EXHIBIT 1.1
Underwriting Agreement
____________, 1999
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
As Representatives of the several Underwriters
c/o BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Introductory. NetSolve, Incorporated, a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 3,530,000 shares of its common
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stock, $.01 par value per share ("Common Shares"); and the stockholders of the
Company named in Schedule B (collectively, the "Selling Stockholders") severally
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propose to sell to the Underwriters an aggregate of 170,000 Common Shares. The
3,530,000 Common Shares to be sold by the Company and the 170,000 Common Shares
to be sold by the Selling Stockholders are collectively called the "Firm
Shares." In addition, the Company has granted to the Underwriters an option to
purchase up to an additional 555,000 Common Shares (the "Option Shares"), as
provided in Section 2. The Firm Shares and, if and to the extent such option is
exercised, the Option Shares are collectively called the "Shares." BancBoston
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC have agreed to act as
representatives of the several Underwriters (in such capacity, the
"Representatives") in connection with the offering and sale of the Common
Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-65691), which contains a form of prospectus to be used in connection with
the public offering and sale of the Shares. Such registration statement, as
amended, including the financial statements included therein and the exhibits
thereto, in the form in which it was declared effective by the Commission under
the Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A or Rule 434
under the Securities Act, is called the "Registration Statement." Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the "Rule 462(b) Registration Statement," and from and
after the date and time of filing of the Rule 462(b) Registration Statement the
term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriters to
confirm sales of the Shares, is called the "Prospectus." All references in this
Agreement to the Registration Statement, the Rule 462(b) Registration Statement,
any prospectus subject to completion (each a "preliminary prospectus") or the
Prospectus, or any amendments or supplements to any of the foregoing, shall
include any copy thereof filed pursuant to the Commission's Electronic Data
Gathering, Analysis and Retrieval system.
The Company and the Selling Stockholders hereby confirm their respective
agreements with the Underwriters as follows:
Section 1. Representations and Warranties.
A. Representations and Warranties of the Company. The Company hereby
represents, warrants and covenants to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration Statement
and any Rule 462(b) Registration Statement have been declared effective by
the Commission under the Securities Act. The Company has complied to the
Commission's satisfaction with all requests of the Commission for additional
or supplemental information. No stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement is in
effect, and no proceedings for such purpose have been instituted, are pending
or, to the knowledge of the Company, are contemplated or threatened by the
Commission. Each preliminary prospectus and the Prospectus when filed
complied in all material respects with the Securities Act and, if filed by
electronic transmission pursuant to the Commission's Electronic Data
Gathering, Analysis and Retrieval system, was identical to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale
of the Shares. Each of the Registration Statement, any Rule 462(b)
Registration Statement, and any post-effective amendment to the Registration
Statement or any Rule 462(b) Registration Statement, at the time it became
effective and at all subsequent times, complied and will comply in all
material respects with the Securities Act and did not and 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 not
misleading. The Prospectus, as amended or supplemented, as of its date and
at all subsequent times, did not and will not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties set forth in
the two immediately preceding sentences do not apply to statements in or
omissions from the Registration Statement, any Rule 462(b) Registration
Statement, any post-effective amendment to the Registration Statement or any
Rule 462(b) Registration Statement, the Prospectus, or any amendment or
supplement to the Prospectus made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing
by the Representatives expressly for use therein. There are no contracts or
other documents required to be described in the Prospectus or to be filed as
exhibits to the Registration Statement that have not been described or filed
as required.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representatives (i) three complete conformed copies of the
Registration Statement, including each consent of experts filed as a part
thereof, and (ii) conformed copies of the Registration Statement (without
exhibits), each preliminary prospectus and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives
have reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material by the Company. The Company has not
distributed and will not distribute, prior to the later of the Second Closing
Date (as defined below) and the completion of the Underwriters' distribution
of the Shares, any offering material in connection with the offering and sale
of the Shares other than any preliminary prospectus, the Prospectus or the
Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the
Company, enforceable in
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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 laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(e) Authorization of the Shares to be Sold by the Company. The Shares to
be purchased by the Underwriters from the Company have been duly authorized
for issuance and sale pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement, will be validly issued,
fully paid and nonassessable.
(f) Authorization of the Firm Shares to be Sold by the Selling
Stockholders. The Firm Shares to be purchased by the Underwriters from the
Selling Stockholders were duly authorized when issued and are validly issued,
fully paid and nonassessable.
(g) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included
in the offering contemplated by this Agreement, except for such rights as
have been duly waived.
(h) No Material Adverse Change. Subsequent to the respective dates as of
which information is given in the Prospectus:
(i) there has been no material adverse change, or any development
that reasonably could be expected to result in a material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations, whether or not arising from transactions in the ordinary course
of business, of the Company and the Subsidiaries (as defined below),
considered as one entity (any such change or effect is called a "Material
Adverse Change" or "Material Adverse Effect");
(ii) neither the Company nor either of the Subsidiaries has incurred
any liability or obligation, indirect, direct or contingent, not in the
ordinary course of business or has entered into any transaction or agreement
not in the ordinary course of business, other than any such liabilities,
obligations, transactions and agreements that are not, in the aggregate,
material to the Company and the Subsidiaries, considered as one entity; and
(iii) there has not been any dividend or distribution of any kind
declared, paid or made by the Company or either of the Subsidiaries on any
class of capital stock or any repurchase or redemption by the Company or
either of the Subsidiaries of any class of capital stock.
(i) Independent Certified Public Accountants. Ernst & Young LLP, who have
expressed their opinion with respect to the consolidated financial statements
(which term as used in this Agreement includes the related notes thereto)
filed with the Commission as a part of the Registration Statement and
included in the Prospectus, are independent certified public accountants with
respect to the Company and the Subsidiaries within the meaning of the
Securities Act.
(j) Preparation of the Financial Statements. The consolidated financial
statements filed with the Commission as a part of the Registration Statement
and included in the Prospectus present fairly in all material respects the
consolidated financial position of the Company and the Subsidiaries as of and
at the dates indicated and the results of operations and cash flows
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of the Company and the Subsidiaries for the periods specified. Such
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. No supporting schedules or other financial statements
are required to be included in the Registration Statement. The financial data
set forth in the Prospectus under the captions "Summary--Summary Consolidated
Financial Data," "Selected Consolidated Financial Data" and "Capitalization"
fairly present in all material respects the information set forth therein on
a basis consistent with that of the audited consolidated financial statements
contained in the Registration Statement.
(k) Accounting Systems. Each of the Company and the Subsidiaries
maintains a system of accounting controls 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 to permit preparation of consolidated financial statements in
conformity with generally accepted accounting principles and 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 existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(l) Subsidiaries of the Company. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other
than Specialized Network Services, Inc. and SNS Credit Corporation (together,
the "Subsidiaries"). Both of the Subsidiaries currently are inactive.
(m) Incorporation and Good Standing of the Company and the Subsidiaries.
Each of the Company and the Subsidiaries (i) has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is organized, with all requisite corporate power and
authority to own its properties and conduct its business as described in the
Prospectus, and (ii) is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction that
requires such qualification.
(n) Capitalization of the Subsidiaries. All the outstanding shares of
capital stock of each of the Subsidiaries (i) have been duly authorized and
are validly issued, fully paid and nonassessable and (ii) are owned by the
Company, free and clear of any security interests, claims, liens or
encumbrances.
(o) No Prohibition on Subsidiaries Paying Dividends or Making Other
Distributions. Except as described in the Prospectus, neither of the
Subsidiaries is prohibited, directly or indirectly, from (i) paying any
dividends to the Company, (ii) making any other distribution on its capital
stock, (iii) repaying to the Company or the other Subsidiary any loans or
advances from the Company or such other Subsidiary or (iv) transferring any
of its properties or assets to the Company,
(p) Capitalization and Other Capital Stock Matters. The authorized, issued
and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options or warrants described in
the Prospectus). The Common Shares, including the Shares, conform in all
material respects to the description thereof contained in the Prospectus. All
of the issued and outstanding Common Shares (i) have been duly authorized and
are validly issued, fully paid and nonassessable and (ii) have been issued in
compliance with federal and state securities
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laws. None of the outstanding Common Shares were issued in violation of any
preemptive rights, rights of first refusal, or other similar rights to
subscribe for or purchase securities of the Company. There are no authorized
or outstanding options, warrants, preemptive rights, rights of first refusal
or other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or either
of the Subsidiaries other than those accurately described in the Prospectus.
The description of the Company's stock option, stock bonus and other stock
plans or arrangements, and the options or other rights granted thereunder,
set forth in the Prospectus accurately and fairly presents in all material
respects the information required to be shown with respect to such plans,
arrangements, options and rights.
(q) Listing. The Shares have been approved for inclusion on the Nasdaq
National Market, subject only to official notice of issuance.
(r) No Consents, Approvals or Authorizations Required. No consent,
approval, authorization or order of, or filing with, any court or
governmental agency or regulatory body is required in connection with the
transactions contemplated herein, except such as have been obtained or made
under the Securities Act and such as may be required by the blue sky laws of
any state or other jurisdiction of the United States, the by-laws, rules and
regulations of the National Association of Securities Dealers, Inc. (the
"NASD"), or federal or provincial securities laws of Canada.
(s) Non-Contravention of Existing Instruments and Agreements. Neither the
issue and sale of the Shares, the consummation of any of the other
transactions contemplated herein nor the fulfillment of the terms hereof
will conflict with, result in a breach or violation of, or result in the
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or either of the Subsidiaries pursuant to (i) the charter or by-
laws of the Company or either of the Subsidiaries, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument
to which the Company or either of the Subsidiaries is a party or bound or to
which its properties are subject or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or either of the
Subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company, either of the Subsidiaries or any of their properties.
(t) No Defaults or Violations. Neither the Company nor either of the
Subsidiaries is in violation or default of (i) any provision of its charter
or by-laws, (ii) the terms of any indenture, contract, lease, mortgage, deed
of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which it is a party or bound or to which
its properties are subject or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having jurisdiction
over the Company or such Subsidiary or any of its properties, as applicable,
except for any such violations or defaults that do not and will not, in the
aggregate, have a Material Adverse Effect.
(u) No Actions, Suits or Proceedings. No action, suit or proceeding by or
before any court, any governmental agency, authority or body, or any
arbitrator involving the Company, either of the Subsidiaries, or its or their
properties is pending or, to the knowledge of the Company, threatened that
reasonably could be expected (i) to have a material adverse effect on the
performance of this Agreement or the consummation of any of the transactions
contemplated hereby or (ii) to result in a Material Adverse Effect.
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(v) All Necessary Permits, etc. Each of the Company and the Subsidiaries
possesses all valid and current certificates, authorizations and permits
issued by the appropriate state, federal or foreign regulatory agencies or
bodies necessary to conduct its business. Neither the Company nor either of
the Subsidiaries has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such certificate,
authorization or permit that, in the aggregate, if the subject of unfavorable
decisions, rulings or findings, reasonably could be expected to result in a
Material Adverse Change.
(w) Title to Properties. The Company and the Subsidiaries have valid and
indefeasible title to all the properties and assets reflected as owned in the
consolidated financial statements referred to in Section 1(A)(i), in each
case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except such as, in the
aggregate, do not materially and adversely affect the value of such
properties and do not materially interfere with the use made or proposed to
be made of such properties by the Company and the Subsidiaries. The real
property, improvements, equipment and personal property held under lease by
the Company or either of the Subsidiaries are held under valid and
enforceable leases, with such exceptions as, in the aggregate, are not
material and do not materially interfere with the use made or proposed to be
made of such real property, improvements, equipment or personal property by
the Company or such Subsidiary.
(x) Tax Law Compliance. The Company and the Subsidiaries have (i) filed
all necessary federal income tax returns and all necessary state and foreign
income and franchise tax returns or have properly requested extensions
thereof and (ii) paid all taxes required to be paid by any of them and, if
due and payable, any related or similar assessment, fine or penalty levied
against any of them except as is being contested in good faith and by
appropriate proceedings. The Company has made adequate charges, accruals and
reserves in the applicable consolidated financial statements referred to in
Section 1(A)(i) in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company
or either of the Subsidiaries has not been finally determined. The Company
is not aware of any tax deficiency that has been or might be asserted or
threatened against the Company or either of the Subsidiaries and that
reasonably could be expected to result in a Material Adverse Change.
(y) Intellectual Property Rights. Each of the Company and the Subsidiaries
owns or possesses adequate rights to use all patents, patent rights or
licenses, inventions, collaborative research agreements, trade secrets, know-
how, trademarks, service marks, trade names and copyrights that are necessary
to conduct its businesses as described in the Registration Statement and the
Prospectus. The expiration of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights of the Company and the
Subsidiaries would not result in a Material Adverse Effect that is not
otherwise disclosed in the Prospectus. Except as set forth in the
Registration Statement and the Prospectus, neither the Company nor either of
the Subsidiaries has received any notice of, or has any knowledge of, any
infringement of or conflict with asserted rights of the Company by others
with respect to any patent, patent rights, inventions, trade secrets, know-
how, trademarks, service marks, trade names or copyrights. Except as set
forth in the Registration Statement and the Prospectus, neither the Company
nor either of the Subsidiaries has received any notice of, or otherwise has
any knowledge of, any infringement of or conflict with asserted rights of
others with respect to any patent, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names or copyrights that, in the
aggregate, if the subject of an unfavorable decisions, rulings or findings,
reasonably could be expected to have a Material Adverse Effect. There is no
claim being made against the Company or either of the Subsidiaries regarding
patents, patent rights or licenses, inventions, collaborative research,
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trade secrets, know-how, trademarks, service marks, trade names or
copyrights. The Company and the Subsidiaries do not in the conduct of their
business as now or proposed to be conducted (as described in the Prospectus)
infringe or conflict with any right or patent of any third party, or any
discovery, invention, product or process that is the subject of a patent
application filed by any third party, known to the Company or either of the
Subsidiaries, which infringement or conflict reasonably could be expected to
result in a Material Adverse Change.
(z) Year 2000 Preparedness. There are no issues related to the
preparedness of the Company or either of the Subsidiaries for the Year 2000
that (i) are of a character required to be described or referred to in the
Registration Statement or Prospectus by the Securities Act that have not been
accurately described in the Registration Statement and the Prospectus or (ii)
reasonably could be expected to result in a Material Adverse Change or to
materially affect their properties, assets or rights. All internal computer
systems and each Constituent Component of those systems, and all computer-
related products and each Constituent Component of those products, of the
Company and the Subsidiaries (i) have been reviewed to confirm that they
store, process (including sorting and performing mathematical operations,
calculations and computations), input and output data containing date and
information correctly regardless of whether the date contains dates and times
before, on or after January 1, 2000, (ii) have been designated to ensure date
and time entry recognition and calculations and date data interface values
that reflect the century, (iii) accurately manage and manipulate data
involving dates and times, including single century formulas and multi-
century formulas, and will not cause an abnormal ending scenario within the
application or generate incorrect values or invalid results involving such
dates, (iv) accurately process any date rollover, and (v) accept and respond
to two-digit year date input in a manner that resolves any ambiguities as to
the century. "Constituent Component" means all software (including operating
systems, programs, packages and utilities), firmware, hardware, networking
components and peripherals provided as part of the configuration. The
Company has inquired of material vendors as to their preparedness for the
Year 2000 and has disclosed in the Registration Statement and the Prospectus
any issues that reasonably could be expected to result in a Material Adverse
Change.
(aa) No Transfer Taxes or Other Fees. There are no transfer taxes or
other similar fees or charges under federal law or the laws of any state, or
any political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance and sale of Shares
by the Company.
(bb) Company Not an "Investment Company." The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as
amended. The Company is not, and after receipt of payment for the Shares
will not be, an "investment company" or an entity "controlled" by an
"investment company" within the meaning of such Act. The Company will
conduct its business in a manner so that it will not become subject to such
Act.
(cc) Insurance. The Company and the Subsidiaries are insured by
recognized, financially sound and reputable institutions with policies in
such amounts, with such deductibles and covering such risks as are adequate
and customary for their businesses, including policies covering (i) real and
personal property owned or leased by the Company and the Subsidiaries against
theft, damage, destruction, acts of vandalism and earthquakes, (ii) general
liability, and (iii) directors' and officers' liability. The Company has no
reason to believe that it or either of the Subsidiaries will not be able (i)
to renew its existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar
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institutions as may be necessary or appropriate to conduct its business as
now conducted and at a cost that would not result in a Material Adverse
Change.
(dd) Labor Matters. To the Company's knowledge, no labor disturbance by
employees of the Company or either of the Subsidiaries exists or is imminent.
The Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or licensors or its significant
customers that reasonably could be expected to result in a Material Adverse
Change.
(ee) No Price Stabilization or Manipulation. The Company has not taken
and will not take, directly or indirectly, any action designed to, or that
reasonably could be expected to, cause or result in stabilization or
manipulation of the price of the Common Shares to facilitate the sale or
resale of the Shares.
(ff) Lock-Up Agreements. Each officer and director of the Company, each
Selling Stockholder and each of the other record holders of securities of the
Company identified in Exhibit A hereto, has signed an agreement substantially
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in the form attached hereto as Exhibit B (the "Lock-up Agreements"). The
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Company has provided to ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Underwriters
("Underwriters' Counsel"), a complete and accurate list of all
securityholders of the Company and the number and type of securities held by
each securityholder. The Company has provided to Underwriters' Counsel
executed copies of all of the Lock-up Agreements.
(gg) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company, either of the Subsidiaries
or any other person that are required to be described in the Prospectus and
have not been described as required.
(hh) No Unlawful Contributions or Other Payments. Neither the Company,
either of the Subsidiaries nor, to the knowledge of the Company, any employee
or agent of the Company or either of the Subsidiaries has made any
contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of a character
required to be disclosed in the Prospectus.
(ii) Environmental Laws. The Company and the Subsidiaries are in
compliance with all existing rules, laws and regulations relating to the use,
treatment, storage and disposal of toxic substances and protection of health
or the environment ("Environmental Laws") that are applicable to their
businesses, except where the failure to comply would not result in a Material
Adverse Change. Neither the Company nor either of the Subsidiaries has
received any notice from any governmental authority or third party of an
asserted claim under Environmental Laws, which claim is required to be
disclosed in the Registration Statement and the Prospectus. Neither the
Company nor either of the Subsidiaries will be required to make future
material capital expenditures to comply with Environmental Laws. No property
owned, leased or occupied by the Company or either of the Subsidiaries has
been designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. (S) 9601, et
seq.), or otherwise designated as a contaminated site under applicable state
or local law.
(jj) ERISA Compliance. The Company, the Subsidiaries and any "employee
benefit plan" (as defined under the Employee Retirement Income Security Act
of 1974, as amended, and the regulations and published interpretations
thereunder (collectively, "ERISA")) established or maintained by the Company,
either of the Subsidiaries or their "ERISA Affiliates" (as defined below) are
in compliance in all material respects with ERISA. "ERISA Affiliate" means
any member of any group of organizations described in Section 414(b),(c),(m)
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or (o) of the Internal Revenue Code of 1986, as amended (the "Code"), of
which the Company or such Subsidiary is a member. No "reportable event" (as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any "employee benefit plan" established or maintained by the
Company, the Subsidiaries or any ERISA Affiliate. No "employee benefit plan"
established or maintained by the Company, either of the Subsidiaries or any
ERISA Affiliate, if such "employee benefit plan" were terminated, would have
any "amount of unfounded benefit liabilities" (as defined under ERISA).
Neither the Company, either of the Subsidiaries nor any ERISA Affiliate has
incurred or reasonably expects to incur any liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "employee
benefit plan" or (ii) Section 412, 4971, 4975 or 4980B of the Code. Each
"employee benefit plan" established or maintained by the Company, either of
the Subsidiaries or any ERISA Affiliate that is intended to be qualified
under Section 401(a) of the Code is so qualified, and nothing has occurred,
whether by action or failure to act, that would cause the loss of such
qualification.
(kk) Certificates. Any certificate signed by an officer of the Company
and delivered to the Representatives or Underwriters' Counsel in connection
with this Agreement shall be deemed to be a representation and warranty
hereunder by the Company to each Underwriter as to the matters set forth
therein.
B. Representations and Warranties of the Selling Stockholders. Each Selling
Stockholder represents, warrants and covenants to each Underwriter as follows:
(a) The Underwriting Agreement. This Agreement (i) has been duly
authorized, executed and delivered by or on behalf of such Selling
Stockholder and (ii) 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 laws relating to or affecting the rights and remedies of
creditors or by general equitable principles.
(b) The Custody Agreement and Power of Attorney. Each of (i) the Custody
Agreement signed by or on behalf of such Selling Stockholder and American
Stock Transfer & Trust Company, as custodian (the "Custodian"), relating to
the deposit of the Shares to be sold by such Selling Stockholder (the
"Custody Agreement") and (ii) the Irrevocable Power of Attorney of such
Selling Stockholder appointing ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as such
Selling Stockholder's attorneys-in-fact (each an "Attorney-in-Fact") to the
extent set forth therein relating to the transactions contemplated hereby and
by the Prospectus (with respect to such Selling Stockholder, the "Power of
Attorney") has been duly authorized, 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 the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the rights and remedies of
creditors or by general equitable principles. Such Selling Stockholder agrees
that the Firm Shares to be sold by such Selling Stockholder on deposit with
the Custodian are subject to the interests of the Underwriters, that the
arrangements made for such custody are to that extent irrevocable, and that
the obligations of such Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement or in the Custody Agreement,
by any act of such Selling Stockholder, by operation of law, by death or
incapacity of such Selling Stockholder, or by the occurrence of any other
event. If such Selling Stockholder should die or become incapacitated, or if
any other event should occur, before the delivery of the Shares to be sold by
such Selling Stockholder hereunder, the documents evidencing the Firm Shares
to be sold by such Selling Stockholder
9
then on deposit with the Custodian shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such death,
incapacity or other event had not occurred, regardless of whether or not the
Custodian shall have received notice thereof.
(c) Title to Shares to be Sold. Such Selling Stockholder is the lawful
owner of the Firm Shares to be sold by such Selling Stockholder hereunder.
Upon sale and delivery of, and payment for, such Firm Shares as provided
herein, such Selling Stockholder will convey good and marketable title to
such Firm Shares, free and clear of all security interests, claims, liens or
encumbrances.
(d) All Authorizations Obtained. Such Selling Stockholder has, and on the
First Closing Date will have, (i) good and marketable title to all of the
Firm Shares being sold by such Selling Stockholder pursuant to this Agreement
and (ii) the legal right and power, and all authorizations and approvals
required by law and its organizational documents (if any) to enter into this
Agreement, the Custody Agreement and the Power of Attorney, to sell, transfer
and deliver all of the Firm Shares being sold by such Selling Stockholder
pursuant to this Agreement, and to comply with its other obligations
hereunder and thereunder.
(e) No Further Consents, Authorization or Approvals. No consent,
approval, authorization or order of any court or governmental agency or body
is required for the consummation by such Selling Stockholder of the
transactions contemplated herein, except such as may have been obtained or
made under the Securities Act or otherwise and such as may be required by the
blue sky laws of any state or other jurisdiction of the United States, the
by-laws, rules and regulations of the NASD, or federal or provincial
securities laws of Canada.
(f) Non-Contravention. Neither the sale of the Firm Shares being sold by
such Selling Stockholder, the consummation of any of the other transactions
herein contemplated by such Selling Stockholder, nor the fulfillment of the
terms hereof by such Selling Stockholder will conflict with, result in a
breach or violation of, or constitute a default under any law, any indenture
or other agreement or instrument to which such Selling Stockholder is party
or bound or any judgment, order or decree applicable to such Selling
Stockholder of any court or regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Stockholder.
(g) No Registration or Other Similar Rights. Such Selling Stockholder
does not have, or has waived prior to the date hereof, any registration or
other similar rights to have any equity or debt securities registered for
sale by the Company under the Registration Statement or included in the
offering contemplated by this Agreement.
(h) No Preemptive, Co-sale or Other Similar Rights. Such Selling
Stockholder does not have, or has waived prior to the date hereof, any
preemptive right, co-sale right, 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 own any warrants, options or
similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, right, warrants, options or other securities from
the Company, other than those described in the Registration Statement and the
Prospectus.
(i) Disclosure Made by Such Selling Stockholder in the Prospectus. All
information furnished by or on behalf of such Selling Stockholder in writing
expressly for use in the Registration Statement and the Prospectus (i) is,
and on the First Closing Date and the Second Closing Date will be, accurate
and complete in all material respects and (ii) does not,
10
and on the First Closing Date and the Second Closing Date will not, contain
any untrue statement of a material fact or omit to state any material fact
necessary to make such information not misleading. Such Selling Stockholder
confirms as accurate the numbers of shares of Common Shares set forth
opposite such Selling Stockholder's name in the Prospectus under the caption
"Principal and Selling Stockholders" (both prior to and after giving effect
to the sale of the Shares).
(j) No Price Stabilization or Manipulation. Such Selling Stockholder has
not taken and will not take, directly or indirectly, any action designed to
or that reasonably could be expected to cause or result in stabilization or
manipulation of the price of the Common Shares to facilitate the sale or
resale of the Shares.
(k) No Transfer Taxes or Other Fees. There are no transfer taxes or other
similar fees or charges under federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the sale of Firm Shares by such
Selling Stockholder.
(l) Distribution of Offering Materials by Such Selling Stockholder. Such
Selling Stockholder has not distributed and will not distribute, prior to the
later of the Second Closing Date and the completion of the Underwriters'
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any preliminary prospectus, the
Prospectus or the Registration Statement.
(m) Confirmation of Company Representations and Warranties. Such Selling
Stockholder (i) has no reason to believe that the representations and
warranties of the Company contained in Section 1(A) are not true and correct,
(ii) is familiar with the Registration Statement and the Prospectus and has
no knowledge of any material fact, condition or information not disclosed in
the Registration Statement or the Prospectus that has had or may result in a
Material Adverse Effect and (iii) is not prompted to sell the Firm Shares to
be sold by such Selling Stockholder by any information concerning the Company
that is not set forth in the Registration Statement and the Prospectus.
(n) Certificates. Any certificate signed by or on behalf of any Selling
Stockholder and delivered to the Representatives or Underwriters' Counsel in
connection with this Agreement shall be deemed to be a representation and
warranty hereunder by such Selling Stockholder to each Underwriter as to the
matters covered thereby.
Section 2. Purchase, Sale and Delivery of the Shares.
(a) The Firm Shares. Upon the terms herein set forth, (i) the Company agrees
to issue and sell to the several Underwriters an aggregate of 3,530,000 Firm
Shares and (ii) the Selling Stockholders agree to sell to the several
Underwriters an aggregate of 170,000 Firm Shares, each Selling Stockholder
selling the number of Firm Shares set forth opposite such Selling Stockholder's
name on Schedule B. On the basis of the representations, warranties and
----------
agreements herein contained, and upon the terms but subject to the conditions
herein set forth, the Underwriters agree, severally and not jointly, to purchase
from the Company and the Selling Stockholders the respective numbers of Firm
Shares set forth opposite their names on Schedule A. The purchase price per
----------
Firm Share to be paid by the several Underwriters to the Company and the Selling
Stockholders shall be $___.
(b) The First Closing Date. Delivery of the Firm Shares to be purchased by
the Underwriters and payment therefor shall be made by the Company and the
Representatives at 6 A.M., San
11
Francisco time, at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP (or at
such other place as may be agreed upon between the Representatives and the
Company), (i) on the third full business day following the first day that Shares
are traded, (ii) if this Agreement is executed and delivered after 1:30 P.M.,
San Francisco time, the fourth full business day following the day that this
Agreement is executed and delivered or (iii) at such other time and date not
later that seven full business days following the first day that Shares are
traded as the Representatives and the Company may determine (or at such time and
date to which payment and delivery shall have been postponed pursuant to Section
8), such time and date of payment and delivery being herein called the "Closing
Date." Notwithstanding the foregoing, if the Company has not made available to
the Representatives copies of the Prospectus within the time provided in Section
4(d), the Representatives may, in their sole discretion, postpone the Closing
Date until no later that two full business days following delivery of copies of
the Prospectus to the Representatives.
(c) The Option Shares; the Second Closing Date. In addition, on the basis of
the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up
to an aggregate of 555,000 Option Shares from the Company at the purchase price
per share to be paid by the Underwriters for the Firm Shares. The option
granted hereunder is for use by the Underwriters solely in covering any over-
allotments in connection with the sale and distribution of the Firm Shares. The
option granted hereunder may be exercised at any time upon notice by the
Representatives to the Company, which notice may be given at any time within 30
days from the date of this Agreement. The time and date of delivery of the
Option Shares, if subsequent to the First Closing Date, are called the "Second
Closing Date," shall be determined by the Representatives and shall not be
earlier than three nor later than five full business days after delivery of such
notice of exercise. If any Option Shares are to be purchased, each Underwriter
agrees, severally and not jointly, to purchase the number of Option Shares
(subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Option Shares to be purchased as the number of Firm Shares set forth
on Schedule A opposite the name of such Underwriter bears to the total number of
----------
Firm Shares. The Representatives may cancel the option at any time prior to its
expiration by giving written notice of such cancellation to the Company.
(d) Public Offering of the Shares. The Representatives hereby advise the
Company and the Selling Stockholders that the Underwriters intend to offer for
sale to the public, as described in the Prospectus, their respective portions of
the Shares as soon after this Agreement has been executed and the Registration
Statement has been declared effective as the Representatives, in their sole
judgment, have determined is advisable and practicable.
(e) Payment for the Shares. Payment for the Shares to be sold by the Company
shall be made at the First Closing Date (and, if applicable, at the Second
Closing Date) by wire transfer of immediately available funds to the order of
the Company. Payment for the Shares to be sold by the Selling Stockholders
shall be made at the First Closing Date by wire transfer of immediately
available funds to the order of the Custodian.
It is understood that the Representatives have been authorized, for their
own accounts and the accounts of the several Underwriters, to accept delivery of
and receipt for, and make payment of the purchase price for, the Firm Shares and
any Option Shares the Underwriters have agreed to purchase. BancBoston
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., individually and not as one of the Representatives, may
(but shall not be obligated to) make payment for any Shares to be purchased by
any Underwriter whose funds shall not have been received by the Representatives
by the First Closing Date or the Second Closing Date, as the case may be, for
the account of such Underwriter,
12
but any such payment shall not relieve such Underwriter from any of its
obligations under this Agreement.
Each Selling Stockholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Firm Shares to be sold by such Selling Stockholder to
the several Underwriters or otherwise in connection with the performance of such
Selling Stockholder's obligations hereunder and (ii) the Custodian is authorized
to deduct for such payment any such amounts from the proceeds to such Selling
Stockholder hereunder and to hold such amounts for the account of such Selling
Stockholder with the Custodian under the Custody Agreement.
(f) Delivery of the Shares. The Company and the Selling Stockholders shall
deliver, or cause to be delivered, a credit representing the Firm Shares to an
account or accounts at The Depository Trust Company as designated by the
Representatives for the accounts of the Representatives and the several
Underwriters at the First Closing Date, against the irrevocable release of a
wire transfer of immediately available funds for the amount of the purchase
price therefor. The Company shall also deliver, or cause to be delivered, a
credit representing the Option Shares to an account or accounts at The
Depository Trust Company as designated by the Representatives for the accounts
of the Representatives and the several Underwriters at the Second Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. Time shall be of the
essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than 12 noon, San
Francisco time, on the second business day following the date the Shares are
released by the Underwriters for sale to the public, the Company shall deliver
or cause to be delivered copies of the Prospectus in such quantities and at such
places as the Representatives shall reasonably request.
Section 3. Covenants of the Company and the Selling Stockholders.
A. Covenants of the Company. The Company further covenants and agrees with
each Underwriter as follows:
(a) Registration Statement Matters. The Company will use its best
efforts to cause a registration statement on Form 8-A (the "Form 8-A
Registration Statement") as required by the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), to become effective simultaneously with the
Registration Statement. The Company will use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A
of the Securities Act is followed, will prepare and timely file with the
Commission pursuant to Rule 424(b) under the Securities Act a prospectus in a
form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A of the Securities Act. The Company will not file any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus of which the Representatives have not previously been advised and
furnished with a copy, to which the Representatives have reasonably objected
in writing or which is not in compliance with the Securities Act. If the
Company elects to rely on Rule 462(b) under the Securities Act, the Company
will file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) under the Securities Act prior to the time
confirmations are sent or given, as specified by Rule 462(b)(2) under the
Securities Act, and will pay the applicable fees in accordance with Rule 111
under the Securities Act.
13
(b) Securities Act Compliance. The Company will advise the
Representatives promptly when (i) the Registration Statement or any post-
effective amendment thereto becomes effective, (ii) the Company receives any
comments from the Commission, (iii) the Commission requests any amendment of
the Registration Statement, any amendment or supplement to the Prospectus, or
any additional information and (iv) the Commission institutes any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or institutes proceedings for that purpose. The Company will use
its best efforts to prevent the Commission from issuing any such stop order
and, if such a stop order is issued, to cause the Commission to lift such
stop order as soon as possible.
(c) Blue Sky Compliance. The Company will cooperate with the
Representatives and Underwriters' Counsel in endeavoring to qualify the
Shares for sale under the securities laws of such jurisdictions (both
national and foreign) as the Representatives may reasonably have designated
in writing and will make such applications, file such documents and furnish
such information as may be reasonably required for that purpose, provided the
Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction where it is not
now so qualified or required to file such a consent. The Company will, from
time to time, prepare and file such statements, reports and other documents
as are or may be required to continue such qualifications in effect for so
long a period as the Representatives may reasonably request for distribution
of the Shares.
(d) Amendments and Supplements to the Prospectus and Other Securities Act
Matters. The Company will comply with the Securities Act, the Exchange Act
and the rules and regulations of the Commission under the Exchange Act so as
to permit the completion of the distribution of the Shares as contemplated by
this Agreement and the Prospectus. If during the period in which a
prospectus is required by law to be delivered by an underwriter or dealer,
any event shall occur as a result of which, in the judgment of the Company or
in the reasonable opinion of the Representatives or Underwriters' Counsel, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, not misleading, or, if it is
necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission, and
furnish at its own expense to the Underwriters and to dealers, an appropriate
amendment to the Registration Statement or supplement to the Prospectus so
that the Prospectus as so amended or supplemented will not, in the light of
the circumstances when it is so delivered, be misleading, or so that the
Prospectus will comply with the law.
(e) Copies of any Amendments and Supplements to the Prospectus. The
Company will furnish to the Representatives, without charge, during the
period beginning on the date hereof and ending on the later of the Second
Closing Date or such date as in the opinion of Underwriters' Counsel the
Prospectus is no longer required by law to be delivered in connection with
sales by an underwriter or dealer (the "Prospectus Delivery Period"), as many
copies of the Prospectus and any amendments and supplements thereto as the
Representatives may request.
(f) Insurance. The Company will (i) obtain directors' and officers'
liability insurance in the minimum amount of $10,000,000 that shall apply to
the offering contemplated hereby and (ii) cause BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Inc. to be added as an additional insured to such policy in respect of the
offering contemplated hereby.
(g) Notice of Subsequent Events. If at any time during the ninety-day
period after the Registration Statement becomes effective, any rumor,
publication or event relating to or
14
affecting the Company shall occur as a result of which in the reasonable
judgment of the Representatives the market price of the Common Shares has
been or is likely to be materially affected (regardless of whether such
rumor, publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from the Representatives
advising the Company to the effect set forth above, forthwith prepare,
consult with the Representatives concerning the substance of, and disseminate
a press release or other public statement, reasonably satisfactory to
Representatives, responding to or commenting on such rumor, publication or
event.
(h) Use of Proceeds. The Company will apply the net proceeds from the
sale of the Shares sold by it in the manner described under the caption "Use
of Proceeds" in the Prospectus.
(i) Transfer Agent. The Company will engage and maintain, at its expense,
a registrar and transfer agent for the Common Shares.
(j) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month
period ending ____________, 2000 that satisfies the provisions of Section
11(a) of the Securities Act.
(k) Periodic Reporting Obligations. During the Prospectus Delivery
Period, the Company will file with the Commission, on a timely basis, all
reports and documents required to be filed under the Exchange Act.
(l) Agreement Not to Offer or Sell Additional Securities. The Company
will not, for a period of 180 days after the date of the Prospectus, offer to
sell, contract to sell, or otherwise sell, dispose of, loan, pledge or grant
any rights with respect to any Common Shares, any options or warrants to
purchase any Common Shares, or any securities convertible into or
exchangeable for Common Shares without the prior written consent of
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., other than the sale of the Shares to be
sold by the Company hereunder and the Company's issuance of options or Common
Shares under the Company's Long-Term Incentive Compensation Plan and 1988
Stock Option Plan, each as presently authorized.
(m) Future Reports to the Representatives. During the five-year period
commencing on the date hereof, the Company will furnish to the
Representatives (i) as soon as practicable after the end of each fiscal year,
copies of its annual report containing the consolidated balance sheet of the
Company and its subsidiaries as of the close of such fiscal year,
consolidated statements of income, stockholders' equity and cash flows for
the year then ended, and the opinion thereon of the Company's independent
certified public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report
filed by the Company with the Commission, the Nasdaq Stock Market, Inc. or
any securities exchange; and (iii) as soon as practicable after mailing,
copies of any report or communication of the Company mailed generally to
holders of its capital stock.
B. Covenants of the Selling Stockholders. Each Selling Stockholder further
covenants and agrees with each Underwriter as follows:
(a) Delivery of Form W-8 or W-9. Such Selling Stockholder will deliver to
the Representatives prior to the First Closing Date a properly completed and
executed United
15
States Treasury Department Form W-8 (if such Selling Stockholder is a non-
United States person) or Form W-9 (if such Selling Stockholder is a United
States Person).
(b) Notification of Untrue Statements, etc. If, at any time prior to
the date on which the distribution of the Shares as contemplated by this
Agreement and the Prospectus has been completed, as determined by the
Representatives, such Selling Stockholder has knowledge of the occurrence of
any event as a result of which the Prospectus or the Registration Statement,
in each case as then amended or supplemented, would include an 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, such Selling Stockholder will promptly notify the
Company and the Representatives.
Section 4. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase and pay for the
Shares as provided herein on the First Closing Date and, with respect to the
Option Shares, the Second Closing Date shall be subject to the accuracy of the
respective representations and warranties on the part of the Company and the
Selling Stockholders set forth in Section 1 as of the date hereof and as of the
First Closing Date as though then made and, with respect to the Option Shares,
as of the Second Closing Date as though then made, to the timely performance by
the Company and the Selling Stockholders of their respective covenants and other
obligations hereunder, and to each of the following additional conditions:
(a) Compliance with Registration Requirements; No Stop Order; No Objection
from the NASD. The Registration Statement shall have become effective prior
to the execution of this Agreement, or at such later date as shall be
consented to in writing by the Representatives. No stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that
purpose shall have been initiated or, to the knowledge of the Company, any
Selling Shareholder or any Underwriter, threatened by the Commission. Any
request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of Underwriters' Counsel. The
NASD shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(b) Corporate Proceedings. All corporate proceedings and other legal
matters in connection with this Agreement, the form of the Registration
Statement and the Prospectus, and the registration, authorization, issue,
sale and delivery of the Shares shall have been reasonably satisfactory to
Underwriters' Counsel. Such counsel shall have been furnished with such
papers and information as they may reasonably have requested to enable them
to pass upon the matters referred to in this Section 4.
(c) No Material Adverse Change. Subsequent to the execution and delivery
of this Agreement and prior to the First Closing Date or the Second Closing
Date, as the case may be, there shall not have been any Material Adverse
Change from that set forth in the Registration Statement or Prospectus that
in the sole judgment of the Representatives, is material and adverse and that
makes it, in the sole judgment of the Representatives, impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus.
(d) Opinion of Counsel for the Company. You shall have received on the
First Closing Date or the Second Closing Date, as the case may be, an opinion
of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, L.L.P., counsel for the Company,
substantially in the form of Exhibit C attached hereto, dated the First
---------
Closing Date or the Second Closing Date, as the case may be,
16
addressed to the Underwriters and with reproduced copies or signed
counterparts thereof for each of the Underwriters. Counsel rendering the
opinion contained in Exhibit C may rely as to questions of law not involving
---------
the law of the United States or Texas or the General Corporation Law of the
State of Delaware upon opinions of local counsel, and as to questions of fact
upon representations or certificates of officers of the Company and of
government officials, in which case their opinion is to state that they are
so relying and that they have no knowledge of any material misstatement or
inaccuracy in any such opinion, representation or certificate. Copies of any
opinion, representation or certificate so relied upon shall be delivered to
the Representatives and to Underwriters' Counsel.
(e) Opinion of Counsel for the Underwriters. You shall have received on
the First Closing Date or the Second Closing Date, as the case may be, an
opinion of Underwriters' Counsel, substantially in the form of Exhibit D
---------
hereto. The Company shall have furnished to such counsel such documents as
they may have requested for the purpose of enabling them to pass upon such
matters.
(f) Accountants' Comfort Letter. You shall have received on the First
Closing Date and on the Second Closing Date, as the case may be, a letter
from Ernst & Young LLP addressed to the Underwriters, dated the First Closing
Date or the Second Closing Date, as the case may be, confirming that they are
independent certified public accountants with respect to the Company and the
Subsidiaries within the meaning of the Securities Act and based upon the
procedures described in such letter delivered to you concurrently with the
execution of this Agreement (herein called the "Original Letter"), but
carried out to a date not more than four business days prior to the First
Closing Date or the Second Closing Date, as the case may be, (i) confirming,
to the extent true, that the statements and conclusions set forth in the
Original Letter are accurate as of the First Closing Date or the Second
Closing 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 such letter or to reflect the availability
of more recent financial statements, data or information. The letter shall
not disclose any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and the
Subsidiaries considered as one enterprise from that set forth in the
Registration Statement or the Prospectus that, in the sole judgment of the
Representatives, is material and adverse and that makes it, in the sole
judgment of the Representatives, impracticable or inadvisable to proceed with
the public offering of the Shares as contemplated by the Prospectus. The
Original Letter from Ernst & Young LLP (i) shall be addressed to the
Underwriters, (ii) shall be satisfactory in form and substance to the
Representatives, (iii) shall represent, to the extent true, that they are
independent accountants with respect to the Company within the meaning of the
Securities Act, (iv) shall set forth their opinion with respect to their
examination of the consolidated balance sheets of the Company as of March 31,
1998 and 1999 and related consolidated statements of operations,
shareholders' equity, and cash flows for the fiscal years ended March 31,
1997, 1998 and 1999 and (v) shall address other matters agreed upon by Ernst
& Young LLP and the Representatives. In addition, you shall have received
from Ernst & Young LLP a letter addressed to the Company and made available
to you for the use of the Underwriters stating that their review of the
Company's system of internal accounting controls, to the extent they deemed
necessary in establishing the scope of their examination of the Company's
consolidated financial statements as of March 31, 1999, did not disclose any
weaknesses in internal controls that they considered to be material
weaknesses.
(g) Officers' Certificate. You shall have received on the First Closing
Date or the Second Closing Date, as the case may be, a certificate of the
Company, dated the First
17
Closing Date or the Second Closing Date, as the case may be, signed by the
President and Chief Executive Officer and the Vice President-Finance and
Chief Financial Officer of the Company, to the effect that, and you shall be
satisfied that:
(i) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the
First Closing Date or the Second Closing Date, as the case may
be, 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 First Closing Date or the Second
Closing Date, as the case may be;
(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 threatened under the
Securities Act;
(iii) when the Registration Statement became effective and at all
times subsequent thereto up to the time of delivery of such
certificate, (A) the Registration Statement and the
Prospectus, and any amendments or supplements thereto,
contained all material information required to be included
therein by the Securities Act and conformed in all material
respects to the requirements of the Securities Act and (B) the
Registration Statement and the Prospectus, and any amendments
or supplements thereto, did not and do not include any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading;
(iv) since the effective date of the Registration Statement, there
has occurred no event required to be set forth in an amendment
or supplement to the Prospectus that has not been so set
forth; and
(v) subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has
not been (A) any Material Adverse Change, (B) any transaction
that is material to the Company and the Subsidiaries
considered as one enterprise, except transactions entered into
in the ordinary course of business, (C) any obligation, direct
or contingent, that is material to the Company and the
Subsidiaries considered as one enterprise, incurred by the
Company or the Subsidiaries, except obligations incurred in
the ordinary course of business, (D) any change in the capital
stock or outstanding indebtedness of the Company or either of
the Subsidiaries that is material to the Company and the
Subsidiaries considered as one enterprise, (E) any dividend or
distribution of any kind declared, paid or made on the capital
stock of the Company or either of the Subsidiaries, or (F) any
loss or damage (whether or not insured) to the properties of
the Company or either of the Subsidiaries that has been
sustained or will have been sustained that has or will have a
Material Adverse Effect.
(h) Opinion of Counsel for the Selling Stockholders. You shall have
received on the First Closing Date or the Second Closing Date, as the case
may be, the opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, L.L.P., counsel for
the Selling Stockholders, substantially in the form of Exhibit E hereto,
---------
dated as of the First Closing Date or the Second Closing Date, as the case
may be, addressed to the Underwriters and with reproduced copies or signed
counterparts thereof for each of the Underwriters. In rendering such opinion,
such counsel may rely as to questions of law not involving the law of the
United States or Texas or the
18
General Corporation Law of the State of Delaware upon opinions of local
counsel and as to questions of fact upon representations or certificates of
the Selling Stockholders, officers of the Selling Stockholders (when the
Selling Stockholder is not a natural person) and governmental officials, in
which case their opinion is to state that they are so relying and that they
have no knowledge of any material misstatement or inaccuracy of any material
misstatement or inaccuracy in any such opinion, representation or certificate
so relied upon shall be delivered to the Representatives and Underwriters'
Counsel.
(i) Selling Stockholders' Certificate. You shall have received on the
First Closing Date a written certificate executed by the Attorneys-in-Fact,
dated as of the First Closing Date, to the effect that:
(i) the representations, warranties and covenants of each of the
Selling Stockholders set forth in Section 1(B) are true and correct with the
same force and effect as though expressly made by the Selling Stockholders on
and as of the First Closing Date; and
(ii) each of the Selling Stockholders has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the First Closing Date.
(j) Stock Listing. The Shares shall have been approved for inclusion on
the Nasdaq National Market, subject only to official notice of issuance.
(k) Compliance with Prospectus Delivery Requirements. The Company shall
have complied with the provisions of Sections 2(g) and 3(e) with respect to
the furnishing of Prospectuses.
(l) Additional Documents. On or before the First Closing Date or the
Second Closing Date, as the case may be, the Representatives and
Underwriters' Counsel shall have received such information, documents and
opinions as they may reasonably require (i) for the purpose of enabling them
to pass upon the issuance and sale of the Shares as contemplated herein or
(ii) in order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements, of
the Company or the Selling Stockholders herein contained.
If any condition specified in this Section 4 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Stockholders at any
time on or prior to the First Closing Date and, with respect to the Option
Shares, at any time prior to the Second Closing Date, which termination shall be
without liability on the part of any party to any other party, except that
Sections 5, 6, 7 and 10 shall at all times be effective and shall survive such
termination.
19
Section 5. Payment of Expenses.
The Company agrees to pay all costs, fees and expenses incurred in connection
with the performance of the obligations of the Company and the Selling
Stockholders hereunder and in connection with the transactions contemplated
hereby, including (i) all expenses incident to the issuance and delivery of the
Shares (including all printing and engraving costs), (ii) all fees and expenses
of the registrar and transfer agent of the Common Shares, (iii) all issue,
transfer and other stamp taxes in connection with the issuance and sale of the
Shares to the Underwriters, (iv) all fees and expenses of the Company's counsel,
independent accountants and other advisors, (v) all costs and expenses incurred
in connection with the preparation, printing, filing, shipping and distribution
of the Registration Statement (including financial statements, exhibits,
consents and certificates of experts), each preliminary prospectus and the
Prospectus, and all amendments and supplements thereto, and this Agreement, (vi)
all filing fees, attorneys' fees and expenses incurred by the Company or the
Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Shares for offer and sale under the state securities or blue sky laws or the
provincial securities laws of Canada or any other country, and, if requested by
the Representatives, preparing and printing a "Blue Sky Memorandum," an
"International Blue Sky Memorandum" or any other memoranda, and any supplements
thereto, advising the Underwriters of such qualifications, registrations and
exemptions, provided that such fees of Underwriters' Counsel shall not exceed
$10,000, (vii) the filing fees incident to, and the reasonable fees and expenses
of Underwriters' Counsel in connection with, the NASD review and approval of the
Underwriters' participation in the offering and distribution of the Shares,
(viii) the fees and expenses associated with listing the Common Shares on the
Nasdaq National Market, (ix) all costs and expenses incident to the preparation
and undertaking of "road show" preparations to be made to prospective investors,
and (x) all other fees, costs and expenses referred to in Item 13 of Part II of
the Registration Statement. Except as provided in this Section 5 or in Section
6 or 7, the Underwriters shall pay their own expenses, including the fees and
disbursements of their counsel.
This Section 5 shall not affect or modify any separate, valid agreement
relating to the allocation of payment of expenses between the Company, on the
one hand, and the Selling Stockholders, on the other hand.
Section 6. Reimbursement of Underwriters' Expenses.
If this Agreement is terminated by the Representatives pursuant to Section 4,
7, 8, 9 or 15, or if the sale to the Underwriters of the Firm Shares on the
First Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company or the Selling Stockholders to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse the Representatives and the other Underwriters (or such Underwriters
as have terminated this Agreement with respect to themselves), severally upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Representatives and the other Underwriters in connection with the
proposed purchase and the offering and sale of the Shares, including fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges but the Company shall not in any event be liable to you or
any of the other several Underwriters for any other damages, whether direct,
indirect, special, incidental, consequential or punitive, in connection with
such failure, refusal, inability or termination, including any damages on
account of loss of anticipated profits from your or their sale of the Shares.
20
Section 7. Indemnification and Contribution.
(a) Indemnification of the Underwriters.
(1) The Company agrees to indemnify and hold harmless each Underwriter,
its officers and employees, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the Exchange Act
against any loss, claim, damage, liability or expense, as incurred, to which
such Underwriter or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based:
(i) upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any
amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A or Rule 434 under the
Securities Act, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(ii) upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
(iii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained
herein;
(iv) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under law; or
(v) any act or failure to act or any alleged act or failure to
act by any Underwriter in connection with, or relating in any
manner to, the Shares or the offering contemplated hereby,
which is included as part of or referred to in any loss,
claim, damage, liability or action arising out of or based
upon any matter covered by clause (i), (ii), (iii) or (iv)
above, provided that the Company shall not be liable under
this clause (v) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that
such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its bad faith
or willful misconduct;
and to reimburse each Underwriter and each such controlling person for any
and all expenses (including the fees and disbursements of counsel chosen by
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.) as such expenses are reasonably incurred
by such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity
21
with written information furnished to the Company by the Representatives
expressly for use in the Registration Statement, any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto); and provided,
further, that with respect to any preliminary prospectus, the foregoing
indemnity agreement shall not inure to the benefit of any Underwriter from
whom the person asserting any loss, claim, damage, liability or expense
purchased Shares, or any person controlling such Underwriter, if copies of
the Prospectus were timely delivered to the Underwriter pursuant to Section 2
and a copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the
sale of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense. The indemnity agreement set forth in this
Section 7(a)(i) shall be in addition to any liabilities that the Company may
otherwise have.
(2) Each of the Selling Stockholders, jointly and severally, agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Underwriter or such
controlling person may become subject, under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company, which consent shall not
be unreasonably withheld), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of
or is based:
(i) upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any
amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A or Rule 434 under the
Securities Act, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary
to make the statements therein not misleading 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;
(ii) upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; or
(iii) in whole or in part upon any inaccuracy in the representations
and warranties of such Selling Stockholder contained herein;
(iv) in whole or in part upon any failure of such Selling
Stockholder to perform its obligations hereunder or under law;
or
(v) any act or failure to act or any alleged act or failure to act
by any Underwriter in connection with, or relating in any
manner to, the Shares or the offering
22
contemplated hereby, which is included as part of or referred
to in any loss, claim, damage, liability or action arising out
of or based upon any matter covered by clause (i), (ii), (iii)
or (iv) above, provided that the Selling Stockholders shall
not be liable under this clause (v) to the extent that a court
of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through
its bad faith or willful misconduct;
and to reimburse each Underwriter and each such controlling person for any
and all expenses (including the fees and disbursements of counsel chosen by
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.) as such expenses are reasonably incurred
by such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Selling Stockholders by the Representatives
expressly for use in the Registration Statement, any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto); and provided,
further, that with respect to any preliminary prospectus, the foregoing
indemnity agreement shall not inure to the benefit of any Underwriter from
whom the person asserting any loss, claim, damage, liability or expense
purchased Shares, or any person controlling such Underwriter, if copies of
the Prospectus were timely delivered to the Underwriter pursuant to Section 2
and a copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the
sale of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense. The indemnity agreement set forth in this
Section 7(a)(2) shall be in addition to any liabilities that the Selling
Stockholders may otherwise have.
(b) Indemnification of the Company, Its Directors and Officers and the
Selling Stockholders. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, the Selling Stockholders and
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer, Selling Stockholder or controlling person may become subject
under the Securities Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Company and the Selling Stockholders by the Representatives
expressly for use therein; and to reimburse the Company, or any such director,
officer, Selling Stockholder or controlling person for
23
any legal and other expense reasonably incurred by the Company, or any such
director, officer, Selling Stockholder or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. The indemnity agreement set forth in this
Section 7(b) shall be in addition to any liabilities that the Underwriters may
otherwise have.
(c) Information Provided by the Underwriters. The Company and each of the
Selling Stockholders hereby acknowledge that the only information that the
Underwriters have furnished to the Company and the Selling Stockholders
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) are the information set
forth in the table in the first paragraph and the statements in the second,
sixth, eighth and ninth paragraphs under the caption "Underwriting" in the
Prospectus. The Underwriters confirm that such statements are correct.
(d) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability that
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 7 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party (BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. in the case of Sections
7(b) and 8), representing the indemnified parties who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(e) Settlements. The indemnifying party under this Section 7 shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there be a final judgment for the
24
plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
7(d), the indemnifying party agrees that it shall be liable for any settlement
of any proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement, compromise or consent to the entry
of judgment in any pending or threatened action, suit or proceeding in respect
of which any indemnified party is or could have been a party and indemnity was
or could have been sought hereunder by such indemnified party, unless such
settlement, compromise or consent includes (i) an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding and (ii) does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(f) Contribution. If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Selling Stockholders on the one hand and the Underwriters on
the other from the offering of the Shares. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Selling
Stockholders on the one hand and the Underwriters on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, (or actions or proceedings in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriter on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Selling Stockholders on
the one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 7(f)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to above in this Section
7(f). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 7(f) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (f), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in
25
this Section 7(f) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(g) Timing of Any Payments of Indemnification. Any losses, claims, damages,
liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred, but in all cases, no later than thirty
days of invoice to the indemnifying party.
(h) Survival. The indemnity and contribution agreements contained in this
Section 7 and the representation and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company, its directors or officers or any
persons controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 7.
(i) Acknowledgments of Parties. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof, including the
provisions of this Section 7, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 7 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 and the Prospectus as required by the Securities Act.
Section 8. Default of One or More of the Several Underwriters.
If, on the First Closing Date or the Second Closing Date, as the case may be,
any one or more of the several Underwriters shall fail or refuse to purchase
Shares that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares that such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on Schedule A
----------
bears to the aggregate number of Firm Shares set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Shares that such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Shares and the
aggregate number of Shares with respect to which such default occurs exceeds 10%
of the aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Shares are not made within 48 hours after such default, this Agreement shall
terminate without liability of any party to any other party except that the
provisions of Sections 4 and 7 shall at all times be effective and shall survive
such termination. In any such case either the Representatives or the Company
shall have the right to postpone the First Closing Date or the Second Closing
Date, as the case may be, but in no event for longer than seven days in order
that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to include
any person substituted for a defaulting Underwriter under this Section 8. Any
action taken under this Section 8
26
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
Section 9. Termination of this Agreement.
Prior to the First Closing Date, this Agreement may be terminated by the
Representatives by notice given to the Company and the Selling Stockholders if
at any time (a) trading or quotation in any of the Company's securities shall
have been suspended or limited by the Commission or by the Nasdaq Stock Market,
or trading in securities generally on either the Nasdaq Stock Market or the New
York Stock Exchange shall have been suspended or limited, or minimum or maximum
prices shall have been generally established on any of such stock exchanges by
the Commission or the NASD; (b) a general banking moratorium shall have been
declared by any of federal, New York, Delaware or California authorities; (c)
there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United
States or international financial markets, or any substantial change or
development involving a prospective change in United States' or international
political, financial or economic conditions, as in the judgment of the
Representatives is material and adverse and makes it impracticable or
inadvisable to market the Common Shares in the manner and on the terms described
in the Prospectus or to enforce contracts for the sale of securities; (d) in the
judgment of the Representatives there shall have occurred any Material Adverse
Change; or (e) the Company shall have sustained a loss by strike, fire, flood,
earthquake, accident or other calamity of such character as in the judgment of
the Representatives may interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured. Any termination pursuant to this Section 9 shall be without
liability on the part of (i) the Company or the Selling Stockholders to any
Underwriter, except that the Company and the Selling Stockholders shall be
obligated to reimburse the expenses of the Representatives and the Underwriters
pursuant to Sections 5 and 6, (ii) any Underwriter to the Company or the Selling
Stockholders, or (iii) of any party hereto to any other party except that the
provisions of Section 7 shall at all times be effective and shall survive such
termination.
Section 10. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Stockholders, as
the case may be, and will survive delivery of and payment for the Shares sold
hereunder and any termination of this Agreement.
Section 11. Notices.
All communications hereunder shall be in writing and shall be mailed, hand
delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representatives: BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
27
If to the Company: NetSolve, Incorporated
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President and Chief Executive
Officer
If to the Selling Stockholders: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
As Attorneys-in-Fact
c/o NetSolve, Incorporated
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 12. Successors.
This Agreement will inure to the benefit of and be binding upon the parties
hereto, including any substitute Underwriters pursuant to Section 9, and to the
benefit of the employees, officers and directors and controlling persons
referred to in Section 7, and to their respective successors, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Shares as such from any of the Underwriters
merely by reason of such purchase.
Section 13. Partial Unenforceability.
The invalidity or unenforceability of any Section, paragraph or provision of
this Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
Section 14. Governing Law Provisions.
(a) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in such state.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of San Francisco or the courts
of the State of California in each case located in the City and County of San
Francisco (collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party's address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an
28
inconvenient forum. Each party not located in the United States irrevocably
appoints CT Corporation System, which currently maintains a San Francisco office
at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of
America, as its agent to receive service of process or other legal summons for
purposes of any such suit, action or proceeding that may be instituted in any
state or federal court in the City and County of San Francisco.
Section 15. Failure of One or More Selling Stockholders to Sell and Deliver
Shares.
If one or more of the Selling Stockholders shall fail to sell and deliver to
the Underwriters the Firm Shares to be sold and delivered by such Selling
Stockholders at the First Closing Date pursuant to this Agreement, then the
Underwriters may at their option, by written notice from the Representatives to
the Company and the Selling Stockholders, either (a) terminate this Agreement
without any liability on the part of any Underwriter or, except as provided in
Sections 5, 6 and 7, the Company or the Selling Stockholders, (b) purchase the
Shares that the Company and other Selling Stockholders have agreed to sell and
deliver in accordance with the terms hereof or (c) postpone the First Closing
Date, but in no event for longer than seven days in order that the required
changes, if any, to the Registration Statement and the Prospectus or any other
documents or arrangements may be effected.
Section 16. General Provisions.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. All references to Sections, Schedules and
Exhibits shall be deemed references to such parts of this Agreement, except as
otherwise provided. The Table of Contents and the Section headings herein are
for the convenience of the parties only and shall not affect the construction or
interpretation of this Agreement. The word "including" as used herein shall not
be construed so as to exclude any other thing not referred to or described.
* * *
29
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company and the Attorneys-in-Fact the enclosed
copies hereof, whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.
Very truly yours,
NetSolve, Incorporated
By
-------------------------------------
President and Chief Executive Officer
Selling Stockholders
By
-------------------------------------
As Attorney-in-Fact for the Selling
Stockholders named in Schedule B
----------
hereto
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
the Representatives as of the date
first above written:
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
On their behalf and on behalf of each
of the several Underwriters named in
Schedule A hereto
----------
By BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
By
----------------------------------
Authorized Signatory
30
SCHEDULE A
Number of
Firm Shares
to be
Underwriters Purchased
------------ -----------
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc...............................
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC......................................
-----------
Total...................................................... 3,700,000
===========
SCHEDULE B
Number of
Firm Shares
Selling Stockholder to be Sold
------------------- ------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇................................................. 120,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇................................................ 8,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇................................................ 26,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇.................................................. 2,000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇.................................................. 4,476
Sequoia XX....................................................... 41
Sequoia Capital V................................................ 922
Sequoia Technology Partners V.................................... 61
▇▇▇▇▇▇ ▇▇▇▇▇..................................................... 8,500
------------
Total....................................................... 170,000
============
EXHIBIT A
List of Securityholders Delivering Lock-up Agreements
-----------------------------------------------------
EXHIBIT B
Lock-Up Agreement
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
As Lead Representative of the several Underwriters
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that you, as lead representative of the several
underwriters (the "Underwriters"), propose to enter into an Underwriting
Agreement (the "Underwriting Agreement") with NetSolve, Inc. (the "Company") and
certain selling stockholders providing for the initial public offering (the
"Public Offering") by the Underwriters, including yourselves, of the Company's
common stock, $.01 par value (the "Common Stock"), pursuant to a registration
statement on Form S-1 to be filed with the Securities and Exchange Commission.
This letter agreement shall terminate and be of no further force and effect upon
a decision by BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. or the Company not to proceed
with the Public Offering.
In consideration of the Underwriters' agreement to purchase and make the
Public Offering of the Common Stock, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the undersigned
hereby agrees that the undersigned will not, for a period commencing on the date
hereof and continuing thereafter until 180 days after the date of the final
prospectus for the Public Offering (the "Lock-Up Period"), offer to sell,
contract to sell, or otherwise sell, dispose of, loan, pledge or grant any
rights with respect to (each a "Disposition") 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 (collectively,
"Securities") now owned or hereafter acquired directly by the undersigned or
with respect to which the undersigned has or hereafter acquires the power of
disposition, otherwise than (a) as a bona fide gift or a distribution to limited
partners, members or shareholders of the undersigned, provided that the donees
or distributees thereof (as the case may be) agree in writing to be bound by the
terms of this Lock-Up Agreement, or (b) with the prior written consent of
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. The foregoing restriction is expressly
agreed to preclude the holder of the Securities from engaging in any hedging or
other transaction that is designed to or reasonably expected to lead to or
result in a Disposition of Securities during the Lock-Up Period, even if such
Securities would be disposed of by someone other than the undersigned. Such
prohibited hedging or other transactions include, without limitation, any short
sale (whether or not against the box) or any purchase, sale or grant of any
right (including, without limitation, any put or call option) with respect to
any Securities or with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from the Securities. Notwithstanding the foregoing, this Lock-Up
Agreement does not prohibit (i) the sale of shares of Common Stock by the
undersigned to the Underwriters in the Public Offering or (ii) resales of shares
of Common Stock acquired by the undersigned in the Public Offering or in
subsequent open-market purchases. The undersigned hereby agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent
against the transfer of the Securities held by the undersigned except in
compliance with this Lock-Up Agreement.
Date: , 1999
B-1
EXHIBIT C
Matters to be Covered in the Opinion of Counsel for the Company
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has all requisite corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus.
(iii) The Company is duly qualified to do business as a foreign corporation
and is in good standing in each of the jurisdictions named therein. To such
counsel's knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
Subsidiaries.
(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
dates stated therein. The issued and outstanding shares of capital stock of the
Company, including the Firm Shares to be sold by the Selling Stockholders, have
been duly and validly issued and are fully paid and nonassessable and, to such
counsel's knowledge, will not have been issued in violation of any preemptive
right, co-sale right, registration right, right of first refusal or other
similar right.
(vi) The Firm Shares or the Option Shares, as the case may be, to be
issued by the Company pursuant to the terms of this Agreement have been duly
authorized and, upon issuance and delivery against payment therefor in
accordance with the terms hereof, will be duly and validly issued and fully paid
and nonassessable, and will not have been issued in violation of or subject to
any preemptive right, co-sale right, registration right, right of first refusal
or other similar right.
(vii) The Company has the corporate power and authority to enter into this
Agreement and to issue, sell and deliver to the Underwriters the Shares to be
issued and sold by the Company hereunder.
(viii) This 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.
(ix) The Registration Statement has become effective under the Securities
Act. To such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or threatened under the Securities Act.
(x) The Form 8-A Registration Statement complied as to form in all
material respects with the requirements of the Exchange Act. The Form 8-A
Registration Statement has become effective under the Exchange Act. The Firm
Shares or the Option Shares, as the case maybe, have been validly registered
under the Exchange Act and the applicable rules and regulations of the
Commission thereunder.
(xi) The Registration Statement, the Prospectus, and each amendment or
supplement to the Registration Statement or the Prospectus (other than in each
case the financial statements and financial data derived therefrom, 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.
(xii) The information in the Prospectus under the caption "Description of
Capital Stock," to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by such counsel
C-1
and is a fair summary of such matters and conclusions in all material respects.
The form of certificates evidencing the Common Shares and filed as an exhibit to
the Registration Statement complies with Delaware law.
(xiii) The description in the Registration Statement and the Prospectus of
the charter and bylaws of the Company and of statutes are accurate and fairly
present the information required to be presented by the Securities Act in all
material respects.
(xiv) To such counsel's knowledge, there are no agreements, contracts,
leases or documents to which the Company is a party of a character required to
be described or referred to in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement that are not described or
referred to therein or filed as required.
(xv) The performance of this Agreement and the consummation of the
transactions herein contemplated (other than performance of the Company's
indemnification obligations hereunder, as to which no opinion need be expressed)
will not (a) result in any violation of the Company's charter or bylaws or (b)
to such counsel's knowledge, result in a material breach or violation of any of
the terms and provisions of, or constitute a default under, any agreement or
instrument filed as an exhibit to the Registration Statement, any applicable
statute, rule or regulation known to such counsel or, to such counsel's
knowledge, any order, writ or decree of any court, government or governmental
agency or body having jurisdiction over the Company or either of the
Subsidiaries, or over any of their properties or operations.
(xvi) No consent, approval, authorization or order of or qualification with
any court, government or governmental agency or body having jurisdiction over
the Company or either of the Subsidiaries, or over any of their properties or
operations is necessary in connection with the consummation by the Company of
the transactions herein contemplated, except (i) such as have been obtained
under the Securities Act, (ii) such as may be required under state or other
securities or Blue Sky laws in connection with the purchase and the distribution
of the Shares by the Underwriters, (iii) such as may be required by the NASD and
(iv) such as may be required under the federal or provincial laws of Canada.
(xvii) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against the Company or either of the
Subsidiaries of a character required to be disclosed in the Registration
Statement or the Prospectus by the Securities Act, other than those described
therein.
(xviii) To such counsel's knowledge, neither the Company nor either of the
Subsidiaries is presently (a) in material violation of its respective charter or
bylaws, or (b) in material breach of any applicable statute, rule or regulation
known to such counsel or, to such counsel's knowledge, any order, writ or decree
of any court or governmental agency or body having jurisdiction over the Company
or either of the Subsidiaries, or over any of their properties or operations;
and
(xix) To such counsel's knowledge, except as set forth in the Registration
Statement and Prospectus, no holders of Common Shares or other securities of the
Company have registration rights with respect to securities of the Company and,
except as set forth in the Registration Statement and Prospectus, all holders of
securities of the Company having rights known to such counsel to registration of
such shares of Common Shares or other securities, because of the filing of the
Registration Statement by the Company have, with respect to the offering
contemplated thereby, waived such rights or such rights have expired by reason
of lapse of time following notification of the Company's intent to file the
Registration Statement or have included securities in the Registration Statement
pursuant to the exercise of and in full satisfaction of such rights.
C-2
(xx) The Company is not and, after giving effect to the offering and the
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(xxi) To such counsel's knowledge, the Company owns or possesses sufficient
trademarks, trade names, patent rights, copyrights, licenses, approvals, trade
secrets and other similar rights (collectively, "Intellectual Property Rights")
reasonably necessary to conduct their business as now conducted; and the
expected expiration of any such Intellectual Property Rights would not result in
a Material Adverse Effect. The Company has not received any notice of
infringement or conflict with asserted Intellectual Property Rights of others,
which infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Effect. To such counsel's knowledge, the Company's
discoveries, inventions, products, or processes referred to in the Registration
Statement or Prospectus do not infringe or conflict with any right or patent
that is the subject of a patent application known to the Company.
In addition, such counsel shall state that such counsel has participated in
conferences with officials and other representatives of the Company, the
Representatives, Underwriters' Counsel and the independent certified public
accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed, and
although they have not verified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus, nothing has come to
the attention of such counsel that leads them to believe that, at the time the
Registration Statement became effective and at all times subsequent thereto up
to and on the First Closing Date or Second Closing Date, as the case may be, the
Registration Statement and any amendment or supplement thereto (other than the
financial statements including financial and statistical information derived
therefrom, as to which such counsel need express no comment) 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 First Closing Date or the Second Closing Date, as the case may be, the
Registration Statement, the Prospectus and any amendment or supplement thereto
(except as aforesaid) contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
C-3
EXHIBIT D
Matters to be Covered in the Opinion of Underwriters' Counsel
(i) The Company is validly existing as a corporation in good standing
under the General Corporation Law of the State of Delaware.
(ii) The execution and delivery of the Underwriting Agreement have been
duly authorized by all necessary corporate action of the Company, and the
Underwriting Agreement has been duly executed and delivered by the Company.
(iii) The Shares to be issued be the Company have been duly authorized by
all necessary corporate action of the Company. When those Shares are issued and
delivered in accordance with the terms of the Underwriting Agreement, they will
be validly issued, fully paid and non-assessable.
(iv) To our knowledge, the Registration Statement has become effective
under the Securities Act, no order suspending the effectiveness of the
Registration Statement has been issued by the Commission and no proceeding for
that purpose has been instituted or threatened by the Commission.
(v) To our knowledge, the Form 8-A Registration Statement has become
effective under the Exchange Act, no order suspending the effectiveness of the
Form 8-A Registration Statement has been issued by the Commission and no
proceeding for that purpose has been instituted or threatened by the Commission.
Such counsel shall state that such counsel has reviewed the opinions
addressed to the Representatives from ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP, each
dated the date hereof, and furnished to you in accordance with the provisions of
the Underwriting Agreement. Such opinions appear on their face to be
appropriately responsive to the requirements of the Underwriting Agreement.
In addition, such counsel shall state that such counsel has participated in
conferences with officials and other representatives of the Company, the
Company's counsel, the Representatives and the independent certified public
accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed, and
although they have not verified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus:
(a) The Registration Statement (except the financial statements and
other financial and statistical data included therein, as to which such
counsel need express no view), at the time it became effective, and the
Prospectus (except as aforesaid), as of its date, appeared on their face to
be appropriately responsive in all material respects to the requirements of
the Securities Act.
(b) No information has come to the attention of such counsel that
causes such counsel to believe that the Registration Statement (except the
financial statements and other financial and statistical data included
therein, as to which such counsel need express no view), at the time it
became effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) No information has come to the attention of such counsel that
causes such counsel to believe that the Prospectus (except the financial
statements and other financial and statistical data included therein, as to
which such counsel need express no
D-1
view), as of its date or the date of such opinion, contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The Form 8-A Registration Statement, at the time it became
effective, appeared on its face to be appropriately responsive in all
material respects to the requirements of the Exchange Act.
D-2
EXHIBIT E
Matters to be Covered in the Opinion of Counsel for the Selling Stockholders
(i) The Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder.
(ii) The execution and delivery by such Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, the
Underwriting Agreement and its Custody Agreement and its Power of Attorney will
not contravene or conflict with, result in a breach of, or constitute a default
under, the charter or by-laws, partnership agreement, trust agreement or other
organization documents as have been provided to such counsel by such Selling
Stockholder, as the case may be, of such Selling Stockholder, or, to the
knowledge of such counsel, violate, result in a breach of or constitute a
default under the terms of any other agreement or instrument to which such
Selling Stockholder is a party or by which it is bound, or any judgement, order
or decree applicable to such Selling Stockholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction over
such Selling Stockholder.
(iii) Such Selling Stockholder has good and valid title to all of the Common
Shares that may be sold by such Selling Stockholder under the Underwriting
Agreement and has the legal right and power, and all authorization and approvals
required under the charter or by-laws, partnership agreement, trust agreement or
other organizational documents as have been provided to such counsel by such
Selling Stockholder, as the case may be, to enter into the Underwriting
Agreement and its Custody Agreement and its Power of Attorney, to sell, transfer
and deliver all of the Common Shares that may be sold by such Selling
Stockholder under the Underwriting Agreement and to comply with its other
obligations under the Underwriting Agreement, its Custody Agreement and its
Power of Attorney.
(iv) Each of the Custody Agreement and Power of Attorney of such Selling
Stockholder has been duly authorized, executed and delivered by such Selling
Stockholder and is a valid and binding agreement of such Selling Stockholder,
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting creditors' rights generally or by general equitable
principles.
(v) Assuming that the Underwriters purchase the Shares that are sold by
such Selling Stockholder pursuant to the Underwriting Agreement for value, in
good faith and without notice of any adverse claims, the delivery of such Shares
pursuant to the Underwriting Agreement will pass good and valid title to such
Shares, free and clear of any security interest, mortgage, pledge, lieu
encumbrance or other claim.
(vi) To the knowledge of such counsel, no consent, approval, authorization
or other order of, or registration or filing with, any court or governmental
authority or agency, is required for the consummation by such Selling
Stockholder of the transactions contemplated in the Underwriting Agreement,
except as required under the Securities Act, applicable state securities or blue
sky laws, and from the NASD.
E-1