STB SYSTEMS, INC.
1,800,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
November __, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇ & COMPANY
▇/▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
STB Systems, Inc., a Texas corporation (herein called the Company),
proposes to issue and sell 1,500,000 shares of its authorized but unissued
Common Stock, $.01 par value (herein called the Common Stock), and the
shareholders of the Company named in Schedule II hereto (herein collectively
called the Selling Securityholders) propose to sell an aggregate of 300,000
shares of Common Stock of the Company (said 1,800,000 shares of Common Stock
being herein called the Underwritten Stock). The Selling Securityholders propose
to grant to the Underwriters (as hereinafter defined) an option to purchase up
to 270,000 additional shares of Common Stock (herein called the Option Stock and
with the Underwritten Stock herein collectively called the Stock). The Common
Stock is more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.
The Company and the Selling Securityholders severally hereby confirm the
agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent
and warrant that you have been authorized by each of the other Underwriters to
enter into this Agreement on its behalf and to act for it in the manner herein
provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities and
Exchange Commission (herein called the Commission) a registration statement on
Form S-1 (No. 333-14313), including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (herein called the
Securities Act) of the Stock. Copies of such registration statement and of
____________
(1) Plus an option to purchase from the Selling Securityholders up to
270,000 additional shares to cover over-allotments.
each amendment thereto, if any, including the related preliminary prospectus
(meeting the requirements of Rule 430A of the rules and regulations of the
Commission) heretofore filed by the Company with the Commission have been
delivered to you.
The term Registration Statement as used in this agreement shall mean such
registration statement, including all exhibits and financial statements, all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, and any information deemed to be part thereof at
the time of effectiveness pursuant to Rule 434, in the form in which it became
effective, and any registration statement filed pursuant to Rule 462(b) of the
rules and regulations of the Commission with respect to the Stock (herein called
a Rule 462(b) registration statement), and, in the event of any amendment
thereto after the effective date of such registration statement (herein called
the Effective Date), shall also mean (from and after the effectiveness of such
amendment) such registration statement as so amended (including any Rule 462(b)
registration statement). The term Prospectus as used in this Agreement shall
mean the prospectus (including any prospectus subject to completion meeting the
requirements of Rule 430(a) or 430A of the Commission provided by the Company
with any term sheet meeting the requirements of Rule 434(b)) relating to the
Stock first filed with the Commission pursuant to Rule 424(b) and Rule 430A (or
if no such filing is required, as included in the Registration Statement) and,
in the event of any supplement or amendment to such prospectus after the
Effective Date, shall also mean (from and after the filing with the Commission
of such supplement or the effectiveness of such amendment) such prospectus as so
supplemented or amended. The term Preliminary Prospectus as used in this
Agreement shall mean each preliminary prospectus included in such registration
statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SECURITYHOLDERS.
(a) Each of the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, a Selling Securityholder,
hereby represents and warrants as follows:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full power
and authority to own or lease its properties and conduct its business
as described in the Registration Statement and the Prospectus and as
being conducted, and is duly qualified as a foreign corporation and in
good standing in all jurisdictions in which the character of the
property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so
qualified would not have a material adverse effect on the business,
properties, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole).
(ii) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been
any materially adverse change in the business, properties, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in the
ordinary course of business, other than as set forth in the
Registration Statement and the Prospectus, and since such dates, except
in the ordinary course of business, neither the Company nor any of its
subsidiaries has
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entered into any material transaction not referred to in the Registration
Statement and the Prospectus.
(iii) The Registration Statement and the Prospectus comply, in all
material respects, with the provisions of the Securities Act and the rules
and regulations of the Commission thereunder as in effect on the date hereof;
on the Effective Date, the Registration Statement did not contain any untrue
statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and, on the Effective Date the Prospectus (including
any supplement thereto required under Canadian provincial laws in connection
with the offer and sale of the Stock in Canada) did not and, on the Closing
Date and any later date on which Option Stock is to be purchased, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that none of the representations and warranties in this subparagraph (iii)
shall apply to statements in, or omissions from, the Registration Statement
or the Prospectus made in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Underwriters
through you or by a Selling Securityholder expressly for use in the
Registration Statement or the Prospectus.
(iv) Any term sheet and prospectus subject to completion provided by the
Company to the Underwriters for use in connection with the offering and sale
of the Stock pursuant to Rule 434 under the Securities Act together are not
materially different from the prospectus included in the Registration
Statement as filed with the Commission (exclusive of any information deemed
to be a part thereof by virtue of Rule 434(d)).
(v) The Stock is duly and validly authorized, is (or, in the case of
shares of the Stock to be sold by the Company, will be, when issued and sold
to the Underwriters against payment therefor as provided herein) duly and
validly issued, fully paid and nonassessable and conforms to the description
thereof in the Prospectus. No further approval or authority of the
shareholders or the Board of Directors of the Company will be required for
the transfer and sale of the Stock to be sold by the Selling Securityholders
or the issuance and sale of the Stock as contemplated herein.
(vi) The Stock to be sold by the Selling Securityholders is listed for
trading on the Nasdaq National Market, and prior to the Closing Date the
Stock to be issued and sold by the Company will be authorized for listing by
the Nasdaq National Market upon official notice of issuance.
(vii) The Company and its subsidiaries have good and marketable
title to all material personal property owned by them, in each case free and
clear of all liens, encumbrances and defects except such as are described in
the Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and all real property and
buildings used in or necessary for the conduct of the business of the Company
and its subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
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(viii) The Company has an authorized capitalization as set forth in
the Prospectus, all of the outstanding shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus and the number of issued and outstanding shares of Common Stock is
as set forth in the Prospectus; all of the issued shares of capital stock of
STB Assembly, Inc., a Texas corporation (herein called Assembly), STB de
Mexico, S.A. (formerly known as Industrias Fronterizas de Chihuahua, S.A. de
C.V.), a Mexican corporation (herein called IFC), and Maquilados
Continentales de Ciudad ▇▇▇▇▇▇, ▇.▇. de C.V., a Mexican corporation (herein
called MCCJ) (Assembly, IFC and MCCJ being the only subsidiaries of the
Company and being referred to collectively herein as the subsidiaries), have
been duly and validly authorized and issued, are fully paid and
non-assessable and (except for one share of common stock of IFC, representing
0.04% of the issued and outstanding capital stock of IFC) all the outstanding
capital stock of Assembly, IFC and MCCJ are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or claims.
(ix) The Company has full power and authority to enter into this
Agreement and to issue, sell and deliver to the Underwriters the Stock to be
sold by it hereunder, and this Agreement has been duly authorized, executed
and delivered by the Company.
(x) The issue and sale by the Company to the Underwriters of the Stock
to be sold by it hereunder 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, sale/leaseback agreement or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of
the Articles of Incorporation, as amended, or the Bylaws, as amended, of the
Company or any statute or any order, rule or regulation of any court or
government agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such court
or governmental agency or body is required for the issue and sale of the
Stock to be sold by the Company hereunder or the consummation by the Company
of the transactions contemplated by this Agreement, except the registration
under the Act of the Stock and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws or by the National Association of Securities Dealers, Inc. (the
NASD) in connection with the purchase and distribution of the Stock by the
Underwriters.
(xi) Except for the litigation styled ▇▇▇▇▇ V. STB SYSTEMS, INC. ET AL.,
filed on or about September 6, 1995 in the Texas State District Court of
Dallas County (Citation No. 95-9681-G), which has been fully disclosed to you
prior to the date hereof and is accurately described in the Registration
Statement and Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or of
which any property of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material adverse effect on the
consolidated financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole; and, to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
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(xii) Price Waterhouse, who have certified financial statements of
the Company and its subsidiaries, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder.
(xiii) The pro forma financial information of the Company and its
subsidiaries included in the Registration Statement and Prospectus presents
fairly, in all material respects, the information shown therein, and the
assumptions used in the preparation thereof are reasonable.
(xiv) The Company and its subsidiaries, taken as a whole, own, or
possess adequate rights to use, all the patents, trademarks, service marks,
trade names and copyrights (herein called Intellectual Property) necessary
for the present and currently planned conduct of the business of the Company
and its subsidiaries, taken as a whole. To the best knowledge of the
Company, there is no infringement on the Intellectual Property rights of the
Company or its subsidiaries by others that could materially adversely affect
the business or condition, financial or otherwise, of the Company and its
subsidiaries, taken as a whole, and, to the best knowledge of the Company,
none of the activities engaged in by the Company or any of its subsidiaries
infringes or conflicts with Intellectual Property rights of others in a
manner that could materially adversely affect the business or condition,
financial or otherwise, of the Company and its subsidiaries, taken as a whole.
(xv) No person has any right to require the Company to register any
securities under the Securities Act and, except as disclosed in the
Prospectus, no person has any option, preemptive right or other right to
subscribe for or purchase any securities of the Company or of any subsidiary
of the Company.
(xvi) The Company has provided or made available to you originals or
complete and accurate copies of all agreements, contracts, corporate records,
financial statements, business plans, product literature and other
instruments and documents material to the business or operations of the
Company and its subsidiaries, taken as a whole, and has responded fully to
all requests for documents and information submitted to it by or for you, and
the Company has provided or made available to you all updates of or
supplements to any such document or information to the extent necessary to
reflect new developments or additional information relevant thereto.
(xvii) Except as otherwise fully disclosed to you prior to the date
hereof, the Company's results of operations during the fourth quarter of the
fiscal year ended October 31, 1996 are consistent in all material respects
with the anticipated results of operations for such quarter previously
provided to you by the Company, and no aspect of such performance requires
the modification or supplementation of any information contained in the
Registration Statement or any Preliminary Prospectus.
(xviii) No officer, director, nominee for director or shareholder of
the Company has any direct or indirect affiliation or association with any
NASD member, except that ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a director of the Company, is
President and Chief Executive Officer and an equity owner of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Co. (HBW), which is a member of the NASD. The Company's
transactions and relationships with HBW and its predecessors are fully and
accurately described in the Prospectus.
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(xix) Except as disclosed in the Prospectus, no person has the right
to any payment (including without limitation any finder's fee) in connection
with the offering or sale of the Stock.
(xx) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
(b) Each of the Selling Securityholders hereby represents and warrants as
follows:
(i) Such Selling Securityholder has good and marketable title to all
the shares of Stock to be sold by such Selling Securityholder hereunder, free
and clear of all liens, encumbrances, equities, security interests and claims
whatsoever, with full right and authority to deliver the same pursuant to
this Agreement and the Power of Attorney (as hereinafter defined), and that
upon the delivery of and payment for such shares of the Stock hereunder, the
several Underwriters will receive good and marketable title thereto, free and
clear of all liens, encumbrances, equities, security interests and claims
whatsoever.
(ii) Such Selling Securityholder has full right, power and authority to
enter into this Agreement and the Power of Attorney (as defined herein) and
to sell, assign, transfer and deliver the Stock to be sold by such Selling
Securityholder hereunder, and this Agreement and the Power of Attorney have
each been duly executed and delivered by or on behalf of such Selling
Securityholder and are the legal, valid and binding agreements of such
Selling Securityholder, enforceable in accordance with their respective terms.
(iii) Such Selling Securityholder has granted a power of attorney
(herein called the Power of Attorney) to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇
(herein called the Attorneys-in-Fact) to purchase all requisite stock
transfer tax stamps, to sign this Agreement, to agree on the price at which
the shares of Stock being sold by such Selling Securityholder are to be sold
to the Underwriters, to deliver and accept payment for such Stock on behalf
of such Selling Securityholder, and to execute all instruments and documents,
and to take all actions, necessary to carry out the provisions of this
Agreement on behalf of such Selling Securityholder; prior to the date of this
Agreement, each Selling Securityholder has delivered to the Attorneys-in-Fact
a certificate or certificates in negotiable form evidencing the shares of
Stock (including Option Stock) to be sold by such Selling Securityholder, to
be held by the Attorneys-in-Fact until such time as the Attorneys-in-Fact
shall deliver such shares of Stock to the Underwriters in accordance with
this Agreement and the Power of Attorney or, if this Agreement is terminated
prior to such delivery, shall return such shares of Stock to the Selling
Securityholder. Such Selling Securityholder specifically agrees that the
shares of Stock represented by the certificates so held for such Selling
Securityholder are subject to the interests of the several Underwriters and
the Company, that the Power of Attorney is to that extent irrevocable, and
that the obligations of such Selling Securityholder shall not be terminated
by any act of such Selling Securityholder or by operation of law, whether by
the death or incapacity of such Selling Securityholder or the occurrence of
any other event; if any such death, incapacity or other such event should
occur before the delivery of such shares of Stock hereunder, certificates for
such shares of Stock shall be delivered by the Attorneys-in-Fact in
accordance with the terms and conditions of this Agreement as if such death,
incapacity or other event had not occurred, regardless of whether the
Attorneys-in-Fact shall have received notice of such death, incapacity or
other event.
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(iv) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Securityholder of this Agreement
and the Power of Attorney, and for the sale and delivery of the shares of
Stock to be sold by such Selling Securityholder hereunder, have been
obtained, and the sale of the shares of Stock to be sold by such Selling
Securityholder hereunder and the compliance by such Selling Securityholder
with all of the provisions of this Agreement and the Power of Attorney and
the consummation of the transactions herein contemplated will not conflict
with or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any statute, any indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to which such
Selling Securityholder is a party or by which such Selling Securityholder is
bound or to which any of the property or assets of such Selling
Securityholder is subject, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over such Selling
Securityholder or the property of such Selling Securityholder.
(v) Such Selling Securityholder has not taken and will not take,
directly or indirectly, any action designed to cause or which might
reasonably be expected to cause or result in, stabilization or manipulation
of the price of the Common Stock.
(vi) Such Selling Securityholder has not retained or dealt with any
broker or finder, other than the Underwriters, with respect to the
transactions contemplated hereby.
(vii) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by such Selling
Securityholder expressly for use therein, such Preliminary Prospectus and the
Registration Statement did, and the Prospectus and any further amendments or
supplements to the Registration Statement and the Prospectus will, when they
become effective or are filed with the Commission, as the case may be,
conform in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder and not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading.
(viii) Except as set forth in the Prospectus, such Selling
Securityholder does not own, beneficially or of record, and does not have any
option, preemptive right or other right to subscribe for or purchase, or any
claim against, any shares of capital stock or other securities of the Company
or of any subsidiary of the Company; such Selling Securityholder has no right
to require the Company to register under the Act any of the shares of Common
Stock owned by him.
(ix) Such Selling Securityholder has reviewed the Registration Statement
and Prospectus and, although such Selling Securityholder has not
independently verified the accuracy or completeness of all the information
contained therein, nothing has come to the attention of such Selling
Securityholder that would lead such Selling Securityholder to believe that:
(A) on the Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading; or (B) on the date of the Prospectus as set forth on the cover
page thereof the Prospectus contained or, on the Closing Date and any later
date on which Option Stock is to be purchased, will contain any untrue
statement of a material fact or omitted or will omit to state any material
fact necessary in order to make the
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statements therein, in the light of the circumstances under which they
were made, not misleading.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject to the
terms and conditions herein set forth, the Company agrees to issue and sell
1,500,000 shares of the Underwritten Stock to the several Underwriters, each
Selling Securityholder agrees to sell to the several Underwriters the number of
shares of the Underwritten Stock set forth in Schedule II opposite the name of
such Selling Securityholder, and each of the Underwriters agrees to purchase
from the Company and the Selling Securityholders the respective aggregate number
of shares of Underwritten Stock set forth opposite its name in Schedule I. The
price at which such shares of Underwritten Stock shall be sold by the Company
and the Selling Securityholders and purchased by the several Underwriters shall
be $___ per share. The obligation of each Underwriter to the Company and each
of the Selling Securityholders shall be to purchase from the Company and the
Selling Securityholders that number of shares of the Underwritten Stock which
represents the same proportion of the total number of shares of the Underwritten
Stock to be sold by each of the Company and the Selling Securityholders pursuant
to this Agreement as the number of shares of the Underwritten Stock set forth
opposite the name of such Underwriter in Schedule I hereto represents of the
total number of shares of the Underwritten Stock to be purchased by all
Underwriters pursuant to this Agreement, as adjusted by you in such manner as
you deem advisable to avoid fractional shares. In making this Agreement, each
Underwriter is contracting severally and not jointly; except as provided in
paragraphs (b) and (c) of this Section 3, the agreement of each Underwriter is
to purchase only the respective number of shares of the Underwritten Stock
specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company or the Selling Securityholders shall
immediately give notice thereof to you, and the non-defaulting Underwriters
shall have the right within 24 hours after the receipt by you of such notice
to purchase, or procure one or more other Underwriters to purchase, in such
proportions as may be agreed upon between you and such purchasing Underwriter
or Underwriters and upon the terms herein set forth, all or any part of the
shares of the Stock which such defaulting Underwriter or Underwriters agreed
to purchase. If the non-defaulting Underwriters fail so to make such
arrangements with respect to all such shares and portion, the number of
shares of the Stock which each non-defaulting Underwriter is otherwise
obligated to purchase under this Agreement shall be automatically increased
on a pro rata basis to absorb the remaining shares and portion which the
defaulting Underwriter or Underwriters agreed to purchase; PROVIDED, HOWEVER,
that the non-defaulting Underwriters shall not be obligated to purchase the
shares and portion which the defaulting Underwriter or Underwriters agreed to
purchase if the aggregate number of such shares of the Stock exceeds 10% of
the total number of shares of the Stock which all Underwriters agreed to
purchase hereunder. If the total number of shares of the Stock which the
defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company and the Selling Securityholders shall have the right, within 24 hours
next succeeding the 24-hour period above referred to, to make arrangements
with other underwriters or purchasers satisfactory to you for purchase of
such shares and portion on the terms herein set forth. In any such case,
either you or the Company and the Selling Securityholders shall have the
right to postpone the Closing Date determined as provided in Section 5 hereof
for not more than seven business days after the date originally fixed as the
Closing Date pursuant to said Section 5 in order that any necessary
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changes in the Registration Statement, the Prospectus or any other documents
or arrangements may be made. If neither the non-defaulting Underwriters nor
the Company and the Selling Securityholders shall make arrangements within
the 24-hour periods stated above for the purchase of all the shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall be terminated without further act or deed and
without any liability on the part of the Company or the Selling
Securityholders to any non-defaulting Underwriter and without any liability
on the part of any non-defaulting Underwriter to the Company or the Selling
Securityholders. Nothing in this paragraph (b), and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, each of the
Selling Securityholders grants an option to the several Underwriters to
purchase, severally and not jointly, up to 90,000 shares in the aggregate of the
Option Stock from such Selling Securityholder at the same price per share as the
Underwriters shall pay for the Underwritten Stock. Said option may be exercised
only to cover over-allotments in the sale of the Underwritten Stock by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the thirtieth day after the date of this Agreement upon
written or telegraphic notice by you to the Attorneys-in-Fact setting forth the
aggregate number of shares of the Option Stock as to which the several
Underwriters are exercising the option and the date on which such shares of the
Option Stock are to be delivered, as determined by you but in no event earlier
than the date that the Underwritten Stock is delivered hereunder. Delivery of
certificates for the shares of Option Stock, and payment therefor, shall be made
as provided in Section 5 hereof. The number of shares of the Option Stock to be
purchased by each Underwriter shall be the same percentage of the total number
of shares of the Option Stock to be purchased by the several Underwriters as
such Underwriter is purchasing of the Underwritten Stock, as adjusted by you in
such manner as you deem advisable to avoid fractional shares. If the
Underwriters elect to purchase less than all 270,000 shares of Option Stock,
then one-third of the shares of Option Stock purchased by all the Underwriters
pursuant to such election shall be purchased from each of the Selling
Securityholders.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of the
Stock to be purchased by them hereunder shall be as set forth in the Prospectus.
The Underwriters may from time to time change the public offering price after
the closing of the initial public offering and increase or decrease the
concessions and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front cover
page, the last paragraph on the inside front cover page and under "Underwriting"
(excluding the last sentence of the sixth paragraph, regarding the Company's
indemnification of the Selling Securityholders) in the Registration Statement,
in any Preliminary Prospectus and in the Prospectus relating to the Stock filed
by the Company (insofar as such information relates to the Underwriters)
constitutes the only information furnished by the Underwriters to the Company
for inclusion in the Registration Statement, any Preliminary Prospectus, and
the Prospectus, and you on behalf of the respective Underwriters represent and
warrant to the Company that the statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten Stock and
the Option Stock (if the option granted by Section 3(c) hereof shall have been
exercised not later than 9:00 A.M., Dallas time, on the date two business days
preceding the Closing Date), and payment therefor, shall be made
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at the office of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, A Professional Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, at 9:00 a.m., Dallas time, on the fourth
business day after the date of this Agreement, or at such time on such other
day, not later than seven full business days after such fourth business day,
as shall be agreed upon in writing by the Company, the Selling
Securityholders and you. The date and hour of such delivery and payment
(which may be postponed as provided in Section 3(b) hereof) are herein called
the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised after
9:00 a.m., Dallas time, on the date two business days preceding the Closing
Date, delivery of certificates for the shares of Option Stock, and payment
therefor, shall be made at the office of ▇▇▇▇▇▇▇▇ & Knight, A Professional
Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, at 9:00 a.m.,
Dallas time, on the third business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made to the
Company or its order, and payment for the Stock purchased from each Selling
Securityholder shall be made payable to such Selling Securityholder or his
order, but delivered to the Attorneys-in-Fact, for the account of the Selling
Securityholders, in each case by one or more certified or official bank check or
checks in same day funds. Certificates for the Stock to be delivered to you
shall be registered in such name or names and shall be in such denominations as
you may request at least two business days before the Closing Date, in the case
of Underwritten Stock, and at least two business days prior to the purchase
thereof, in the case of the Option Stock. Certificates for the Underwritten
Stock will be made available to the Underwriters for inspection, checking and
packaging at the offices of Lewco Securities Corporation, ▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on the business day prior to the Closing Date, and certificates
for the Option Stock will be made available for such purpose at such address by
3:00 p.m., New York time, on the business day preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholders as stated above for shares to be purchased by
any Underwriter whose check shall not have been received by you on the Closing
Date or any later date on which Option Stock is purchased for the account of
such Underwriter. Any such payment by you shall not relieve such Underwriter
from any of its obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees
as follows:
(a) The Company will (i) prepare and timely file with the
Commission under Rule 424(b) a Prospectus containing information
previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A and (ii) file any amendment to the
Registration Statement or supplement to the Prospectus (including the
issuance or filing of any term sheet within the meaning of Rule 434)
only if (x) you shall previously have been advised and furnished with a
copy of such document, (y) you shall not have reasonably objected in
writing to the filing of such document and (z) such document is in
compliance with the Securities Act and the rules and regulations of the
Commission.
(b) The Company will promptly notify each Underwriter in the
event of (i) the request by the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any
additional information, (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, (iii)
the institution or notice of intended institution of any action or
proceeding for that purpose, (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Stock
-10-
for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company
will make every reasonable effort to prevent the issuance of such a stop
order and, if such an order shall at any time be issued, to obtain the
withdrawal thereof at the earliest possible moment.
(c) The Company (i) on or before the Closing Date, will deliver to you
a signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any, to the Registration Statement (together
with, in each case, all exhibits thereto unless previously furnished to you)
and will also deliver to you, for distribution to the Underwriters, a
sufficient number of additional conformed copies of each of the foregoing
(but without exhibits) so that one copy of each may be distributed to each
Underwriter, (ii) as promptly as practicable, will deliver to you and send to
the several Underwriters, at such office or offices as you may designate, as
many copies of the Prospectus as you may reasonably request, and (iii)
thereafter from time to time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, likewise will
send to the Underwriters as many additional copies of the Prospectus and as
many copies of any supplement to the Prospectus and of any amended
prospectus, filed by the Company with the Commission, as you may reasonably
request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of counsel for the Underwriters, to supplement or
amend the Prospectus in order to make the Prospectus not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser of the Stock, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus or an amended prospectus so that
the Prospectus as so supplemented or amended will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time such Prospectus is delivered to such purchaser, not
misleading. If the Underwriters shall propose to vary the terms of the
offering of the Stock by reason of changes in general market conditions or
otherwise, you will advise the Company in writing of the proposed variation,
and, if in the opinion either of counsel for the Company or of counsel for
the Underwriters such proposed variation requires that the Prospectus be
supplemented or amended, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus or an amended prospectus setting
forth such variation. The Company authorizes the Underwriters and all
dealers to whom any of the Stock may be sold by the several Underwriters to
use the Prospectus, as from time to time amended or supplemented, in
connection with the sale of the Stock in accordance with the applicable
provisions of the Securities Act and the applicable rules and regulations
thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment
to the Registration Statement and any supplement to the Prospectus or any
amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue
sky laws of such jurisdictions as you may designate and, during the period in
which a prospectus is required by law to be delivered
-11-
by an Underwriter or dealer, in keeping such qualifications in good standing
under said securities or blue sky laws; PROVIDED, HOWEVER, that the Company
shall not be obligated to file any general consent to service of process or
to qualify as a foreign corporation in any jurisdiction in which it is not so
qualified. The Company will, from time to time, prepare and file such
statements, reports, and other documents as are or may be required to
continue such qualifications in effect for so long a period as you may
reasonably request for distribution of the Stock.
(g) During a period of two years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to shareholders of
the Company and of all information, documents and reports filed with the
Commission.
(h) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the Effective Date, the Company
will make generally available to its security holders an earning statement in
accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.
(i) The Company agrees with the Underwriters to pay all costs and
expenses incident to the performance of the Company's and the Selling
Securityholders' obligations under this Agreement, including all costs and
expenses incident to (i) the preparation, printing and filing with the
Commission and the National Association of Securities Dealers, Inc. ("NASD")
of the Registration Statement, any Preliminary Prospectus and the Prospectus,
(ii) the furnishing to the Underwriters of copies of any Preliminary
Prospectus and of the several documents required by paragraph (c) of this
Section 6 to be so furnished, (iii) the copying of this Agreement and related
documents delivered to the Underwriters, (iv) the preparation, printing and
filing of all supplements and amendments to the Prospectus referred to in
paragraph (d) of this Section 6, (v) the furnishing to you and the
Underwriters of the reports and information referred to in paragraph (g) of
this Section 6 and (vi) the printing and issuance of stock certificates,
including the transfer agent's fees.
(j) The Company agrees to reimburse you, for the account of the several
Underwriters, for state or Canadian provincial blue sky, registration or private
placement fees and related disbursements (including counsel fees and
disbursements and cost of copying memoranda for the Underwriters) paid by or for
the account of the Underwriters or their counsel in qualifying the Stock under
state or provincial securities or blue sky laws and in the review of the
offering by the NASD.
(k) The provisions of paragraphs (i) and (j) of this Section are intended
to relieve the Underwriters from the payment of the expenses and costs which the
Company hereby agrees to pay and shall not affect any agreement which the
Company and the Selling Securityholders may make, or may have made, for the
sharing of any such expenses and costs. Without limiting the foregoing, all
fees and expenses of counsel for each Selling Securityholder and all
underwriters' discounts and commissions in respect of the sale of the Stock to
be sold hereunder by such Selling Securityholder shall be paid by such Selling
Securityholder.
(l) The Company and each of the Selling Securityholders hereby agrees
that, without the prior written consent of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC on behalf of
the Underwriters, the Company or such Selling Securityholder, as the case may
be, will not, for a period of 90
-12-
days following the commencement of the public offering of the Stock by
the Underwriters, directly or indirectly, (i) issue, sell, offer,
contract to sell, transfer the economic risk of ownership in, make any
short sale, pledge or otherwise transfer or dispose of any shares of
Common Stock or any securities convertible into or exchangeable or
exercisable for or any rights to purchase or acquire Common Stock,
whether any such transaction is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Stock to be sold to the Underwriters
pursuant to this Agreement, (B) shares of Common Stock issued by the
Company upon the exercise of options granted under the stock option
plans of the Company (herein called the Option Plans) or pursuant to the
Company's 1995 Employee Stock Option Purchase Plan (herein called the
Employee Plan), all as described in footnote (2) to the table under the
caption "Capitalization" and under the caption "Management" in the
Preliminary Prospectus, and (C) options to purchase Common Stock granted
under the Option Plans or deemed granted under the Employee Plan.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of this Section 7,
the Company and the Selling Securityholders jointly and severally agree
to indemnify and hold harmless each Underwriter and each person
(including each partner or officer thereof) who controls any Underwriter
within the meaning of Section 15 of the Securities Act from and against
any and all losses, claims, damages or liabilities, joint or several, to
which such indemnified parties or any of them may become subject under
the Securities Act, the Securities Exchange Act of 1934, as amended
(herein called the Exchange Act), or the common law or otherwise, and
the Company and the Selling Securityholders jointly and severally agree
to reimburse each such Underwriter and controlling person for any legal
or other expenses (including, except as otherwise hereinafter provided,
reasonable fees and disbursements of counsel) incurred by the respective
indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any
investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of
or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (including the
Prospectus as part thereof and any Rule 462(b) registration statement)
or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or 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, or (ii) any untrue statement
or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented
if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to
state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; PROVIDED, HOWEVER, that (1) the indemnity agreements of
the Company and the Selling Securityholders contained in this paragraph
(a) shall not apply to any such losses, claims, damages, liabilities or
expenses if such statement or omission was made in reliance upon and in
conformity with information furnished as herein stated or otherwise
furnished in writing to the Company by or on behalf of any Underwriter
for use in any Preliminary Prospectus or the Registration Statement or
the Prospectus or any such amendment thereof or supplement thereto; (2)
the indemnity agreements of the Company and the Selling Securityholders
contained in this paragraph (a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom
the person asserting any such losses, claims, damages, liabilities or
expenses purchased the Stock which is the subject thereof (or to the
benefit of any person controlling such Underwriter) if at or prior to
the written confirmation of the sale of such Stock a copy of the
Prospectus (or the Prospectus as amended or supplemented) was not sent
or delivered to such person and the untrue statement or omission of a
material fact contained in such
-13-
Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented) unless the failure is the result
of noncompliance by the Company with paragraph (c) of Section 6 hereof;
and (3) each Selling Securityholder shall only be liable under this
paragraph with respect to (A) information pertaining to such Selling
Securityholder furnished by or on behalf of such Selling Securityholder
expressly for use in any Preliminary Prospectus or the Registration
Statement or the Prospectus or any such amendment thereof or supplement
thereto or (B) facts that would constitute a breach of any
representation or warranty of such Selling Securityholder set forth in
Section 2 hereof. The indemnity agreements of the Company and the
Selling Securityholders contained in this paragraph (a) and the
representations and warranties of the Company and the Selling
Securityholders contained in Section 2 hereof shall remain operative and
in full force and effect regardless of any investigation made by or on
behalf of any indemnified party and shall survive the delivery of and
payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its officers who signs the Registration
Statement on his own behalf or pursuant to a power of attorney, each of
its directors, each other Underwriter and each person (including each
partner or officer thereof) who controls the Company or any such other
Underwriter within the meaning of Section 15 of the Securities Act, and
each Selling Securityholder from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified
parties or any of them may become subject under the Securities Act, the
Exchange Act, or the common law or otherwise and to reimburse each of
them for any legal or other expenses (including, except as otherwise
hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with
defending against any such losses, claims, damages or liabilities or in
connection with any investigation or inquiry of, or other proceeding
which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any
Rule 462(b) registration statement) or any post-effective amendment
thereto (including any Rule 462(b) registration statement) or 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 or (ii) any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (as amended or as supplemented
if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to
state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, if (in the case of clause (i) or (ii)) such statement or
omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the
Company by or on behalf of such indemnifying Underwriter for use in the
Registration Statement or the Prospectus or any such amendment thereof
or supplement thereto. The indemnity agreement of each Underwriter
contained in this paragraph (b) shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the
Stock.
(c) Each party indemnified under the provision of paragraphs (a)
and (b) of this Section 7 agrees that, upon the service of a summons or
other initial legal process upon it in any action or suit instituted
against it or upon its receipt of written notification of the
commencement of any investigation or inquiry of, or proceeding against,
it in respect of which indemnity may be sought on account of any
indemnity agreement contained in such paragraphs, it will promptly give
written notice (herein called the Notice) of such service or
notification to the party or parties from whom indemnification may be
sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if
the party to whom such Notice was not given was unaware of the action,
suit, investigation, inquiry or proceeding to which the Notice would
have related and was
-14-
prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall
not relieve such indemnifying party or parties from any liability which it or
they may have to the indemnified party for contribution or otherwise than on
account of such indemnity agreement. Any indemnifying party shall be
entitled at its own expense to participate in the defense of any action, suit
or proceeding against, or investigation or inquiry of, an indemnified party.
Any indemnifying party shall be entitled, if it so elects within a reasonable
time after receipt of the Notice by giving written notice (herein called the
Notice of Defense) to the indemnified party, to assume (alone or in
conjunction with any other indemnifying party or parties) the entire defense
of such action, suit, investigation, inquiry or proceeding, in which event
such defense shall be conducted, at the expense of the indemnifying party or
parties, by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties; PROVIDED,
HOWEVER, that (i) if the indemnified party or parties reasonably determine
that there may be a conflict between the positions of the indemnifying party
or parties and of the indemnified party or parties in conducting the defense
of such action, suit, investigation, inquiry or proceeding or that there may
be legal defenses available to such indemnified party or parties different
from or in addition to those available to the indemnifying party or parties,
then counsel for the indemnified party or parties, upon written notice to the
indemnifying parties, shall be entitled to conduct the defense to the extent
reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties and (ii) in any event, the
indemnified party or parties shall be entitled to have counsel chosen by such
indemnified party or parties participate in, but not conduct, the defense.
If, within a reasonable time after receipt of the Notice, an indemnifying
party gives a Notice of Defense and the counsel chosen by the indemnifying
party or parties is reasonably satisfactory to the indemnified party or
parties, the indemnifying party or parties will not be liable under
paragraphs (a) through (c) of this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with
the defense of the action, suit, investigation, inquiry or proceeding, except
that (A) the indemnifying party or parties shall bear the legal and other
expenses incurred in connection with the conduct of the defense as referred
to in clause (i) of the proviso to the preceding sentence and (B) the
indemnifying party or parties shall bear such other expenses as it or they
have authorized to be incurred by the indemnified party or parties. If,
within a reasonable time after receipt of the Notice, no Notice of Defense
has been given, the indemnifying party or parties shall be responsible for
any legal or other expenses incurred by the indemnified party or parties in
connection with the defense of the action, suit, investigation, inquiry or
proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu
of indemnifying such indemnified 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 paragraph (a) or (b) of this Section 7
(i) in such proportion as is appropriate to reflect the relative benefits
received by each indemnifying party from the offering of the Stock or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of each
indemnifying party in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, or actions in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Securityholders on
the one hand and the Underwriters on the other shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of
the Stock received by the Company and the Selling Securityholders and the
total underwriting discount received by the Underwriters, as set forth in the
table on the cover page of the Prospectus, bear to the aggregate public
offering price of the Stock. Relative fault shall be determined by reference
to, among other things, whether the untrue or alleged
-15-
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by each indemnifying
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (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 into
account the equitable considerations referred to in the first sentence of
this paragraph (d). The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities, or actions in respect thereof,
referred to in the first sentence of this paragraph (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigation, preparing to defend or defending
against any action or claim which is the subject of this paragraph (d).
Notwithstanding the provisions of this paragraph (d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Stock purchased by such Underwriter. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations
in this paragraph (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted
against it in respect of which contribution may be sought, it will promptly
give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in paragraph (c) of this Section
7).
(e) Neither the Company nor the Selling Securityholders will, without
the prior written consent of each Underwriter, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not such Underwriter or any person who controls such
Underwriter within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act is a party to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional
release of such Underwriter party and each such controlling person from all
liability arising out of such claim, action, suit or proceeding.
(f) The liability of each Selling Securityholder under such Selling
Securityholder's representations and warranties contained in Section 2 hereof
and under the indemnity and reimbursement agreements contained in the
provisions of this Section 7 and Section 11 hereof shall be limited to an
amount equal to the total net proceeds from the sale of the Stock sold by
such Selling Securityholder to the Underwriters. In addition, no Selling
Securityholder shall be liable under the indemnity and reimbursement
agreements of Sections 7 and 11 hereof unless and until the Underwriters have
made written demand on the Company for payment under such Sections which
shall not have been paid by the Company within 60 days after receipt of such
demand. The Company and the Selling Securityholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which they each
shall be responsible.
8. TERMINATION. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company and the
Selling Securityholders if after the date
-16-
of this Agreement trading in the Common Stock shall have been suspended, or
if there shall have occurred (i) the engagement in major hostilities or an
escalation of major hostilities by the United States or the declaration of
war or a national emergency by the United States on or after the date hereof,
(ii) any outbreak of hostilities or other national or international calamity
or crisis or change in economic or political conditions if the effect of such
outbreak, calamity, crisis or change in economic or political conditions in
the financial markets of the United States would, in the Underwriters'
reasonable judgment, make the offering or delivery of the Stock
impracticable, (iii) suspension of trading in securities generally or a
material adverse decline in value of securities generally on the New York
Stock Exchange, the American Stock Exchange, or The Nasdaq Stock Market, or
limitations on prices (other than limitations on hours or numbers of days of
trading) for securities on either such exchange or system, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of, or commencement of any proceeding or
investigation by, any court, legislative body, agency or other governmental
authority which in the Underwriters' reasonable opinion materially and
adversely affects or will materially or adversely affect the business or
operations of the Company, (v) declaration of a banking moratorium by either
federal or New York State authorities or (vi) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the Underwriters' reasonable opinion has a material
adverse effect on the securities markets in the United States. If this
Agreement shall be terminated pursuant to this Section 8, there shall be no
liability of the Company or the Selling Securityholders to the Underwriters
and no liability of the Underwriters to the Company or the Selling
Securityholders (in each case, including without limitation any liability for
loss of anticipated profits); PROVIDED, HOWEVER, that in the event of any
such termination the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company and the Selling Securityholders under this
Agreement, including all costs and expenses referred to in paragraphs (i) and
(j) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company and by the Selling Securityholders of all their
respective obligations to be performed hereunder at or prior to the Closing Date
or any later date on which Option Stock is to be purchased, as the case may be,
and to the following further conditions:
(a) The Registration Statement shall have become effective; and
no stop order suspending the effectiveness thereof shall have been
issued and no proceedings therefor shall be pending or threatened by
the Commission.
(b) The legality and sufficiency of the sale of the Stock
hereunder and the validity and form of the certificates representing
the Stock, all corporate proceedings and other legal matters incident
to the foregoing, and the form of the Registration Statement and of the
Prospectus (except as to the financial statements contained therein),
shall have been approved at or prior to the Closing Date by ▇▇▇▇▇▇▇▇ &
Knight, A Professional Corporation, counsel for the Underwriters.
(c) You shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇ (A
Professional Corporation), counsel for the Company; Lic. ▇▇▇▇ ▇▇▇▇▇
Ferring, Mexican counsel for the Company; and ▇▇▇ ▇▇▇▇▇▇ & Associates,
P.C., counsel for the Selling Securityholders, opinions addressed to
the Underwriters and dated the Closing Date, covering the matters set
forth in Annexes A, B and C hereto, respectively, and if Option Stock is
purchased at any date after the Closing Date, additional opinions from
each such counsel, addressed to the Underwriters and
-17-
dated such later date, confirming that the statements
expressed as of the Closing Date in such opinions remain valid as of such
later date.
(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true
and correct, the Registration Statement did not contain any untrue statement
of a material fact and did not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading and the Prospectus did not contain any 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, not misleading, (ii) since the Effective Date, no event has occurred
which, in the opinion of counsel to the Company or counsel to the
Underwriters, should have been set forth in a supplement or amendment to the
Prospectus which has not been set forth in such a supplement or amendment,
(iii) since the respective dates as of which information is given in the
Registration Statement in the form in which it originally became effective
and the Prospectus contained therein, there has not been any material adverse
change or any development involving a prospective material adverse change in
or affecting the business, properties, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, whether or
not arising from transactions in the ordinary course of business, and, since
such dates, except in the ordinary course of business, neither the Company
nor any of its subsidiaries has entered into any material transaction not
referred to in the Registration Statement in the form in which it originally
became effective and the Prospectus contained therein, (iv) neither the
Company nor any of its subsidiaries has any material contingent obligations
which are not disclosed in the Registration Statement and the Prospectus, (v)
there are not any pending or known threatened legal proceedings to which the
Company or any of its subsidiaries is a party or of which property of the
Company or any of its subsidiaries is the subject which are material and
which are not disclosed in the Registration Statement and the Prospectus,
(vi) the representations and warranties of the Company and the Selling
Securityholders herein are true and correct in all material respects as of
the Closing Date or any later date on which Option Stock is to be purchased,
as the case may be, and (vii) there has not occurred any event specified in
the first sentence of Section 8 which, in your reasonable judgment, makes it
impracticable to make a public offering of the Stock.
(e) You shall have received on the Closing Date and on any later date
on which Option Stock is purchased a certificate, dated the Closing Date or
such later date, as the case may be, and signed by the President and the
Chief Financial Officer of the Company, stating that the respective signers
of said certificate have carefully examined the Registration Statement in the
form in which it originally became effective and the Prospectus contained
therein and any supplements or amendments thereto, and that the statements
included in clauses (i) through (vii) of paragraph (d) of this Section 9 are
true and correct.
(f) You shall have received from Price Waterhouse LLP, a letter or
letters, addressed to the Underwriters and dated the Closing Date and any
later date on which Option Stock is purchased, confirming that they are
independent public accountants with respect to the Company within the meaning
of the Securities Act and the applicable published rules and regulations
thereunder and based upon the procedures described in their letter delivered
to you concurrently with the execution of this Agreement (herein called the
Original Letter), but carried out to a date not more than three business days
prior to the Closing Date or such later date on which Option Stock is
purchased (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing
Date or such later date, as the case may be, and (ii) setting forth any
revisions and additions to the statements and
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conclusions set forth in the Original Letter which are necessary to
reflect any changes in the facts described in the Original Letter since
the date of the Original Letter or to reflect the availability of more
recent financial statements, data or information. The letters shall
not disclose any change, or any development involving a prospective
change, in or affecting the business or properties of the Company or
any of its subsidiaries which, in your sole reasonable judgment, makes
it impractical or inadvisable to proceed with the public offering of
the Stock or the purchase of the Option Stock as contemplated by the
Prospectus.
(g) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the
qualification referred to in paragraph (f) of Section 6 hereof.
(h) Prior to the Closing Date, the Stock to be issued and sold by
the Company shall have been duly authorized for listing by the Nasdaq
National Market upon official notice of issuance.
(i) On or prior to the Closing Date, you shall have received from
all directors and executive officers of the Company agreements, in form
reasonably satisfactory to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, stating that without
the prior written consent of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC on behalf of the
Underwriters, such person will not, for a period of 90 days following
the commencement of the public offering of the Stock by the
Underwriters, directly or indirectly, sell, offer, contract to sell,
transfer the economic risk of ownership in, make any short sale, pledge
or otherwise transfer or dispose of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for or any
rights to purchase or acquire Common Stock.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if ▇▇▇▇▇▇▇▇ & Knight, A Professional Corporation,
counsel for the Underwriters, shall be satisfied that they comply in form and
scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving written notice
to the Company and to the Selling Securityholders. Any such termination
shall be without liability of the Company or the Selling Securityholders to
the Underwriters and without liability of the Underwriters to the Company or
the Selling Securityholders (in each case, including without limitation any
liability for loss of anticipated profits); PROVIDED, HOWEVER, that (i) in
the event of such termination, the Company agrees to indemnify and hold
harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all costs and expenses referred to in
paragraphs (i) and (j) of Section 6 hereof, and (ii) if this Agreement is
terminated by you because of any refusal, inability or failure on the part of
the Company or the Selling Securityholders to perform any agreement herein,
to fulfill any of the conditions herein, or to comply with any provision
hereof other than by reason of a default by any of the Underwriters, the
Company will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
transactions contemplated hereby.
-19-
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. The obligation of the Company and the Selling
Securityholders to deliver the Stock shall be subject to the conditions that
(a) the Registration Statement shall have become effective and (b) no stop
order suspending the effectiveness thereof shall be in effect and no
proceedings therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall not
be fulfilled, this Agreement may be terminated by the Company and the Selling
Securityholders by giving written notice to you. Any such termination shall
be without liability of the Company and the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders (in each case, including without limitation any
liability for loss of anticipated profits); PROVIDED, HOWEVER, that in the
event of any such termination the Company agrees to indemnify and hold
harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all costs and expenses referred to in
paragraphs (i) and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement (and subject, in the case of a
Selling Securityholder, to the provisions of paragraph (f) of Section 7), the
Company and the Selling Securityholders hereby jointly and severally agree to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending 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 paragraph (a) of Section 7 of this Agreement and in respect of
which the Underwriters have given to the Company or the Selling
Securityholders any Notice required by Section 7(c) (and provided the
Underwriters would be entitled to conduct the investigation or defense
thereof pursuant to Section 7(c)), notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 11 and the possibility that such payments might later be held to
be improper; PROVIDED, HOWEVER, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when
and if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of the Company, the Selling Securityholders and the
several Underwriters and, with respect to the provisions of Section 7 hereof,
the several parties (in addition to the Company, the Selling Securityholders
and the several Underwriters) indemnified under the provisions of said
Section 7, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give
to any other person, firm or corporation any legal or equitable remedy or
claim under or in respect of this Agreement or any provision herein
contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Stock from any of the
several Underwriters.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by facsimile and, if to the Underwriters,
shall be mailed, transmitted by facsimile or delivered to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and if to the Company,
shall be mailed, transmitted by facsimile or delivered to it at its office,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief
Executive Officer; and if to the Selling Securityholders, shall be mailed,
transmitted by facsimile or delivered to the Selling Securityholders in care
of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, Attorneys-in-Fact, at the Company's
address at such
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office. Notwithstanding the foregoing, any notice delivered to a Selling
Securityholder, as an indemnifying or indemnified party, after the Closing
Date in accordance with Section 7 shall be addressed and delivered to such
Selling Securityholder at the Company's address as specified in this
paragraph, rather than to the Attorneys-in-Fact. All notices given by
facsimile shall be promptly confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or the Selling Securityholders or their respective directors or
officers, and (c) delivery and payment for the Stock under this Agreement;
PROVIDED, HOWEVER, that if this Agreement is terminated prior to the Closing
Date, the provisions of paragraph (l) of Section 6 hereof shall be of no further
force or effect.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California.
-21-
Please sign and return to the Company and to the Selling Securityholders
in care of the Company the enclosed duplicates of this letter, whereupon this
letter will become a binding agreement among the Company, the Selling
Securityholders and the several Underwriters in accordance with its terms.
Very truly yours,
STB SYSTEMS, INC.
By
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Chief Executive Officer
and Chairman of the Board
SELLING SECURITYHOLDERS:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇
By
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Individually and as
Attorney-in-Fact acting on
behalf of each of the other
Selling Securityholders
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇ & COMPANY
By ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
By
----------------------------------------------
, Managing Director,
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
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SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES OF
UNDERWRITTEN
STOCK TO BE
UNDERWRITERS PURCHASED
------------ ------------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC.....................................
▇▇▇▇▇ & Company...........................................
------------
Total................................................ 1,800,000
------------
------------
SCHEDULE II
SELLING SECURITYHOLDERS
NUMBER OF NUMBER OF SHARES
SHARES OF OF OPTION STOCK
UNDERWRITTEN TO BE SOLD IF
STOCK TO BE MAXIMUM OPTION
NAME OF SELLING SECURITYHOLDER SOLD EXERCISED
------------------------------ ------------ ----------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇........................... 100,000 90,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.................. 100,000 90,000
▇▇▇▇ ▇. ▇▇▇▇.............................. 100,000 90,000
------------ ----------------
Total................................ 300,000 270,000
------------ ----------------
------------ ----------------
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF
▇▇▇▇▇ ▇▇▇▇▇▇▇ RAIN ▇▇▇▇▇▇▇ (A PROFESSIONAL CORPORATION),
COUNSEL FOR THE COMPANY
(i) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Texas and has
full power and authority to own or lease its properties and conduct its
business as described in the Registration Statement;
(ii) the Company has no subsidiaries other than Assembly, IFC and
MCCJ; Assembly has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation; all of the issued shares of capital stock of Assembly have
been duly and validly authorized and issued, are fully paid and
nonassessable, and such shares are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims; and to the best of such
counsel's knowledge, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in Assembly
are outstanding;
(iii) the authorized capital stock of the Company and the number of
issued and outstanding shares of such capital stock is as set forth under the
caption "Capitalization" in the Prospectus; proper corporate proceedings have
been taken validly to authorize such authorized capital stock; all of the
outstanding shares of such capital stock (including the shares of Stock, when
issued and paid for by the Underwriters) have been duly and validly issued
and are fully paid and nonassessable; and no preemptive rights of, or rights
of refusal in favor of, shareholders exist with respect to the Stock, or the
issue and sale thereof, pursuant to the Articles of Incorporation or Bylaws
of the Company and, to the knowledge of such counsel, there are no
contractual preemptive rights, rights of first refusal or rights of co-sale
which exist and have not been waived with respect to the Stock being sold by
the Selling Securityholders or the issue and sale of the Stock;
(iv) the Registration Statement has become effective under the
Securities Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus is in effect and no proceedings for that
purpose have been instituted or are pending or contemplated by the Commission;
(v) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained
therein, as to which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Securities Act and with
the rules and regulations of the Commission thereunder;
(vi) the information required to be set forth in the Registration
Statement in answer to Item 10 (insofar as it relates to such counsel) and
Items 9 and 11(c) (insofar as such information constitutes a summary of legal
matters) of Form S-1 is to the best of such counsel's knowledge accurately
and adequately set forth therein in all material respects or no response is
required with respect to such Items;
(vii) such counsel do not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion
of such counsel are of a character
required to be described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement, which are not
described and filed (or incorporated by reference) as required;
(viii) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company and is the legal, valid and binding agreement of the
Company enforceable in accordance with its terms (except to the extent the
enforceability of the indemnification and contribution provisions of Section
7 of the Underwriting Agreement may be limited by federal or state securities
laws or by public policy considerations as expressed in such laws as
construed by courts of competent jurisdiction, and except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditors' rights generally and by general principles of
equity);
(ix) the issue and sale by the Company of the shares of Stock sold by
the Company as contemplated by the Underwriting Agreement will not conflict
with, or result in a breach of, the Articles of Incorporation or Bylaws of
the Company or any of its subsidiaries or any agreement or instrument known
to such counsel to which the Company or any of its subsidiaries is a party or
any applicable law or regulation (assuming compliance with the securities
registration and qualification requirements under applicable state securities
or blue sky laws), or so far as is known to such counsel, any order, writ,
injunction or decree, of any jurisdiction, court or governmental
instrumentality;
(x) to the best of such counsel's knowledge, no holders of securities
of the Company have any rights to the registration of shares of Common Stock,
or other securities, because of the filing of the Registration Statement by
the Company;
(xi) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Company
of the transactions contemplated in the Underwriting Agreement, except such
as have been obtained under the Securities Act and such as may be required
under state securities or blue sky laws or by the National Association of
Securities Dealers, Inc. in connection with the purchase and distribution of
the Stock by the Underwriters;
(xii) such counsel have no reason to believe that the Registration
Statement or the Prospectus (A) contains any untrue statement of a material
fact with respect to patents, trade secrets, trademarks, service marks or
other proprietary information or materials (herein called Intellectual
Property) owned or used by the Company, or the manner of its use thereof, or
(B) omits to state any material fact relating to Intellectual Property owned
or used by the Company, or the manner of its use thereof, that is required to
be stated in the Registration Statement or the Prospectus or is necessary to
make the statements therein not misleading; and
(xiii) to the best of such counsel's knowledge, there are no pending or
threatened legal or governmental proceedings or infringement claims relating
to Intellectual Property owned or used by the Company.
____________________________________
In addition to the matters set forth above, counsel rendering the
foregoing opinion shall also include a statement to the effect that nothing
has come to the attention of such counsel that leads them to believe that the
Registration Statement (except as to the financial statements and schedules
and other financial and statistical data contained or incorporated by
reference therein, as to which such counsel need not express any opinion or
belief) at the Effective Date contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, that the Prospectus
(except as to the financial statements and schedules and other financial and
statistical data contained or incorporated by reference therein, as to which
such counsel need not express any opinion or belief) as of its date or at the
Closing Date (or any later date on which Option Stock is purchased),
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
ANNEX B
MATTERS TO BE COVERED IN THE OPINION OF
LIC. ▇▇▇▇ ▇▇▇▇▇ FERRING,
MEXICAN COUNSEL FOR THE COMPANY
(i) each of IFC and MCCJ has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction
of incorporation; and
(ii) all of the issued shares of capital stock of IFC and MCCJ have
been duly and validly authorized and issued, are fully paid and
nonassessable, and (except for one share of common stock of IFC, representing
0.04% of the issued and outstanding capital stock of IFC) all the outstanding
shares of capital stock of IFC and MCCJ are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or claims.
ANNEX C
MATTERS TO BE COVERED IN THE OPINION OF
▇▇▇ ▇▇▇▇▇▇ & ASSOCIATES, P.C.,
COUNSEL FOR THE SELLING SECURITYHOLDERS
(i) the Power of Attorney has been duly executed and delivered by
each Selling Securityholder and constitutes a valid and binding agreement of
such Selling Securityholder enforceable in accordance with its terms (except
as enforceability may be limited by bankruptcy, insolvency, moratorium and
other laws affecting creditors' rights generally and by general principles of
equity);
(ii) the Underwriting Agreement has been duly executed and delivered
by or on behalf of each Selling Securityholder and is the legal, valid and
binding agreement of such Selling Securityholder enforceable in accordance
with its terms (except to the extent the enforceability of the
indemnification provisions of Section 7 of the Underwriting Agreement may be
limited by public policy considerations as expressed in the Act as construed
by courts of competent jurisdiction, and except as enforceability may be
limited by bankruptcy, insolvency, moratorium and other laws affecting
creditors' rights generally and by general principles of equity); and the
sale of the Stock to be sold by such Selling Securityholder hereunder and the
compliance by such Selling Securityholder with all of the provisions of the
Underwriting Agreement and the Power of Attorney and the consummation of the
transactions therein contemplated will not (a) conflict with the laws of the
State of Texas or the federal laws of the United States by which such Selling
Securityholder is bound, or (b) result in a breach or violation of any order,
rule or regulation known to such counsel of any court or governmental agency
or body which, to such counsel's knowledge, has jurisdiction over such
Selling Securityholder or the Common Stock of such Selling Securityholder;
(iii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated by the Underwriting Agreement in connection with
the Stock to be sold by such Selling Securityholder hereunder, except such as
have been obtained under the Act and such as may be required by the NASD or
under state securities or Blue Sky laws in connection with the purchase and
distribution of such Stock by the Underwriters;
(iv) each Selling Securityholder is the sole record and beneficial
owner of the Stock to be sold by such Selling Securityholder pursuant to the
Underwriting Agreement; upon delivery of the Stock to be sold by such Selling
Securityholder thereunder, the Underwriters who purchase and pay for such
Stock will obtain good, valid and marketable title to such Stock, free of all
adverse claims, assuming the Underwriters purchase such Stock in good faith
and without notice of any such adverse claim within the meaning of the
Uniform Commercial Code; and
(v) except as set forth in the Prospectus, and to the best knowledge
of such counsel, none of the Selling Securityholders owns, beneficially or of
record, nor does any Selling Securityholder have any option granted by the
Company, preemptive right or other right to subscribe for or purchase from
the Company, or any claim against, any shares of capital stock or other
securities of the Company or of any subsidiary of the Company; and none of
the Selling Securityholders has any right to require the Company to register
under the Act any of the shares of Common Stock owned by him.