JAVELIN SYSTEMS, INC.
UNDERWRITING AGREEMENT
__________________, 1999
▇▇▇ ▇▇▇▇▇▇ & COMPANY
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INCORPORATED
MERIDIAN CAPITAL GROUP, INC.
As Representatives of the
Several Underwriters
c/o ▇▇▇ ▇▇▇▇▇▇ & Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Javelin Systems, Inc., a Delaware corporation (the "Company") and
certain stockholders of the Company listed on Schedule II hereto (the
"Selling Stockholders"), propose, subject to the terms and conditions stated
herein, to issue and sell to the several Underwriters named in Schedule I
hereto (each, an "Underwriter" and collectively, the "Underwriters") an
aggregate of 2,500,000 shares (the "Firm Shares") of its authorized but
unissued Common Stock, par value $0.01 per share (the "Common Stock"). The
Company also proposes to grant to the Underwriters an option to purchase up
to 375,000 additional shares of Common Stock (the "Option Shares") for the
sole purpose of covering over-allotments, if any, in connection with the sale
of the Firm Shares. The Firm Shares and any Option Shares purchased pursuant
to this Agreement are collectively referred to below as the "Shares." ▇▇▇
▇▇▇▇▇▇ & Company ("▇▇▇ ▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated and Meridian
Capital Group, Inc. are acting as Representatives of the several Underwriters
and in that capacity are referred to in this Agreement as the
"Representatives."
The Company hereby confirms its agreement with the several Underwriters
as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to and agrees with each Underwriter as follows:
(a) A registration statement (Registration No. 333- ) on
Form SB-2 under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the Shares, including such amendments to such registration
statement as may have been required to the date of this Agreement, has been
prepared by the Company under and in conformity with the provisions of the
Securities Act and the rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission. After the execution of this Agreement, the
Company will file with the Commission either (i) if such registration
statement, as it may have been amended, has been declared by the Commission
to be effective under the Securities Act, either (A) if the Company relies on
Rule 434 under the Securities Act, a Term Sheet (defined below) relating to
the Shares, that identifies the Preliminary Prospectus (defined below) that
it supplements and contains such
1
information as is required or permitted by Rules 434, 430A and 424(b) of the
Rules and Regulations or (B) if the Company does not rely on Rule 434 under
the Securities Act, a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment has been
filed, in such registration statement), with such changes or insertions as
are required by Rule 430A of the Rules and Regulations or permitted by Rule
424(b) of the Rules and Regulations, and in the case of either (i)(A) or
(i)(B) of this sentence, as has been provided to and approved by the
Representatives prior to the execution of this Agreement, or (ii) if such
registration statement, as it may have been amended, has not been declared by
the Commission to be effective under the Securities Act, an amendment to such
registration statement, including a form of prospectus, a copy of which
amendment has been furnished to and approved by the Representatives prior to
the execution of this Agreement. As used in this Agreement, the term
"Registration Statement" means such registration statement, as amended at the
time when it was or is declared effective, including all financial schedules
and exhibits thereto, any information omitted therefrom pursuant to Rule 430A
of the Rules and Regulations and included in the Prospectus (defined below)
and further including all filings or other documents incorporated therein, as
well as any additional registration statement filed in connection with the
offering of the Shares pursuant to Rule 462(b) under the Securities Act; the
term "Preliminary Prospectus" means each prospectus subject to completion
filed with such registration statement or any amendment thereto (including
the prospectus subject to completion, if any, included in the Registration
Statement or any amendment thereto at the time it was or is declared
effective and further including all filings or documents incorporated
therein); and the term "Prospectus" means the following, including any
filings or documents incorporated therein:
(A) if the Company relies on Rule 434 under the Securities
Act, the Term Sheet relating to the Securities that is first filed pursuant
to Rule 424(b)(7) under the Securities Act, together with the Preliminary
Prospectus identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the
Securities Act, the prospectus first filed with the Commission pursuant to
Rule 424(b) under the Securities Act; or
(C) if the Company does not rely on Rule 434 under the
Securities Act and if no prospectus is required to be filed pursuant to Rule
424(b) under the Securities Act, the prospectus included in the Registration
Statement;
provided that if any revised prospectus that is provided to the Underwriters
by the Company for use in connection with the offering of the Shares differs
from the prospectus on file with the Commission at the time the Registration
Statement became or becomes, as the case may be, effective, whether or not
the revised prospectus is required to be filed with the Commission pursuant
to Rule 424(b)(3) of the Rules and Regulations, the term "Prospectus" shall
mean such revised prospectus (including all filings and documents
incorporated therein) from and after the time it is first provided to the
Underwriters for such use. The term "Term Sheet" as used in this Agreement
means any term sheet that satisfies the requirements of Rule 434 under the
Securities
2
Act. Any reference in this Agreement to the "date" of a Prospectus that
includes a Term Sheet means the date of such Term Sheet.
(b) No order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Preliminary Prospectus
or the Prospectus has been issued and no proceedings for that purpose are
pending or, to the best knowledge of the Company, threatened or contemplated
by the Commission; no stop order suspending the sale of the Shares in any
jurisdiction has been issued and no proceedings for that purpose are pending
or, to the best knowledge of the Company, threatened or contemplated, and any
request of the Commission for additional information (to be included in the
Registration Statement, any Preliminary Prospectus or the Prospectus or
otherwise) has been complied with.
(c) As used in this Agreement, the word "subsidiary" means any
corporation, partnership, limited liability company or other entity of which
the Company directly or indirectly owns 50% or more of the equity or that the
Company directly or indirectly controls. The subsidiaries of the Company
(the "Subsidiaries") and the jurisdiction of incorporation of each Subsidiary
are listed on Exhibit A hereto. The Company has no subsidiaries other than
the Subsidiaries listed on Exhibit A hereto; except as set forth on Exhibit
A, the Company owns 100 percent of the issued and outstanding stock of each
of the Subsidiaries free and clear of any material pledge, lien, security
interest, encumbrance, claim or equitable interest of any type, kind or
nature. Exhibit B hereto lists each entity in which the Company or any
Subsidiary holds an equity interest, whether as shareholder, partner, member,
joint venturer or otherwise. Except as set forth on Exhibit B, neither the
Company nor any Subsidiary has any equity interest in any person. The
Company and each of its Subsidiaries has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction
of its organization, has full corporate power and authority to own or lease
its properties and conduct its business as described in the Registration
Statement and the Prospectus and as is currently being conducted by it and is
duly qualified as a foreign corporation and in good standing in all
jurisdictions in which the character of the property owned or leased or the
nature of the business transacted by it makes qualification necessary (except
where the failure to be so qualified would not have a material adverse effect
on the business, properties, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries, taken as a whole
(a "Consolidated Material Adverse Effect")). The Company and each of its
Subsidiaries is in possession of and operating in compliance with all
authorizations, licenses, certificates, consents, orders and permits from
federal, state, local and other governmental or regulatory authorities that
are necessary to the conduct of its or their business, all of which are valid
and in full force and effect, except for authorizations, licenses,
certificates, consents, orders and permits which would not have a
Consolidated Material Adverse Effect. Each contractual joint venture in
which the Company or any Subsidiary is involved and, to the Company's best
knowledge, each participant therein is operating in compliance with the terms
of its joint venture agreement except for any non-compliance that would not
have a Consolidated Material Adverse Effect.
(d) When any Preliminary Prospectus was filed with the Commission it
(i) contained all statements required to be contained therein and complied in
all respects with the requirements of the Securities Act, the Rules and
Regulations, the Securities Exchange Act of
3
1934, as amended (the "Exchange Act") and the rules and regulations of the
Commission thereunder (the "Exchange Act Rules and Regulations") and (ii) did
not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was or is declared effective
(the "Effective Date"), it (i) contained or will contain all statements
required to be contained therein and complied or will comply in all respects
with the requirements of the Securities Act, the Rules and Regulations, the
Exchange Act and the Exchange Act Rules and Regulations and (ii) did not or
will not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading. When
the Prospectus or any Term Sheet that is a part thereof or any amendment or
supplement to the Prospectus is filed with the Commission pursuant to Rule
424(b) (or, if the Prospectus or part thereof or such amendment or supplement
is not required to be so filed, when the Registration Statement or the
amendment thereto containing such amendment or supplement to the Prospectus
was or is declared effective) and on the Closing Date (defined below) and any
date on which Option Shares are to be purchased, the Prospectus, as amended
or supplemented at any such time, (i) contained or will contain all
statements required to be contained therein and complied or will comply in
all respects with the requirements of the Securities Act, the Rules and
Regulations and the Exchange Act Rules and Regulations and (ii) did not or
will not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (d) do not apply to statements or
omissions made in any Preliminary Prospectus, the Registration Statement or
any amendment thereto or the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Underwriter through the Representatives
specifically for use therein.
(e) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), there has not been (i)
any material loss or interference with the business of the Company or any of
its Subsidiaries (A) from fire, explosion, flood or other calamity, whether
or not covered by insurance, or (B) from any court or governmental action,
order or decree, or (ii) any material changes in the capital stock or, except
in the ordinary course of its business, long-term debt of the Company or any
of its Subsidiaries, or (iii) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company, or (iv) any
development known to the Company that might cause or result in a Consolidated
Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business, in each case of (i)-(iv) above other than as may
be set forth in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
Since such dates, except in the ordinary course of business, neither the
Company or any of its Subsidiaries has entered into any material transaction
not described in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) that
might cause or result in a Consolidated Material Adverse Effect.
4
(f) There is no agreement, contract, license, lease or other
document required to be described in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. All contracts
described in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), if any, are in full force and effect on
the date hereof, and neither the Company nor any of its direct or indirect
subsidiaries nor, to the best knowledge of the Company, any other party, is
in breach of or default under any such contract, which breach or default
would have a Consolidated Material Adverse Effect.
(g) The authorized and outstanding capital stock of the Company is
set forth in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), and the description of the capital stock
therein conforms with and accurately describes the rights set forth in the
instruments defining the same. The Shares are duly authorized and will, when
issued in accordance with the terms of this Agreement and against payment
therefor, be validly issued, fully paid and non-assessable, and the issuance
of the Shares is not subject to any preemptive or similar rights.
(h) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all applicable federal and
state securities laws and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities that
were not satisfied or waived. All of the issued shares of capital stock or
other equity interests of each Subsidiary have been duly authorized and validly
issued, are fully paid and non-assessable, have been issued in compliance with
all applicable laws, including securities laws, were not issued in violation of
or subject to any preemptive or other rights to subscribe for or purchase such
securities that were not satisfied or waived and are directly or indirectly
owned by the Company, except as otherwise set forth on Exhibit A hereto. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted or exercised thereunder,
set forth in the Prospectus (or, if the Prospectus is not in existence, in the
most recent Preliminary Prospectus), accurately and fairly present the
information required to be shown with respect to such plans, arrangements,
options and rights in all material respects. Other than this Agreement and the
options and warrants to purchase Common Stock described in the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus),
there are no options, warrants or other rights outstanding to subscribe for or
purchase any shares of the Company's capital stock from the Company. There are
no preemptive rights applicable to any shares of capital stock of the Company.
There are no options, warrants or other rights outstanding to subscribe for or
purchase any shares of the capital stock or registered capital of any Subsidiary
from such Subsidiary and no Subsidiary is subject to any obligation, commitment,
plan, arrangement or court or administrative orders with respect to the same.
There are no preemptive rights applicable to any shares of capital stock or
registered capital of the Subsidiaries. There are no restrictions upon the
voting or transfer of any of the Firm Shares or Option Shares pursuant to the
Company's certificate of incorporation, as amended to date ("Certificate of
Incorporation"), bylaws or other governing documents or any agreement to which
the Company is a party or by which it may be bound other than as described
5
in the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by this Agreement
gives rise to any rights, other than those which have been waived, for or
relating to the registration of any securities of the Company.
(i) The Company has full corporate power and authority to enter
into and perform its obligations under this Agreement and to issue, sell and
deliver the Shares. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding agreement of
the Company, and is enforceable against the Company in accordance with its
terms except insofar as enforceability may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and except insofar as the indemnification and contribution
provisions of Section 9 of this Agreement may be affected by public policy
concerns.
(j) Neither the Company nor any of its Subsidiaries is, nor with
the giving of notice or lapse of time or both would be, in violation of or in
default under, nor will the execution or delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement result in a
violation of or constitute a breach of or a default (including without
limitation with the giving of notice, the passage of time or otherwise) that
would result in a Consolidated Material Adverse Effect under the Certificate
of Incorporation, bylaws or other charter documents of the Company or any of
its Subsidiaries or any obligation, agreement, covenant or condition
contained in any material bond, debenture, note or other evidence of
indebtedness or in any contract, indenture, mortgage, deed of trust, loan
agreement, lease, license, joint venture or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which any of
its or their properties may be bound or affected. The Company has not
incurred any liability, direct or indirect, for any finders' or similar fees
payable on behalf of the Company or the Underwriters in connection with the
transactions contemplated by this Agreement. The performance by the Company
of its obligations under this Agreement will not violate any law, ordinance,
Rule or regulation or any order, writ, injunction, judgment or decree of any
governmental agency or body or of any court having jurisdiction over the
Company or any of its Subsidiaries or any of its or their properties that
would result in a Consolidated Material Adverse Effect, or result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company or any of its Subsidiaries that would result
in a Consolidated Material Adverse Effect. Except for permits and similar
authorizations required under the Securities Act, the Exchange Act or under
state securities or Blue Sky laws of certain jurisdictions and for such
permits and authorizations that have been obtained, no consent, approval,
authorization or order of any court, governmental agency or body, financial
institution or any other person is required in connection with the
consummation of the transactions contemplated by this Agreement (except such
additional steps as may be required by the National Association of Securities
Dealers, Inc. (the "NASD").
(k) Each of the Company and its Subsidiaries has good and
marketable title, or has valid rights to use, all items of real and personal
property which are material to the business of the Company and its
Subsidiaries, taken as a whole, free and clear, except as described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
6
existence, the most recent Preliminary Prospectus), of all liens,
encumbrances and claims that when taken as a whole would result in a
Consolidated Material Adverse Effect and subject to such exceptions that do
not adversely affect the present or prospective business of the Company or
its Subsidiaries.
(l) Each of the Company and its Subsidiaries holds adequate rights
to use all material patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, tradenames and copyrights described or
referred to in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) which
are necessary for the conduct of its or their business as described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus); and the Company has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, tradenames or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Consolidated Material Adverse Effect.
(m) There is no litigation or governmental proceeding to which the
Company or any of its Subsidiaries is a party or to which any property of the
Company or any of its Subsidiaries is subject which is pending or, to the
best knowledge of the Company, is threatened or contemplated against the
Company or any of its Subsidiaries that might have a Consolidated Material
Adverse Effect, that might prevent consummation of the transactions
contemplated by this Agreement or that is required to be disclosed in the
Registration Statement or Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(n) Except as disclosed in the Prospectus (or, if the Prospectus
is not in existence, in the most recent Preliminary Prospectus), neither the
Company nor any of its Subsidiaries is in violation of any law, order,
ordinance, Rule or Regulation of which it is aware, or any order, writ,
injunction, judgment or decree of any governmental agency or body or of any
court, to which it or its properties (whether owned or leased) may be
subject, which violation would have a Consolidated Material Adverse Effect.
(o) Neither the Company nor, to the Company's knowledge, any of
the Selling Stockholders have taken, directly or indirectly, any action
designed to cause or result in, or which has constituted or will cause or
result in, under the Exchange Act, the Exchange Act Rules and Regulations or
otherwise, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares other than any
actions which may have been taken or may be taken by the Underwriters. No
bid or purchase by the Company and, to the best knowledge of the Company, no
bid or purchase of any Selling Stockholder or, to the best knowledge of the
Company, any bid or purchase that could be attributed to the Company (as a
result of bids or purchases by an "affiliated purchaser" within the meaning
of Regulation M under the Exchange Act) for or of the Common Stock, any
securities of the same class or series as the Common Stock or any securities
convertible into or exchangeable for or that represent any right to acquire
the Common Stock is now pending or in progress or will have commenced at any
time prior to the completion of the distribution of the Shares.
7
(p) Each of PricewaterhouseCoopers LLP, Ernst & Young LLP, ▇▇▇▇▇▇
& ▇▇▇▇▇ and Rubin, Brown, Gornstein & Co. LLP, whose reports appear in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) are, and during the
periods covered by their reports in the Registration Statement were,
independent accountants as required by the Securities Act and the Rules and
Regulations. The historical and pro forma financial statements, together with
related notes and schedules, and other financial information included in the
Registration Statement, each Preliminary Prospectus and the Prospectus
present fairly (or, if the Prospectus has not been filed with the Commission,
as to the Prospectus, will present fairly) the financial position, results of
operations, cash flows and changes in stockholders' equity of the Company and
its Subsidiaries, taken as a whole, at the dates and for the periods
indicated, and the historical and pro forma financial statements, together
with relates notes, schedules and other financial information included in the
Registration Statement present fairly the information required to be stated
therein in all material respects. Such financial statements, notes,
schedules and other financial information have been prepared in accordance
with U.S. generally accepted accounting principles applied on a consistent
basis throughout the periods presented and all adjustments necessary for a
fair presentation of results for such periods have been made, except as may
be stated therein. The selected and summary financial and statistical data
included in the Registration Statement and the Prospectus present fairly (or,
if the Prospectus has not been filed with the Commission, as to the
Prospectus, will present fairly) the information shown therein and have been
compiled on a basis consistent with the audited financial statements
presented therein. No other financial statements or schedules are required
to be included in the Registration Statement.
(q) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail in all
material respects, the transactions in and dispositions of the assets of the
Company and its Subsidiaries. The systems of internal accounting controls
maintained by the Company and its Subsidiaries are sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary (x) to permit preparation of financial statements in
conformity with U.S. generally accepted accounting principles and (y) to
maintain accountability for assets; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(r) The Company has delivered to ▇▇▇ ▇▇▇▇▇▇ the written agreement
of each of its executive officers and directors (collectively, the "Holders")
to the effect that each of the Holders will not, without the prior written
consent of ▇▇▇ ▇▇▇▇▇▇, for a period of 180 days following the date of this
Agreement, directly or indirectly offer, sell, grant any option to purchase,
contract to sell, or otherwise dispose of any shares of Common Stock, any
options or warrants to purchase any shares of Common Stock or any securities
convertible into or exchangeable for shares of Common Stock owned by the
Holder or with respect to which the Holder has the power of disposition, or
announce any offer to do so.
8
(s) No labor disturbance by the employees of the Company or any of
its Subsidiaries exists, or, to the knowledge of the Company, is imminent,
contemplated or threatened; and the Company is not aware of an existing,
imminent or threatened labor disturbance by the employees of any principal
suppliers, manufacturers, contractors or others which such disturbance might
be expected to result in any Consolidated Material Adverse Effect. No
collective bargaining agreement exists with any of the Company's employees or
those of its Subsidiaries and, to the best knowledge of the Company, no such
agreement is imminent.
(t) Each of the Company and its Subsidiaries has filed all
federal, state, local and foreign tax returns which are required to be filed
or has requested extensions thereof and has paid all taxes, including
withholding taxes, penalties and interest, assessments, fees and other
charges to the extent that the same have become due and payable. To the best
of the Company's knowledge, no tax assessment or deficiency has been made or
proposed against the Company or any of its Subsidiaries nor has the Company
or any of its Subsidiaries received any notice of any proposed tax assessment
or deficiency.
(u) Except as set forth in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), there are no
outstanding contracts, loans, advances or guaranties of indebtedness by the
Company or any of its Subsidiaries to or for the benefit of any of (i) its
"affiliates," as such term is defined in the Rules and Regulations, (ii)
except for immaterial advances in the ordinary course of business, any of the
officers or directors of any of its Subsidiaries, or (iii) any of the members
of the families of any of them, in each case, required to be set forth in the
Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus), under the Securities Act or Rules and Regulations.
(v) To the best of the Company's knowledge, neither the Company
nor any of its Subsidiaries has at any time within the last five years: (i)
made any contributions to any candidate for political office, or failed to
disclose fully any such contribution, in violation of applicable law; (ii)
made any payment to any local, state, federal or foreign governmental officer
or official, or other person charged with similar public or quasi-public
duties, other than payments required or allowed by all applicable laws; or
(iii) violated any applicable provision of the Foreign Corrupt Practices Act
of 1977, as amended.
(w) To the best of the Company's knowledge, neither the Company
nor any of its Subsidiaries has any liability, absolute or contingent,
relating to: (i) public health or safety; (ii) worker health or safety; or
(iii) product defect or warranty (all except as would not reasonably be
expected to have a Consolidated Material Adverse Effect or as are disclosed
in the Registration Statement and Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus)).
(x) The Company has not distributed and will not distribute prior
to the Closing Date or on or prior to any date on which the Option Shares are
to be purchased, as the case may be, any prospectus or other offering
material in connection with the offering and sale of the Shares other than
the Preliminary Prospectus(es), the Prospectus, the Registration Statement
9
and any other material which may be permitted by the Securities Act and the
Rules and Regulations.
(y) Subject to official notice of issuance, the Shares have been
approved for inclusion for listing on the Nasdaq National Market.
(z) The Company is not now, and intends to conduct its affairs in
the future in such a manner so that it will not become, an investment company
within the meaning of the Investment Company Act of 1940, as amended.
(aa) The Company and each of its Subsidiaries is in compliance in
all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) for which the Company or any of its
Subsidiaries would have any liability has occurred; neither the Company nor
any of its Subsidiaries has incurred or expects to incur liability under (1)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (2) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Company or any
of its Subsidiaries would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would
cause the loss of such qualification (all of the above except as would not
reasonably be expected to have a Consolidated Material Adverse Effect).
(bb) Except as set forth in the Prospectus (or if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there has, to the
best knowledge of the Company, been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, hazardous wastes or hazardous substances by the Company or any of its
Subsidiaries (or any of their predecessors in interest) at, upon or from any
of the property now or previously owned or leased by the Company or its
Subsidiaries in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action
under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit; there has to the best knowledge of the Company been no
material spill, discharge, leak, emission, injection, escape, dumping or
release of any kind onto such property or into the environment surrounding
such property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or any of its
Subsidiaries or with respect to which the Company or any of its Subsidiaries
have knowledge; and the terms "hazardous wastes," "toxic wastes" and
"hazardous substances" shall have the meanings specified in any applicable
local, state, federal and foreign laws or regulations with respect to
environmental protection (all of the above except as would not reasonably be
expected to have a Consolidated Material Adverse Effect).
(cc) The Company and each of its Subsidiaries are insured against
such losses and risks and in such amounts as are customary in the businesses
in which they are engaged; neither the Company nor any such Subsidiary has
been refused any insurance coverage sought or
10
applied for; and neither the Company nor any such Subsidiary has any reason
to believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would
not cause a Consolidated Material Adverse Effect.
(dd) Each certificate signed by any officer of the Company, as
amended in writing from time to time, and delivered to the Representatives or
Underwriters' counsel pursuant to Section 7 of this Agreement shall be deemed
to be a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder, severally and not jointly, represents and warrants to
and agrees with each Underwriter and the Company that:
(a) Such Selling Stockholder now has and on the Closing Date will
have good and marketable title to the Shares to be sold by such Selling
Stockholder, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than pursuant to this
Agreement; and upon delivery of such Shares hereunder and payment of the
purchase price as herein contemplated, each of the Underwriters who acquire
such Shares without knowledge of any adverse claim, will obtain good and
marketable title to the Shares purchased by it from such Selling Stockholder,
free and clear of any pledge, lien, security interest pertaining to such
Selling Stockholder or such Selling Stockholder's property, encumbrance,
claim or equitable interest, or any liability to or claims of any creditor,
devisee, legatee or beneficiary of such Selling Stockholder.
(b) Such Selling Stockholder has duly authorized (if applicable),
executed and delivered, in the form heretofore furnished to the
Representatives, an irrevocable Power of Attorney (the "Power of Attorney")
appointing ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ as attorneys-in-fact (collectively,
the "Attorneys" and individually, an "Attorney") and a Letter of Transmittal
and Custody Agreement (the "Custody Agreement") with U.S. State Transfer
Corporation, as custodian (the "Custodian"); each of the Power of Attorney
and the Custody Agreement constitutes a valid and binding agreement on the
part of such Selling Stockholder, enforceable in accordance with its terms,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles and
except insofar as the indemnification and contribution provisions of Section
9 of this Agreement may be affected by public policy concerns; and each of
such Selling Stockholder's Attorneys, acting alone, is authorized to execute
and deliver this Agreement and the certificate referred to in Section 7(f)
hereof on behalf of such Selling Stockholder, to determine the purchase price
to be paid by the several Underwriters to such Selling Stockholder as
provided in Section 3 hereof, to authorize the delivery of the Firm Shares to
be sold by such Selling Stockholder under this Agreement and to duly endorse
(in blank or otherwise) the certificate or certificates representing such
Shares or a stock power or powers with respect thereto, to accept payment
therefor, and otherwise to act on behalf of such Selling Stockholder in
connection with this Agreement.
11
(c) All consents, approvals, authorizations and orders required
for the execution and delivery by such Selling Stockholder of the Power of
Attorney and the Custody Agreement, the execution and delivery by or on
behalf of such Selling Stockholder of this Agreement and the sale and
delivery of the Firm Shares to be sold by such Selling Stockholder under this
Agreement (other than, at the time of the execution hereof (if the
Registration Statement has not yet been declared effective by the
Commission), the issuance of the order of the Commission declaring the
Registration Statement effective and such consents, approvals, authorizations
or orders as may be necessary under state or other securities or Blue Sky
laws) have been obtained and are in full force and effect; such Selling
Stockholder, if other than a natural person, has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization as the type of entity that it purports to be; and such Selling
Stockholder has full legal right, power and authority to enter into and
perform its obligations under this Agreement and such Power of Attorney and
Custody Agreement, and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Stockholder under this Agreement.
(d) Certificates in negotiable form for all Firm Shares to be sold
by such Selling Stockholder under this Agreement, together with a stock power
or powers duly endorsed in blank by such Selling Stockholder, have been
placed in custody with the Custodian for the purpose of effecting delivery
hereunder.
(e) This Agreement has been duly authorized by each Selling
Stockholder that is not a natural person and has been duly executed and
delivered by or on behalf of such Selling Stockholder and is a valid and
binding agreement of such Selling Stockholder, enforceable in accordance with
its terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and except insofar as the indemnification and contribution
provisions of Section 9 of this Agreement may be affected by public policy
concerns; and the performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or violation of
any of the terms and provisions of or constitute a material default under any
bond, debenture, note or other evidence of indebtedness, or under any lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture
or other agreement or instrument to which such Selling Stockholder is a party
or to the best of such Selling Stockholder's knowledge by which such Selling
Stockholder, or any Firm Shares to be sold by such Selling Stockholder
hereunder, may be bound or, to the best of such Selling Stockholders'
knowledge, result in any violation of any law, order, rule, regulation, writ,
injunction, judgment or decree of any court, government or governmental
agency or body, domestic or foreign, having jurisdiction over such Selling
Stockholder or over the properties of such Selling Stockholder, or, if such
Selling Stockholder is other than a natural person, result in any violation
of any provisions of the charter, bylaws or other organizational documents of
such Selling Stockholder.
(f) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Common Stock.
12
(g) Such Selling Stockholder has not distributed to the public and
will not distribute to the public any prospectus or other offering material
in connection with the offering and sale of the Shares.
(h) All information furnished by or on behalf of such Selling
Stockholder relating to such Selling Stockholder and the Firm Shares that is
contained in the representations and warranties of such Selling Stockholder
in such Selling Stockholder's Power of Attorney or set forth in the
Registration Statement or the Prospectus is, and at the time the Registration
Statement became or becomes, as the case may be, effective and at all times
subsequent thereto up to and on the Closing Date was or will be, true,
correct and complete in all material respects, and such information furnished
by or on behalf such Selling Stockholder does not, and at the time the
Registration Statement became or becomes, as the case may be, effective and
at all times subsequent thereto up to and on the Closing Date will not,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they are made, not misleading.
(i) Such Selling Stockholder will review the Prospectus and will
comply with all agreements and satisfy all conditions on its part to be
complied with or satisfied pursuant to this Agreement on or prior to the
Closing Date and will advise one of its Attorneys and ▇▇▇ ▇▇▇▇▇▇ & Company
prior to the Closing Date if any statement to be made on behalf of such
Selling Stockholder in the certificate contemplated by Section 7(f) would be
inaccurate if made as of such date.
(j) Such Selling Stockholder does not have, or has waived prior to
the date hereof, any preemptive right, co-sale right or right of first
refusal or other similar right to purchase any of the Shares that are to be
sold by the Company or any of the other Selling Stockholders to the
Underwriters pursuant to this Agreement; such Selling Stockholder does not
have, or has waived prior to the date hereof, any registration right or other
similar right to participate in the offering made by the Prospectus, other
than such rights of participation as have been satisfied by the participation
of such Selling Stockholder in the transactions to which this Agreement
relates in accordance with the terms of this Agreement; and such Selling
Stockholder does not own any warrants, options or similar rights to acquire,
and does not have any right or arrangement to acquire, any capital stock,
rights, warrants, options or other securities from the Company, other than
those described in the Registration Statement and the Prospectus or those
which are not required to be described in the Registration Statement and the
Prospectus.
(k) Such Selling Stockholder is not aware (without having
conducted any investigation or inquiry) that any of the representations and
warranties of the Company set forth in Section 1 above is untrue or
inaccurate in any material respect.
(l) To the best of such Selling Stockholder's knowledge, when any
Preliminary Prospectus was filed with the Commission it (i) contained all
statements required to be contained therein and complied in all respects with
the requirements of the Securities Act, the Rules and Regulations, the
Exchange Act and the Exchange Act Rules and Regulations and (ii) did not
include any untrue statement of a material fact or omit to state any material
fact
13
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. To the best of
such Selling Stockholder's knowledge, on the Effective Date, the Registration
Statement (i) contained or will contain all statements required to be
contained therein and complied or will comply in all respects with the
requirements of the Securities Act, the Rules and Regulations, the Exchange
Act and the Exchange Act Rules and Regulations and (ii) did not or will not
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. To the best of such Selling
Stockholder's knowledge, when the Prospectus or any Term Sheet that is a part
thereof or any amendment or supplement to the Prospectus is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or part thereof or
such amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing such amendment or
supplement to the Prospectus was or is declared effective) and on any date on
which Option Shares are to be purchased by the Underwriters pursuant to this
Agreement, the Prospectus, as amended or supplemented at any such time, (i)
contained or will contain all statements required to be contained therein and
complied or will comply in all respects with the requirements of the
Securities Act, the Rules and Regulations and the Exchange Act Rules and
Regulations and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The foregoing provisions of this paragraph (l) do
not apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for use therein.
3. PURCHASE, SALE AND DELIVERY OF SHARES
(a) On the basis of the representations, warranties, covenants and
agreements of the Company, the Selling Stockholders and the Underwriters
contained in this Agreement and subject to the terms and conditions set forth
in this Agreement, the Company and the Selling Stockholders agree to sell to
the several Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company and the Selling Stockholders, at a
purchase price of $ per share, the respective number of Firm Shares set
forth opposite the name of such Underwriter on Schedule I to this Agreement
(subject to adjustment as provided in Section 10 of this Agreement).
(b) On the basis of the several (and not joint) covenants and
agreements of the Underwriters contained in this Agreement and subject to the
terms and conditions set forth in this Agreement, the Company grants an
option to the several Underwriters to purchase from the Company all or any
portion of the Option Shares at the same price per share as the Underwriters
are to pay for the Firm Shares. This option may be exercised only to cover
over-allotments in the sale of the Firm Shares by the Underwriters and may be
exercised in whole or in part at any time (but not more than once) on or
before the 45th day after the date of the Prospectus first filed pursuant to
Rule 424(b) under the Securities Act upon written or telecopied notice by the
Representatives to the Company setting forth the aggregate number of Option
Shares as to which
14
the several Underwriters are exercising the option and the settlement date;
notwithstanding the foregoing, if the 45th day after the date of the
Prospectus first filed pursuant to Rule 424(b) under the Securities Act is
not a business day, then the time period for delivery of the notice of the
exercise of the over-allotment option shall automatically be extended until
the first business day following the 45th day after the date of the
Prospectus. The Option Shares shall be purchased severally, and not jointly,
by each Underwriter, if purchased at all, in the same proportion that the
number of Firm Shares set forth opposite the name of the Underwriter in
Schedule I to this Agreement bears to the total number of Firm Shares to be
purchased by the Underwriters under Section 3(a) above, subject to such
adjustments as the Representatives in their absolute discretion shall make to
eliminate any fractional shares. Delivery of certificates for the Option
Shares, and payment therefor, shall be made as provided in Section 3(c) and
Section 3(d) below. Nothing contained in this Section 3 shall relieve any
defaulting Underwriter of its liability, if any, to the Company or to the
remaining Underwriters for damages occasioned by its default hereunder.
(c) Delivery of the Firm Shares and payment therefor, shall be
made at the office of ▇▇▇▇▇▇ Godward LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇ (or at such other location as is agreed by the parties), at
6:30 a.m., San Francisco 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 and the Representatives, or as provided in Section 10
of this Agreement. The date and hour of delivery and payment for the Firm
Shares are referred to in this Agreement as the "Closing Date." As used in
this Agreement, "business day" means a day on which the Nasdaq National
Market is open for trading and on which banks in New York and California are
open for business and not permitted by law or executive order to be closed.
(d) Delivery of the Option Shares and payment therefor, shall be
made at the office of ▇▇▇▇▇▇ Godward LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇ (or at such other location as is agreed by the parties), at
6:30 a.m., San Francisco time, on the date specified by the Representatives
(which shall be three business days after the exercise of the option, but not
in excess of the period of time specified in the Rules and Regulations).
(e) Payment of the purchase price for the Firm Shares by the
several Underwriters shall be made at the election of the Representatives by
(i) certified or official bank check or checks drawn in next-day funds,
payable to the order of the Company and to the Custodian on behalf of the
Selling Stockholders, or (ii) wire transfer of immediately available funds to
such account of the Company and of the Custodian as the Company and the
Custodian shall advise the Representatives in writing at least three business
days prior to the Closing Date. Such payment shall be made upon delivery of
certificates for the Firm Shares to the Representatives for the respective
accounts of the several Underwriters. Certificates for the Firm Shares to be
delivered to the Representatives shall be registered in such name or names
and shall be in such denominations as the Representatives may request at
least two business days before the Closing Date. Such certificates will be
made available to the Underwriters for inspection, checking and packaging at
the offices of BT ▇▇▇▇ ▇▇▇▇▇, New York, New York, not less than one full
business day prior to the Closing Date. It is understood that the
Representatives, individually and not on behalf of the Underwriters, may (but
shall not be obligated to) make
15
payment to the Company and the Custodian on behalf of the Selling
Stockholders for Firm Shares to be purchased by any Underwriter whose check
shall not have been received by the Representatives on the Closing Date for
the account of such Underwriter. Any such payment shall not relieve such
Underwriter from any of its obligations hereunder.
(f) Payment of the purchase price for the Option Shares by the
several Underwriters shall be made at the election of the Representatives by
(i) certified or official bank check or checks drawn in next-day funds,
payable to the order of the Company, or (ii) wire transfer of immediately
available funds to an account specified by the Company in writing at least
three business days prior to the date on which any such Option Shares are
purchased. Such payment shall be made upon delivery of certificates for the
Option Shares to the Representatives for the respective accounts of the
several Underwriters. Certificates for the Option Shares to be delivered to
the Representatives shall be registered in such name or names and shall be in
such denominations as the Representatives may request at least two business
days before the date on which any Option Shares are purchased by the
Underwriters pursuant to this Agreement. Such certificates will be made
available to the Underwriters for inspection, checking and packaging at the
offices of BT ▇▇▇▇ ▇▇▇▇▇, New York, New York, not less than one full business
day prior to the Closing Date. It is understood that the Representatives,
individually and not on behalf of the Underwriters, may (but shall not be
obligated to) make payment to the Company for Option Shares to be purchased
by any Underwriter whose check shall not have been received by the
Representatives on any date on which Option Shares are purchased for the
account of such Underwriter. Any such payment shall not relieve such
Underwriter from any of its obligations hereunder.
(g) It is understood that the several Underwriters propose to
offer the Shares for sale to the public as soon as the Representatives deems
it advisable to do so. The Firm Shares are to be initially offered to the
public at the public offering price set forth (or to be set forth) in the
Prospectus. The Representatives may from time to time thereafter change the
public offering price and other selling terms.
(h) The information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters), the
legends respecting passive market making and stabilization set forth on the
inside front cover page and the statements set forth under the caption
"Underwriting" in any Preliminary Prospectus, the Registration Statement and
the Prospectus filed pursuant to Rule 424(b) constitute the only information
furnished by the Underwriters to the Company for inclusion in any Preliminary
Prospectus, the Prospectus or the Registration Statement.
4. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and
agrees with the several Underwriters as follows:
(a) The Company will use its best efforts to cause the
Registration Statement, and any amendment thereof, if not effective at the
time of execution of this Agreement, to become effective as promptly as
possible. If the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required
under
16
Rule 424(b), the Company will file the Prospectus, properly completed (and in
form and substance reasonably satisfactory to the Underwriters) pursuant to
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company will
not file the Prospectus, any amended Prospectus, any amendment (including
post-effective amendments) to the Registration Statement or any supplement to
the Prospectus without (i) advising the Representatives of and, a reasonable
time prior to the proposed filing of such amendment or supplement, furnishing
the Representatives with copies thereof and (ii) obtaining the prior consent
of the Representatives to such filing. The Company will prepare and file
with the Commission, promptly upon the request of the Representatives, any
amendment to the Registration Statement or supplement to the Prospectus that
may be necessary or advisable in connection with the distribution of the
Shares by the Underwriters and use its best efforts to cause the same to
become effective as promptly as possible.
(b) The Company will promptly advise the Representatives (i) when
the Registration Statement becomes effective, (ii) when any post-effective
amendment thereof becomes effective, (iii) of any request by the Commission
for any amendment of or supplement to the Registration Statement or the
Prospectus or for any additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that
purpose and (v) of the receipt by the Company of any notification with
respect to the suspension of the registration, qualification or exemption
from registration or qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the issuance of any such stop
order or suspension and, if issued, to obtain as soon as possible the
withdrawal thereof.
(c) The Company will (i) on or before the Closing Date, deliver to
the Representatives and to Underwriters' counsel a signed copy of the
Registration Statement as originally filed and of each amendment thereto
filed prior to the time the Registration Statement becomes effective and,
promptly upon the filing thereof, a signed copy of each post-effective
amendment, if any, to the Registration Statement (together with, in each
case, all exhibits thereto unless and to the extent previously furnished to
the Representatives) and all documents filed by the Company with the
Commission under the Exchange Act and deemed to be incorporated by reference
into any Preliminary Prospectus or the Prospectus and will also deliver to
the Representatives, for distribution to the several Underwriters, a
sufficient number of additional conformed copies of each of the foregoing
(excluding exhibits) so that one copy of each may be distributed to each
Underwriter, (ii) as promptly as possible deliver to each of the
Representatives and send to the several Underwriters, at such office or
offices as the Representatives may designate, as many copies of the
Prospectus as the Representatives may reasonably request and (iii) thereafter
from time to time during the period in which a prospectus is required by law
to be delivered by an Underwriter, likewise send to the Underwriters as many
additional copies of the Prospectus and as many copies of any supplement to
the Prospectus and of any amended Prospectus, filed by the Company with the
Commission, as the Representatives may reasonably request for the purposes
contemplated by the Securities Act.
17
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter any event shall occur as a
result of which it is necessary to supplement or amend the Prospectus in
order to make the Prospectus not misleading or so that the Prospectus will
not omit to state a material fact necessary to be stated therein, in each
case at the time the Prospectus is delivered to a purchaser of the Shares, or
if it shall be necessary to amend or to supplement the Prospectus to comply
with the Securities Act or the Rules and Regulations, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus
or an amended Prospectus so that the Prospectus as so supplemented or amended
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein not
misleading and so that it then will otherwise comply with the Securities Act
and the Rules and Regulations. If, after the public offering of the Shares
by the Underwriters commences and during such period, the Underwriters
propose to vary the terms of offering thereof by reason of changes in general
market conditions or otherwise, the Representatives will advise the Company
in writing of the proposed variation and if, in the opinion either of counsel
for the Company or counsel for the Underwriters, such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus
or an amended Prospectus setting forth such variation. The Company
authorizes the Underwriters and all dealers to whom any of the Shares may be
sold by the Underwriters to use the Prospectus, as from time to time so
amended or supplemented, in connection with the sale of the Shares in
accordance with the applicable provisions of the Securities Act and the Rules
and Regulations for such period.
(e) The Company will cooperate with the Representatives and
Underwriters' counsel in the qualification or registration of the Shares for
offer and sale under the securities or blue sky laws of such jurisdictions as
the Representatives may designate and, if applicable, in connection with
exemptions from such qualification or registration and, during the period in
which a Prospectus is required by law to be delivered by an Underwriter or a
dealer, in keeping such qualifications, registrations and exemptions in
effect; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify to do business as a
foreign corporation in any jurisdiction in which it is not so qualified. The
Company will, from time to time, prepare and file such statements, reports
and other documents as are or may be required to continue such
qualifications, registrations and exemptions in effect for so long a period
as the Representatives may reasonably request for the distribution of the
Shares.
(f) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to the Representatives and to
each Underwriter who may so request in writing copies of (i) all periodic and
special reports furnished by it to stockholders of the Company, (ii) all
information, documents and reports filed by it with the Commission, the
Nasdaq National Market, any securities exchange or the NASD, (iii) all
material press releases and material news items or articles in respect of the
Company, its products or affairs released or prepared by the Company (other
than promotional and marketing materials disseminated solely to customers and
potential customers of the Company in the ordinary course of business) and
(iv) any additional information concerning the Company or its business which
the Representatives may reasonably request.
18
(g) As soon as practicable, but not later than the 45th day
following the end of the fiscal quarter first ending after the first
anniversary of the Effective Date, the Company will make generally available
to its securities holders and furnish to the Representatives an earnings
statement or statements in accordance with Section 11(a) of the Securities
Act and Rule 158 thereunder.
(h) The Company agrees that, without ▇▇▇ ▇▇▇▇▇▇'▇ prior written
consent, the Company will not, and will not allow the Holders to, in each
case directly or indirectly, offer, sell, grant any option to purchase,
contract to sell, or otherwise sell or dispose of any shares of Common Stock,
or any securities convertible into or exchangeable for shares of Common Stock
for a period of 180 days following the date of this Agreement, excluding only
(i) the sale of the Shares to be sold to the Underwriters pursuant to this
Agreement and (ii) the grant by the Company of options to purchase Common
Stock (provided that none of such options are or become exercisable during
such 180-day period) or the issuance by the Company of shares of Common Stock
upon the exercise in accordance with options previously granted under the
Company's presently authorized stock option plans as described in the
Prospectus or in documents incorporated therein, or upon the exercise in
accordance with their terms of previously granted warrants which are
described in the Prospectus or in documents incorporated therein.
(i) The Company will establish and maintain all financial control
and financial reporting systems customary for well-established public
companies, including but not limited to adequate management information and
reporting systems, and will employ and maintain, with adequate staffing
levels at headquarters and at each significant Subsidiary or significant
functional division, and at each level of responsibility, an employee staff
of well trained and highly qualified financial professionals. [AS SOON AS
PRACTICABLE AFTER THE CLOSING DATE, THE COMPANY WILL HIRE A FULL-TIME
CORPORATE CONTROLLER WITH SUFFICIENT EXPERIENCE AND AUTHORITY TO ASSIST THE
CHIEF FINANCIAL OFFICER OF THE COMPANY IN MANAGING AND IMPLEMENTING ADEQUATE
MANAGEMENT INFORMATION AND REPORTING SYSTEMS. DID THIS HAPPEN?]
(j) The Company will apply the net proceeds from the offering
received by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(k) The Company will, and at all times for a period of at least
five years after the date of this Agreement, unless such securities are then
listed on a national securities exchange, use its best efforts to cause the
Common Stock (including the Shares) to be included for listing on the Nasdaq
National Market, and the Company will comply with all registration, filing,
reporting and other requirements within its control of the Exchange Act and
the Nasdaq National Market which may from time to time be applicable to the
Company.
(l) The Company will use commercially reasonable efforts to
maintain insurance of the types and in the amounts which it deems adequate
for its business consistent with insurance coverage maintained by companies
of similar size and engaged in similar businesses including, but not limited
to, general liability insurance covering all real and personal
19
property owned or leased by the Company against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against.
(m) The Company will issue no press release prior to the purchase
by the Underwriters of all of the Option Shares or within 45 days after the
Closing Date, whichever is earlier, without prior consultation with ▇▇▇
▇▇▇▇▇▇ with respect to the contents thereof.
5. FURTHER AGREEMENT OF SELLING STOCKHOLDERS. The Selling
Stockholders, severally and not jointly, covenant and agree with the several
Underwriters as follows:
(a) Each Selling Stockholder agrees that, without ▇▇▇ ▇▇▇▇▇▇'▇
prior written consent, such Selling Stockholder will not, directly or
indirectly, offer, sell, grant any option to purchase, contract to sell, or
otherwise dispose of any shares of Common Stock, or any securities
convertible into or exchangeable for shares of Common Stock for a period of
180 days following the date of this Agreement, excluding only the sale of the
Firm Shares to be sold to the Underwriters pursuant to this Agreement.
6. FEES AND EXPENSES.
(a) The Company and the Selling Stockholders agree with each
Underwriter that:
(i) The Company will pay and bear all costs and expenses in
connection with: the preparation, printing and filing of the Registration
Statement (including financial statements, schedules and exhibits),
Preliminary Prospectuses and the Prospectus, any drafts of each of them and
any amendments or supplements to any of them; the duplication or, if
applicable, printing (including all drafts thereof) of this Agreement, the
Agreement Among Underwriters, any Selected Dealer Agreements, the Blue Sky
Survey, the Underwriters' Questionnaire and the Power of Attorney and the
duplication and printing (including of drafts thereof) of any other
underwriting documents and material (including but not limited to marketing
memoranda and other marketing material) in connection with the offering,
purchase, sale and delivery of the Shares; the issuance, transfer and
delivery of the Shares under this Agreement to the several Underwriters,
including all expenses, taxes, duties, fees and commissions on the purchase
and sale of the Shares and Nasdaq National Market brokerage and transaction
levies with respect to the purchase and, if applicable, the sale of the
Shares incident to the sale and delivery of the Shares by the Company and the
Selling Stockholders to the Underwriters; the cost of printing all stock
certificates; the Transfer Agent's and Registrar's fees; the Custodian's
fees; the fees and disbursements of counsel for the Company; all fees and
other charges of the Company's independent public accountants and any other
experts named in the Prospectus; the cost of furnishing to the several
Underwriters copies of the Registration Statement (including appropriate
exhibits), Preliminary Prospectus(es) and the Prospectus, the agreements and
other documents and instruments referred to above and any amendments or
supplements to any of the foregoing; NASD filing fees and reasonable fees and
disbursements of Underwriters' counsel incurred in connection with the review
by the NASD of the terms of the Offering of the Shares; the cost of
qualifying or registering the Shares (or obtaining exemptions
20
from qualification or registration) under the laws of such jurisdictions as
the Representatives may designate (including filing fees in connection with
such state securities or blue sky qualifications, registrations and
exemptions) and preparing the preliminary and any final Blue Sky Memorandum
(including reasonable fees and disbursements of Underwriters' counsel in
connection therewith); all fees and expenses in connection with qualification
of the Shares for inclusion for listing on the Nasdaq National Market; the
Company's share of roadshow expenses; and all other expenses incurred by the
Company in connection with the performance of its obligations hereunder. The
Selling Stockholders will pay and bear all costs associated with the
Custodian and Custodian's fees. Except as provided in this Section 6, the
Underwriters, including the Representatives, shall bear all expenses incurred
by it in connection with the offering, including (but not limited to) the
expenses of its own counsel. The provisions of this Section 7(a)(i) are
intended to relieve the Underwriters from the payment of the expenses and
costs which the Selling Stockholders and the Company hereby agree to pay, but
shall not affect any agreement which the Selling Stockholders and the Company
may make, or may have made, for the sharing of any of such expenses and
costs. Such agreements shall not impair the obligations of the Company and
the Selling Stockholders hereunder to the several Underwriters.
(ii) In addition to its obligations under Section 9(a) of this
Agreement, the Company agrees that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other proceeding arising out
of or based upon any loss, claim, damage or liability described in Section
9(a) of this Agreement, it will reimburse or advance to or for the benefit of
the Underwriters, and each of them, on a monthly basis (or more often, if
requested) for all legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of the Company's obligation to reimburse
or advance for the benefit of the Underwriters for such expenses or the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any portion, or all, of
any such interim reimbursement payments or advances are so held to have been
improper, the Underwriters receiving the same shall promptly return such
amounts to the Company together with interest, compounded daily, at the prime
rate (or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by Bank of America, NT&SA, San
Francisco, California (the "Prime Rate"), but not in excess of the maximum
rate permitted by applicable law. Any such interim reimbursement payments or
advances that are not made to or for the Underwriters within 30 days of a
request for reimbursement or for an advance shall bear interest at the Prime
Rate, but not in excess of the maximum rate permitted by applicable law, from
the date of such request until the date paid.
(b) In addition to their obligations under Section 9(c) of this
Agreement, the Underwriters severally and in proportion to their obligation
to purchase Firm Shares as set forth on Schedule I hereto, agree that, as an
interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any loss, claim,
damage or liability described in Section 9(c) of this Agreement, they will
reimburse or advance to (for the benefit of the Company on a monthly basis
(or more often, if requested) for all legal and other expenses incurred by
the Company in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial
21
determination as to the propriety or enforceability of the Underwriters'
obligation to reimburse or advance for the benefit of the Company for such
expenses and the possibility that such payments or advances might later be
held to have been improper by a court of competent jurisdiction. To the
extent that any portion, or all, of any such interim reimbursement payments
or advances are so held to have been improper, the Company shall promptly
return such amounts to the Underwriters together with interest, compounded
daily, at the Prime Rate, but not in excess of the maximum rate permitted by
applicable law. Any such interim reimbursement payments or advances that are
not made to the Company within 30 days of a request for reimbursement or for
an advance shall bear interest at the Prime Rate, but not in excess of the
maximum rate permitted by applicable law, from the date of such request until
the date paid.
(c) Any controversy arising out of the operation of the interim
reimbursement and advance arrangements set forth in Sections 6(a)(ii) and
6(b) above, including the amounts of any requested reimbursement payments or
advance, the method of determining such amounts and the basis on which such
amounts shall be apportioned among the indemnifying parties, shall be settled
by arbitration conducted under the provisions of the Constitution and Rules
of the Board of Governors of the New York Stock Exchange, Inc. or pursuant to
the Code of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or a written notice
of intention to arbitrate, therein electing the arbitration tribunal. If the
party demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to the demand or
notice is authorized to do so. Any such arbitration will be limited to the
interpretation and obligations of the parties under the interim reimbursement
and advance provisions contained in Sections 6(a)(ii) and 6(b) above and will
not resolve the ultimate propriety or enforceability of the obligation to
indemnify for or contribute to expenses that is created by the provisions of
Section 9 of this Agreement.
(d) If the sale of the Shares provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 7 of this Agreement is not satisfied, or because of any
termination pursuant to Section 11(b) of this Agreement, or because of any
refusal, inability or failure on the part of the Company to perform any
material covenant or agreement set forth in this Agreement or to comply with
any material provision of this Agreement other than by reason of a default by
any of the Underwriters, the Company agrees to reimburse the Representatives
upon demand for, or pay directly, all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by the Representatives in connection with investigating, preparing
to market or marketing the Shares or otherwise in connection with this
Agreement or the offering of the Shares.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters to purchase and pay for the Shares shall be subject, to
the reasonable satisfaction of the Representatives, to the accuracy as of the
date of execution of this Agreement, the Closing Date and the date on which
the Option Shares are to be purchased, as the case may be, of the
representations and warranties of the Company and the Selling Stockholders
set forth in this Agreement, to the accuracy of the statements of the
Company, its officers and the Selling Stockholders made in any certificate
delivered pursuant to this Agreement, to the
22
performance by the Company and the Selling Stockholders of all of their
obligations to be performed under this Agreement at or prior to the Closing
Date or any later date on which Option Shares are to be purchased, as the
case may be, to the satisfaction of all conditions to be satisfied or
performed by the Company at or prior to that date and to the following
additional conditions:
(a) The Registration Statement shall have become effective (or, if
a post-effective amendment is required to be filed pursuant to Rule 462(b)
under the Act, such post-effective amendment shall become effective and the
Company shall have provided evidence satisfactory to the Representatives of
such filing and effectiveness) not later than 5:00 p.m., New York time, on
the date of this Agreement or at such later date and time as the
Representatives may approve in writing and, at the Closing Date or, with
respect to the Option Shares, the date on which such Option Shares are to be
purchased; no stop order suspending the effectiveness of the Registration
Statement or any qualification, registration or exemption from qualification
or registration for the sale of the Shares in any jurisdiction shall have
been issued and no proceedings for that purpose shall have been instituted or
threatened; and any request for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of
the Representatives and Underwriters' counsel.
(b) The Representatives shall have received from ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ &
Freidenrich LLP, counsel for the Underwriters, an opinion, dated as of the
Closing Date or, if applicable, the date on which the Option Shares are to be
purchased, and the Company shall have furnished such counsel with all
documents which they may reasonably request for the purpose of enabling them
to pass upon such matters.
(c) The Representatives shall have received on the Closing Date
and on any later date on which Option Shares are purchased, as the case may
be, the opinions of ▇▇▇▇▇▇ Godward LLP, counsel for the Company and the
Selling Stockholders, and opinions of local counsel for the Company with
respect to the laws of states other than California and Delaware where
necessary, addressed to the Underwriters and dated as of the Closing Date or
such later date, with reproduced copies or signed counterparts thereof for
each of the Underwriters, covering the matters set forth in Annex A to this
Agreement and in form and substance reasonably satisfactory to the
Representatives.
(d) The Representatives shall be satisfied that there has not been
any material change in the market for securities in general or in political,
financial or economic conditions as to render it impracticable in the
Representatives' sole judgment to make a public offering of the Shares, or a
material adverse change in market levels for securities in general or
financial or economic conditions which render it inadvisable to proceed.
(e) The Representatives shall have received on or before the
Closing Date and on any later date on which Option Shares are purchased a
certificate, dated as of the Closing Date or such later date, as the case may
be, and signed by the President and the Chief Financial Officer of the
Company stating that:
(i) the representations and warranties of the Company set forth
in Section 1 of this Agreement are true and correct with the same force and
effect as if expressly
23
made at and as of the Closing Date or such later date, and the Company has
complied with all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to the Closing Date or such later
date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or are threatened under the Securities
Act; and
(iii) (A) the respective signers of the certificate have
carefully examined the Registration Statement in the form in which it
originally became effective and the Prospectus and any supplements or
amendments to any of them and, as of the Effective Date, the statements made
in the Registration Statement and the Prospectus were true and correct in all
material respects and neither the Registration Statement nor the Prospectus
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading, (B) since the
Effective Date, no event has occurred that should have been set forth in an
amendment to the Registration Statement or a supplement or amendment to the
Prospectus that has not been set forth in such an amendment or supplement,
(C) since the respective dates as of which information is given in the
Registration Statement in the form in which it originally became effective
and the Prospectus contained therein, there has not been any Consolidated
Material Adverse Effect or any development involving a prospective
Consolidated Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, and, since such dates,
except in the ordinary course of business, neither the Company nor any of its
Subsidiaries has entered into any material transaction not referred to in the
Registration Statement in the form in which it originally became effective
and the Prospectus contained therein, (D) there are not any pending or known
threatened legal proceedings to which the Company or any of its 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 and (E) there are not any license
agreements, contracts, leases or other documents that are required to be
filed or incorporated by reference as exhibits to the Registration Statement
that have not been filed or incorporated by reference as required.
(f) You shall be satisfied that, and you shall have received a
certificate, dated the Closing Date from the Attorneys for each Selling
Stockholder to the effect that, as of the date on which Option Shares are to
be purchased, they have not been informed that:
(i) The representations and warranties made by such Selling
Stockholder herein are not true or correct in any material respect on the
Closing Date; or
(ii) Such Selling Stockholder has not complied with any
obligation or satisfied any condition which is required to be performed or
satisfied on the part of such Selling Stockholder at or prior to the Closing
Date.
(g) The Representatives shall have received from
PricewaterhouseCoopers LLP a letter or letters, addressed to the Underwriters
and dated as of the Closing Date and any later date on which Option Shares
are purchased, confirming that they are independent accountants with respect
to the Company within the meaning of the Securities Act and the
24
applicable Rules and Regulations thereunder and, based upon the procedures
described in their letter, referred to below, delivered to the
Representatives concurrently with the execution of this Agreement (the
"Original Letter"), but carried out to a date not more than five business
days prior to the Closing Date or such later date on which Option Shares are
purchased, (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing
Date or such later date, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter that are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information. Such letters shall not disclose any change, or any development
involving a prospective change, in or affecting the business, properties or
condition (financial or otherwise), results of operations or prospects of the
Company or any of its Subsidiaries which, in the Representatives' sole
judgment, makes it impractical or inadvisable to proceed with the public
offering of the Shares or the purchase of the Option Shares as contemplated
by the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). In addition, the Representatives shall have
received from PricewaterhouseCoopers LLP, on or prior to the Closing Date, a
letter addressed to the Company and made available to the Representatives for
the use of the Underwriters stating that their review of the Company's system
of internal controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's consolidated financial statements
as of June 30, 1998, or in delivering their Original Letter, did not disclose
any weaknesses in internal controls that they considered to be a material
weaknesses.
(h) Prior to the Closing Date, the Shares shall have been
designated national market system securities, duly authorized for listing on
the Nasdaq National Market upon official notice of issuance.
(i) On or prior to the Closing Date, the Representative shall have
received from all Holders executed agreements covering the matters described
in Section 1(s) of this Agreement.
(j) The Company shall have furnished to the Representatives such
further certificates and documents as the Representatives shall reasonably
request (including certificates of officers of the Company), as to the
accuracy of the representations and warranties of the Company set forth in
this Agreement, the performance by the Company of its obligations under this
Agreement and the other conditions concurrent and precedent to the
obligations of the Underwriters under this Agreement. Counsel to the
Representatives shall provide a written memorandum to the Company identifying
closing documents which such counsel deems necessary for the Underwriters'
review, not less than two business days before the Closing Date.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement will be in compliance with the provisions of
this Agreement only if they are reasonably satisfactory to the
Representatives. The Company will furnish the Representatives with such
number of conformed copies of such opinions, certificates, letters and
documents as the Representatives shall reasonably request.
25
If any of the conditions specified in this Section 7 shall not have been
fulfilled in all material respects when and as provided in this Agreement,
time being of the essence, or if any of the opinions and certificates
mentioned above or elsewhere in this Agreement shall not be in all material
respects reasonably satisfactory in form and substance to the Representatives
and Underwriters' counsel, this Agreement and all obligations of the
Underwriters hereunder may be canceled by the Representatives at, or at any
time prior to, the Closing Date or (with respect to the Option Shares) prior
to the date upon which the Option Shares are to be purchased, as the case may
be. Notice of such cancellation shall be given to the Company in writing or
by telephone or telecopy confirmed in writing. Any such termination shall be
without liability of the Company to the Underwriters (except as provided in
Section 6 or Section 9 of this Agreement) and without liability of the
Underwriters to the Company (except to the extent provided in Section 9 of
this Agreement).
8. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY AND THE SELLING
STOCKHOLDERS. The respective obligations of the Company and the Selling
Stockholders to sell and deliver the Shares required to be delivered as and
when specified in this Agreement shall be subject to the condition that, at
the Closing Date or (with respect to the Option Shares) the date upon which
the Option Shares are to be purchased by the Underwriters pursuant to this
Agreement, no stop order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings therefor shall be pending or
threatened by the Commission.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person (including each partner or officer thereof) who
controls any Underwriter within the meaning of Section 15 of the Securities
Act from and against any and all losses, claims, damages or liabilities,
joint or several, to which such indemnified parties or any of them may become
subject under the Securities Act, the Exchange Act or other federal or state
statute, law or regulation, at common law or otherwise, specifically
including but not limited to losses, claims, damages or liabilities (or
actions in respect thereof) related to negligence on the part of any
Underwriter, and the Company agrees to reimburse each such Underwriter and
controlling person for any legal or other expenses (including, except as
otherwise provided below, settlement expenses and fees and disbursements of
counsel) incurred by the respective indemnified parties in connection with
defending against any such losses, claims, damages or liabilities or in
connection with any investigation or inquiry of, or other proceeding that may
be brought against, the respective indemnified parties, in each case insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon, in whole or in part, (i) any breach
of any representation, warranty, covenant or agreement of the Company in this
Agreement, (ii) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement in the form originally
filed or in any amendment thereto (including the Prospectus as part thereof)
or any post-effective amendment thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading or (iii) any untrue statement or alleged
untrue statement of a material fact contained in any
26
Preliminary Prospectus or the Prospectus (as amended or as supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (iv) any untrue statement or alleged untrue statement
of a material fact contained in any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify or register the Shares under the securities
or Blue Sky laws thereof or to obtain an exemption from such qualification or
registration or filed with the Commission or any securities association, the
Nasdaq National Market, or any securities exchange, or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided, however,
that (1) the indemnity agreements of the Company contained in this Section
9(a) shall not apply to any such losses, claims, damages, liabilities or
expenses if such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Representatives specifically for use in
the Registration Statement, any Preliminary Prospectus or the Prospectus or
any such amendment thereof or supplement thereto and (2) the indemnity
agreement contained in this Section 9(a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages, liabilities or expenses
purchased the Shares that are the subject thereof (or to the benefit of any
person controlling such Underwriter) if the Company can demonstrate that at
or prior to the written confirmation of the sale of such Shares a copy of the
Prospectus (or the Prospectus as amended or supplemented) was not sent or
delivered to such person and the untrue statement or omission of a material
fact contained in such Preliminary Prospectus was corrected in the Prospectus
(or the Prospectus as amended or supplemented), unless the failure is the
result of noncompliance by the Company with Section 4 of this Agreement. The
indemnity agreements of the Company contained in this Section 9(a) and the
representations and warranties of the Company contained in Section 1 of this
Agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any indemnified party and shall
survive the delivery of and payment for the Shares. This indemnity agreement
shall be in addition to any liabilities which the Company may have pursuant
to this Agreement or otherwise.
(b) Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold harmless each Underwriter and each person (including each
partner or officer thereof) who controls any Underwriter within the meaning
of Section 15 of the Securities Act from and against any and all losses,
claims, damages or liabilities, joint or several, to which such indemnified
parties or any of them may become subject under the Securities Act, the
Exchange Act or other federal or state statute, law or regulation, at common
law or otherwise, specifically including but not limited to losses, claims,
damages or liabilities (or actions in respect thereof) related to negligence
on the part of any Underwriter, and each Selling Stockholder, severally and
not jointly, agrees to reimburse each such Underwriter and controlling person
for any legal or other expenses (including, except as otherwise provided
below, settlement expenses and fees and disbursements of counsel) incurred by
the respective indemnified parties in connection with defending against any
such losses, claims, damages or liabilities or in connection with any
27
investigation or inquiry of, or other proceeding that may be brought against,
the respective indemnified parties, in each case insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon, in whole or in part, (i) any breach of any representation,
warranty, covenant or agreement of such Selling Stockholder in this
Agreement, (ii) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement in the form originally
filed or in any amendment thereto (including the Prospectus as part thereof)
or any post-effective amendment thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading or (iii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus
or the Prospectus (as amended or as supplemented if the Company shall have
filed with the Commission any amendment thereof or supplement thereto) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading or (iv)
any untrue statement or alleged untrue statement of a material fact contained
in any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify or
register the Shares under the securities or Blue Sky laws thereof or to
obtain an exemption from such qualification or registration or filed with the
Commission or any securities association, the Nasdaq National Market, or any
securities exchange, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, provided, however, that (1) the indemnity agreements of the
Selling Stockholders contained in this Section 9(b) shall not apply to any
such losses, claims, damages, liabilities or expenses if such statement or
omission was made in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for use in the Registration
Statement, any Preliminary Prospectus or the Prospectus or any such amendment
thereof or supplement thereto, (2) the indemnity agreement contained in this
Section 9(b) with respect to any Preliminary Prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages, liabilities or expenses purchased the Shares that
are the subject thereof (or to the benefit of any person controlling such
Underwriter) if the Selling Stockholder can demonstrate that at or prior to
the written confirmation of the sale of such Shares a copy of the Prospectus
(or the Prospectus as amended or supplemented) was not sent or delivered to
such person and the untrue statement or omission of a material fact contained
in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented), unless the failure is the result of
noncompliance by the Company with Section 4 of this Agreement and (3) the
indemnity agreements of the Selling Stockholders contained in this Section
9(b) shall apply in the case of subparagraphs (ii), (iii) and (iv) of this
Section 9(b) to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company or such Underwriter by such Selling Stockholder, directly or
through such Selling Stockholder's representatives, specifically for use in
the preparation thereof. The indemnity agreements of the Selling
Stockholders contained in this Section 9(b) and the representations and
warranties of the Selling Stockholders contained in Section 2 of this
Agreement shall remain
28
operative and in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the delivery of
and payment for the Shares. This indemnity agreement shall be in addition to
any liabilities which the Selling Stockholders may have pursuant to this
Agreement or otherwise. Notwithstanding anything to the contrary in this
Section 9, no Selling Stockholder shall be required to make any payments in
respect of any indemnity obligation arising under this Section 9(b) in excess
of the net proceeds from the Firm Shares sold by that Selling Stockholder.
(c) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of its officers who signs the
Registration Statement, each of its directors, each other Underwriter, each
Selling Stockholder and each person (including each partner or officer
thereof) who controls the Company or any such other Underwriter within the
meaning of Section 15 of the Securities Act from and against any and all
losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities
Act, the Exchange Act, or other federal or state statute, law or regulation
or at common law or otherwise and to reimburse each of them for any legal or
other expenses (including, except as otherwise hereinafter provided,
settlement expenses and fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any
investigation or inquiry of, or other proceeding that may be brought against,
the respective indemnified parties, in each case arising out of or based upon
(i) any breach of any representation, warranty, covenant or agreement of the
indemnifying Underwriter in this Agreement, (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (including the Prospectus as part thereof) or any post-effective
amendment thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (iii) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus or the
Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, but in
each case under clauses (ii) and (iii) above, as the case may be, only if
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such
indemnifying Underwriter through the Representatives specifically for use in
the Registration Statement, in any Preliminary Prospectus or the Prospectus
or any such amendment thereof or supplement thereto. The Company and the
Selling Stockholders acknowledge and agree that the matters described in
Section 3(h) of this Agreement constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus. The
indemnity agreement of each Underwriter contained in this Section 9(c) shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any indemnified party and shall survive the delivery
of and payment for the Shares. This indemnity agreement shall be in addition
to any liabilities which each Underwriter may have pursuant to this Agreement
or otherwise. Notwithstanding anything to the contrary in this Section 9, no
29
Underwriter shall be required to make any payments in respect of any claim
arising under this Section 9(c) in excess of the underwriting discount
applicable to the Shares purchased by that Underwriter.
(d) Each person or entity indemnified under the provisions of
Sections 9(a), 9(b) and 9(c) above agrees that, upon the service of a summons
or other initial legal process upon it in any action or suit instituted
against it or upon its receipt of written notification of the commencement of
any investigation or inquiry of, or proceeding against, it in respect of
which indemnity may be sought on account of any indemnity agreement contained
in such Sections, it will, if a claim in respect thereunder is to be made
against the indemnifying party or parties under this Section 9, and give
written notice (the "Notice") of such service or notification to the party or
parties from whom indemnification may be sought hereunder within ten (10)
calendar days after receipt by them of written notice of the commencement of
any actions against them. No indemnification provided for in Sections 9(a),
9(b) and 9(c) above shall be available to any person who fails to so give the
Notice if the party to whom such Notice was not given was unaware of the
action, suit, investigation, inquiry or proceeding to which the Notice would
have related, but only to the extent such party was materially prejudiced by
the failure to receive the Notice, and the omission so to notify such
indemnifying party or parties shall not relieve such indemnifying party or
parties from any liability which it or they may have to the indemnified party
for contribution or otherwise than on account of Sections 8(a), 9(b) and
9(c). Any indemnifying party shall be entitled at its own expense to
participate in the defense of any action, suit or proceeding against, or
investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of
the Notice by giving written notice (the "Notice of Defense") to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to
the indemnified party or parties; provided, however, that (i) if the
indemnified party or parties reasonably determine that there may be a
conflict between the positions of the indemnifying party or parties and of
the indemnified party or parties in conducting the defense of such action,
suit, investigation, inquiry or proceeding or that there may be legal
defenses or rights available to such indemnified party or parties different
from or in addition to those available to the indemnifying party or parties,
then separate counsel for and selected by the indemnified party or parties
shall be entitled to conduct, at the expense of the indemnifying parties, the
defense of the indemnified parties to the extent determined by such counsel
to be necessary to protect the interests of the indemnified party or parties,
and (ii) provided, further, that the indemnifying party shall not be liable
for the fees and expenses of more than one separate counsel, reasonably
approved by the indemnifying party, for all of the indemnified parties, plus,
if applicable, one local counsel in each jurisdiction. In addition, in any
event, the indemnified party or parties shall be entitled to have counsel
selected by such indemnified party or parties participate in, but not
conduct, the defense. If, within a reasonable time after receipt of the
Notice, an indemnifying party gives a Notice of Defense and, unless separate
counsel is to be chosen by the indemnified party or parties as provided
above, the counsel chosen by the indemnifying party or parties is reasonably
satisfactory to the indemnified party or parties, the indemnifying party or
parties will not be liable under Sections 9(a), 9(b)
30
and 9(c) for any legal or other expenses subsequently incurred by the
indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear and pay the legal and other expenses incurred in
connection with the conduct of the defense as referred to in clause (i) of
the proviso to the preceding sentence and (B) the indemnifying party or
parties shall bear and pay such other expenses as it or they have authorized
to be incurred by the indemnified party or parties. If, within a reasonable
time after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.
(e) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section
9 but is judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right to appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 9 provides
for indemnification in such case, each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in Section
9(a), 9(b) and 9(c) above (i) in such proportion as is appropriate to reflect
the relative benefits received by each indemnifying party from the offering
of the Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of each party in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, or actions in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company, the Selling Stockholders and the
Underwriters shall be deemed to be in the same respective proportions as the
total proceeds from the offering of the Shares, net of the underwriting
discounts, received by the Company and the Selling Stockholders and the total
underwriting discount retained by the Underwriters bear to the aggregate
public offering price of the Shares. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by a party and the party's
relative intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 9(e) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to in the first sentence of
this Section 9(e) and to the considerations referred to in the third sentence
of the first paragraph of this Section 9(e). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities,
or actions in respect thereof, referred to in the first sentence of this
Section 9(e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against any action or claim
which is the subject of this Section 9(e). Notwithstanding the provisions of
this Section 9(e), no Underwriter shall be required to contribute any amount
in excess of the underwriting discount applicable to
31
the Shares purchased by that Underwriter and no Selling Stockholder shall be
required to contribute any amount in excess of the net proceeds from the Firm
Shares sold by that Selling Shareholder. For purposes of this Section 9(e),
each person who controls an Underwriter within the meaning of the Securities
Act shall have the same rights to contribution as such Underwriter, and each
person who controls the Company within the meaning of the Securities Act,
each officer of the Company who signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the immediately preceding and immediately
following sentences. No person guilty of fraudulent misrepresentation
(within the meaning of Section 1l(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute in this
Section 9(e) are several in proportion to their respective underwriting
obligations and not joint.
Each party or other entity entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from
whom contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in Section 9(d) above). This
Section 9(e) shall not be operative as to any Underwriter to the extent that
the Company is entitled to receive or has received indemnity under this
Section 9.
(f) The Company shall not, without the prior written consent of
each Underwriter, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not such Underwriter or any person who controls such Underwriter
within the meaning of Section 15 of the Securities Act is a party to such
claim, action, suit or proceeding), which consent shall not be unreasonably
withheld, unless such settlement, compromise or consent includes an
unconditional release of each such Underwriter and each such controlling
person from all liability arising out of such claim, action, suit or
proceeding.
(g) No Underwriter shall, without the consent of the Company,
settle or compromise or consent to the entry of any judgment in any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Company is a party to such claim, action, suit or proceeding), which consent
shall not be unreasonably withheld, unless such settlement, compromise or
consent includes an unconditional release of the Company, each of its
officers who signed the Registration Statement, each of its directors, each
Selling Stockholder and each person who controls the Company within the
meaning of Section 15 of the Securities Act, from all liability arising out
of such claim, action, suit or proceeding.
(h) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of
32
Sections 6(a)(ii), 6(b) and 6(c) and this Section 9 of this Agreement and
that they are fully informed regarding all such provisions. They further
acknowledge that the provisions of Sections 6(a)(ii), 6(b) and 6(c) and this
Section 9 of this Agreement fairly allocate the risks in light of the ability
of the parties to investigate the Company and its business in order to assure
that adequate disclosure is made in the Registration Statement, each
Preliminary Prospectus and the Prospectus as required by the Securities Act,
the Rules and Regulations, the Exchange Act and the rules and regulations of
the Commission under the Exchange Act. The parties are advised that federal
or state policy, as interpreted by the courts in certain jurisdictions, may
be contrary to certain provisions of Sections 6(a)(ii), 6(b) and 8(c) and
this Section 9 of this Agreement and, to the extent permitted by law, the
parties hereto hereby expressly waive and relinquish any right or ability to
assert such public policy as a defense to a claim under Sections 6(a)(ii),
6(b) or 6(c) or this Section 9 of this Agreement and further agree not to
attempt to assert any such defense.
10. SUBSTITUTION OF UNDERWRITERS. If for any reason one or more of the
Underwriters fails or refuses (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 7
or Section 11 of this Agreement) to purchase and pay for the number of Firm
Shares agreed to be purchased by such Underwriter or Underwriters, the
Company shall immediately give notice thereof to the Representatives and the
non-defaulting Underwriters shall have the right within 24 hours after the
receipt by the Representatives of such notice to purchase, or procure one or
more other Underwriters to purchase, in such proportions as may be agreed
upon among the Representatives and such purchasing Underwriter or
Underwriters and upon the terms set forth herein, all or any part of the Firm
Shares that such defaulting Underwriter or Underwriters agreed to purchase.
If the non-defaulting Underwriters fail to make such arrangements with
respect to all such Shares, the number of Firm Shares that each
non-defaulting Underwriter is otherwise obligated to purchase under this
Agreement shall be automatically increased on a pro rata basis to absorb the
remaining Shares that the defaulting Underwriter or Underwriters agreed to
purchase, provided, however, that the non-defaulting Underwriters shall not
be obligated to purchase the Shares that the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such Shares
exceeds 10% of the total number of Firm Shares that all Underwriters agreed
to purchase under this Agreement. If the total number of Firm Shares that
the defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the first
24-hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to the Representatives for purchase
of such Shares on the terms set forth in this Agreement. In any such case,
either the Representatives or the Company shall have the right to postpone
the Closing Date determined as provided in Section 3(c) of this Agreement for
not more than seven business days after the date originally fixed as the
Closing Date pursuant to said Section 3(c) in order that any necessary
changes in the Registration Statement, the Prospectus or any other documents
or arrangements may be made.
If neither the non-defaulting Underwriters nor the Company makes
arrangements within the time periods provided in the first three sentences of
the first paragraph of this Section 10 for the purchase of all the Firm Shares
that the defaulting Underwriter or Underwriters agreed to
33
purchase hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company to any
non-defaulting Underwriter (except as provided in Section 6 or Section 9 of
this Agreement) and without any liability on the part of any non-defaulting
Underwriter to the Company (except to the extent provided in Section 9 of
this Agreement). Nothing in this Section 10, and no action taken hereunder,
shall relieve any defaulting Underwriter from liability, if any, to the
Company, the Selling Stockholders or any non-defaulting Underwriter for
damages occasioned by its default under this Agreement. The term
"Underwriter" in this Agreement shall include any persons substituted for an
Underwriter under this Section 10.
11. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
(a) If the Registration Statement has not been declared effective
prior to the date of this Agreement, this Agreement shall become effective at
such time, after notification of the effectiveness of the Registration
Statement has been released by the Commission, as the Representatives and the
Company shall agree upon the public offering price and the purchase price of
the Shares. If the public offering price and the purchase price of the Shares
shall not have been determined prior to 5:00 p.m., New York time, on the
fifth full business day after the Registration Statement has become
effective, this Agreement shall thereupon terminate without liability on the
part of the Company or the Selling Stockholders to the Underwriters (except
as provided in Section 6 or Section 9 of this Agreement) or the Underwriters
to the Company or the Selling Stockholders (except as set forth in Section 9
of this Agreement). By giving notice before the time this Agreement becomes
effective, the Representatives may prevent this Agreement from becoming
effective without liability of any party to the other party, except that the
Company shall remain obligated to pay costs and expenses to the extent
provided in Section 6 and Section 9 of this Agreement. If the Registration
Statement has been declared effective prior to the date of this Agreement,
this Agreement shall become effective upon execution and delivery by the
Representatives, the Company and the Attorneys.
(b) This Agreement may be terminated by the Representatives in
their absolute discretion by giving written notice to the Company at any time
on or prior to the Closing Date or, with respect to the purchase of the
Option Shares, on or prior to any later date on which the Option Shares are
to be purchased, as the case may be, if prior to such time any of the
following has occurred or, in the Representatives' reasonable opinion, is
likely to occur: (i) after the respective dates as of which information is
given in the Registration Statement and the Prospectus, any Consolidated
Material Adverse Effect or development involving a prospective Consolidated
Material Adverse Effect in or affecting particularly the business,
properties, condition (financial or otherwise), results of operations or
prospects of the Company and its direct and indirect subsidiaries, taken as a
whole, whether or not arising in the ordinary course of business, occurs
which would, in the Representatives' reasonable judgment, make the offering
or the delivery of the Shares impracticable or inadvisable; or (ii) if there
shall have been the engagement in hostilities or an escalation of major
hostilities by the United States or the declaration of war or a national
emergency by the United States on or after the date hereof, or any outbreak
of hostilities or other national or international calamity or crisis or
change in economic or political conditions, if the effect of such outbreak,
calamity, crisis or change in
34
economic or political conditions on the financial markets of the United
States would, in the Representatives' reasonable judgment, make the offering
or delivery of the Shares impracticable or inadvisable; or (iii) if there
shall have been suspension of trading in securities generally or a material
adverse decline in value of securities generally on the New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market, or
limitations on prices (other than limitations on hours or numbers of days of
trading) for securities on either such exchange or system; or (iv) if there
shall have been the enactment, publication, decree or other promulgation of
any federal or state statute, regulation, rule or order of, or commencement
of any proceeding or investigation by, any court, legislative body, agency or
other governmental authority which in the Representatives' reasonable
judgment has or may have a Consolidated Material Adverse Effect; or (v) if
there shall have been the declaration of a banking moratorium by federal, New
York or California state authorities; or (vi) if there shall have been the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in the Representatives'
reasonable judgment has a material adverse effect on the securities markets
in the United States; or (vii) existing international monetary conditions
shall have undergone a material adverse change which, in your reasonable
judgment, makes the offering or delivery of the Shares impracticable or
inadvisable. If this Agreement shall be terminated pursuant to this Section
11, there shall be no liability of the Company or the Selling Stockholders to
the Underwriters (except pursuant to Section 6 and Section 9 of this
Agreement) and no liability of the Underwriters to the Company or the Selling
Stockholders (except to the extent provided in Section 9 of this Agreement).
12. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing and, if to the Underwriters, shall be mailed,
telecopied or delivered to ▇▇▇ ▇▇▇▇▇▇ & Company, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Manager
(telecopier: (▇▇▇) ▇▇▇-▇▇▇▇); and if to the Company or the Selling
Stockholders, shall be mailed, telecopied or delivered to it at ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (telecopier: (714/223-5138) Attention:
President, with a copy to ▇▇▇▇▇▇ Godward LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. (telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇). All notices given by telecopy shall be promptly confirmed
by letter.
13. PERSONS ENTITLED TO THE BENEFIT OF THIS AGREEMENT. This Agreement
shall inure to the benefit of the Company, the Selling Stockholders and the
several Underwriters and, with respect to the provisions of Section 6 and
Section 9 of this Agreement, the several parties (in addition to the Company,
the Selling Stockholders and the several Underwriters) indemnified under the
provisions of Section 6 and Section 9, and their respective personal
Representatives, successors and assigns. Nothing in this Agreement is
intended or shall be construed to give to any other person, firm or
corporation any legal or equitable remedy or claim under or in respect of
this Agreement or any provision contained herein. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser,
of any of the Shares from the several Underwriters.
14. GENERAL. Notwithstanding any provision of this Agreement to the
contrary, the reimbursement, indemnification and contribution agreements
contained in this Agreement
35
and the representations, warranties, covenants and agreements in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of
any Underwriter or controlling person thereof or by or on behalf of the
Company or any Selling Stockholder or their respective directors or officers
and (c) delivery and payment for the Shares under this Agreement; provided,
however, that if this Agreement is terminated prior to the Closing Date, the
provisions of Sections 4(f)-4(n) of this Agreement shall be of no further
force or effect.
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which together shall
constitute one and the same instrument, and may be delivered by facsimile
transmission.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS, AND NOT THE LAWS PERTAINING TO CHOICE OR CONFLICT OF LAWS, OF
THE STATE OF CALIFORNIA.
15. AUTHORITY OF THE REPRESENTATIVES. In connection with this
Agreement, the Representatives will act for and on behalf of the several
Underwriters, and any action taken under this Agreement by the
Representatives, as Representatives of the several Underwriters, will be
binding on all the Underwriters.
36
If the foregoing correctly sets forth your understanding, please so
indicate by signing in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement among the Company, the
Selling Stockholders and the several Underwriters.
Very truly yours,
JAVELIN SYSTEMS, INC.
By:
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
SELLING STOCKHOLDERS
By
---------------------------------------------
Attorney-in-Fact for the Selling Stockholders
named in Schedule II hereto
The foregoing Agreement is hereby confirmed and accepted as of the date
first above written.
On their own behalf and on behalf of each of the several Underwriters
named in Schedule I hereto.
▇▇▇ ▇▇▇▇▇▇ & COMPANY
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INCORPORATED
MERIDIAN CAPITAL GROUP, INC.
As Representatives of the
Several Underwriters
By: ▇▇▇ ▇▇▇▇▇▇ & Company
By:
-----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
37
SCHEDULE I
UNDERWRITERS
Number of Firm Shares
Underwriters to be Purchased:
------------ ----------------
▇▇▇ ▇▇▇▇▇▇ & Company...............................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated........................
Meridian Capital Group, Inc........................
Total......................................... 2,500,000
---------
---------
I-1
SCHEDULE II
Number of Option Shares
Selling Stockholder to be Sold:
------------------- -----------
I-2
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR THE COMPANY
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of Delaware; each of CCI Group,
Inc., POSNET Computers, Inc., RGB/Trinet Limited and Jade Communications
Limited (together for the purposes of this Annex A only, the "Subsidiaries")
has been duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction of formation;
(ii) The Company and each Subsidiary has the corporate power to own,
lease and operate its properties and to conduct its business as described in
the Prospectus;
(iii) To the knowledge of such counsel, the Company and each Subsidiary
is duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
for jurisdictions where the failure so to qualify would not have a
Consolidated Material Adverse Effect;
(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under the caption "Capitalization" as of
the date stated therein and conforms as of the date stated therein as to
legal matters in all material respects to the description thereof set forth
in the Prospectus under the caption "Description of Capital Stock;" the
issued and outstanding shares of capital stock of the Company and each
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, and, to the knowledge of such counsel, have not been issued in
violation of any preemptive right or other rights to subscribe for or
purchase securities; and to such counsel's knowledge, except as reflected on
Exhibit A to the Underwriting Agreement, the Company is the record holder of
all of the issued and outstanding equity securities of each of its
Subsidiaries and, to such counsel's knowledge, there are no outstanding
options, warrants or other rights to acquire from the Company or any
Subsidiary any equity securities of any Subsidiary;
(v) The Shares will, when duly countersigned by the Company's transfer
agent and registrar, upon issuance and delivery against payment therefor in
accordance with the terms of the Underwriting Agreement, be duly authorized,
validly issued, fully paid and nonassessable, or to the knowledge of such
counsel, will not have been issued in violation of any preemptive right or
other rights to subscribe for or purchase securities and, to the knowledge of
such counsel, have been duly approved for listing on the Nasdaq National
Market subject only to official notice of issuance thereof;
(vi) The Company has corporate power to enter into the Underwriting
Agreement and to issue, sell and deliver the Shares to the Underwriters.
(vii) The Underwriting Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been duly
executed and delivered by the Company and, assuming its due authorization,
execution and delivery by the Representatives and the
1
Selling Stockholders, is the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except insofar
as the indemnification and contribution provisions of the Agreement may be
limited by public policy concerns and except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally or by general equitable principles;
(viii) We have been informed by the staff of the Securities and Exchange
Commission that the Registration Statement has become effective under the
Securities Act and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or
overtly threatened under the Securities Act;
(ix) The Registration Statement and the Prospectus, and each amendment
or supplement thereto (other than the financial statements, related notes and
schedules, and financial and statistical data derived therefrom or included
therein, as to which such counsel need express no opinion), as of the
effective date of the Registration Statement, complied as to form in all
material respects with the requirements of the Securities Act and the
applicable Rules and Regulations;
(x) The forms of certificates evidencing the Common Stock incorporated
by reference as an exhibit to the Registration Statement are in due and
proper form under Delaware law;
(xi) The information in the Prospectus under the captions "Description
of Capital Stock" and "Shares Eligible for Future Sale," to the extent it
constitutes matters of law or legal conclusions, has been reviewed by such
counsel and is correct in all material respects;
(xii) The description in the Registration Statement and the Prospectus
under the captions "Description of Capital Stock," "Possible Issuance of
Preferred Stock; Anti-Takeover Effect of Delaware and Certain Charter
Provisions," "Stock Option Plans" and "Employment Agreements" of the
Certificate of Incorporation and Bylaws of the Company and of statutes and,
to the knowledge of such counsel, contracts are accurate in all material
respects and fairly present in all material respects the information required
to be presented by the Securities Act and the Rules and Regulations;
(xiii) To the knowledge of such counsel, there are no agreements,
contracts, licenses, leases or documents of a character required to be
described or referred to in the Registration Statement or Prospectus or to be
filed or incorporated by reference as an exhibit to the Registration
Statement that are not described or referred to therein or filed or
incorporated by reference as required;
(xiv) The execution and delivery of the Underwriting Agreement do not,
and the Company's performance of the Underwriting Agreement and the
consummation of the transactions contemplated thereby will not, conflict
with, violate or result in the material breach of or a material default
(including without limitation with the giving of notice, the passage of time
or otherwise) under any of the terms and provisions of the Company's
Certificate of Incorporation or Bylaws or any agreement or instrument of the
Company or any Subsidiary that
2
is filed as an exhibit to the Registration Statement, or, to the knowledge of
such counsel, any law, ordinance, rule or regulation or, any order, writ,
injunction, judgment or decree of any governmental agency or body or of any
court or arbitration tribunal having jurisdiction over the Company or any
Subsidiary or over any of its or their properties; provided, however, that no
opinion need be rendered concerning state securities or Blue Sky laws and
regulations;
(xv) No authorization, approval or consent or other order of any
governmental authority or agency is necessary in connection with the
consummation of the transactions contemplated by the Underwriting Agreement,
except such as have been obtained and are in full force and effect under the
Securities Act or as may be required under state securities or Blue Sky laws
in connection with the purchase and the distribution of the Shares by the
Underwriters and the clearance of such offering with the NASD;
(xvi) To the knowledge of such counsel, there are no legal or
governmental proceedings pending or overtly threatened against the Company or
any Subsidiary of a character which are required to be disclosed in the
Registration Statement or the Prospectus by the Securities Act or the
applicable Rules and Regulations;
(xvii) To the knowledge of such counsel, except as set forth in the
Registration Statement and Prospectus, no holders of Common Stock or other
securities of the Company have rights which have not been waived or complied
with to the registration of any securities of the Company because of the
filing of the Registration Statement by the Company or the offering
contemplated by the Underwriting Agreement;
(xviii) The Underwriting Agreement has been duly executed and delivered
by or on behalf of each Selling Stockholder.
(xix) Each Selling Stockholder has full legal right, power and
authority, and any approval required by law (other than as required by the
Securities Act, the Exchange Act, state securities and Blue Sky laws, as to
which we express no opinion), to sell, assign, transfer and deliver the
portion of the Firm Shares to be sold by such Selling Stockholder pursuant to
the Underwriting Agreement.
(xx) The Custody Agreement and the Power of Attorney executed and
delivered by each Selling Stockholder is valid and binding on each Selling
Stockholder in accordance with their terms.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company, the
independent public accountants of the Company, the Representatives and
counsel to the Underwriters, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although they have not independently verified the accuracy, completeness
or fairness of the statements contained in the Registration Statement or the
Prospectus, nothing has come to the attention of such counsel that caused
them to believe that, at the time the Registration Statement became
effective, the Registration Statement (except as to financial statements,
related notes and schedules, and financial and statistical data derived
therefrom or contained therein, as to which
3
such counsel need express no opinion) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or at the
date Opinion is given, the Prospectus (except as to financial statements,
related notes and schedules, and financial and statistical data derived
therefrom or contained therein, as to which such counsel need express no
opinion) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4
EXHIBIT "A"
LIST OF SUBSIDIARIES
CCI Group, Inc.
POSNET Computers, Inc.
Javelin Systems (Europe) Limited
Javelin Systems Australia Pty Ltd.
Javelin Systems International Pte. Ltd.
Aspact IT Services (Singapore) Pte. Ltd.
RGB/Trinet Limited
Jade Communications Limited
EXHIBIT "B"