EXHIBIT 1.1
2,875,000 SHARES
TUT SYSTEMS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
January __, 1999
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Tut Systems, Inc., a Delaware corporation (the "Company"), proposes to
sell 2,500,000 shares (the "Firm Stock") of Common Stock, par value $.001 per
share, of the Company (the "Common Stock"). In addition, the Company proposes
to grant to the Underwriters named in Schedule 1 hereto (the "Underwriters") an
option to purchase up to an additional 375,000 shares of Common Stock on the
terms and for the purposes set forth in Section 2 (the "Option Stock"). The
Firm Stock and the Option Stock, if purchased, are hereinafter collectively
called the "Stock." This is to confirm the agreement concerning the purchase of
the Stock from the Company by the Underwriters. The Company is successor by
merger to Tut Systems, Inc., a California corporation (the "Predecessor"), as a
result of a reincorporation transaction that became effective on September 29,
1998 (the "Reincorporation").
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 with respect to the
Stock has (i) been prepared by the Company in conformity with the
requirements of the United States Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations
(the "Rule and Regulations") of the United States Securities and
Exchange Commission (the "Commission") thereunder, (ii) been
filed with the Commission under the Securities Act and (iii)
become effective under the Securities Act. Copies of such
registration statement and the amendment(s) thereto have been
delivered by the Company to you as the representatives (the
"Representatives") of the Underwriters. As used in this
Agreement, "Effective Time" means the date and the time as of
which such registration statement, or the most recent post-
effective amendment thereto, if any, was declared effective by
the Commission; "Effective Date" means the date of the Effective
Time; "Preliminary Prospectus" means each prospectus included in
such registration statement, or amendments thereof, before it
became effective under the Securities Act and any prospectus
filed with the Commission by the Company
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with the consent of the Representatives pursuant to Rule 424(a)
of the Rules and Regulations; "Registration Statement" means such
registration statement, as amended at the Effective Time,
including all information contained in the final prospectus filed
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations in accordance with Section 5(a) hereof and deemed to
be a part of the registration statement as of the Effective Time
pursuant to paragraph (b) of Rule 430A of the Rules and
Regulations; and "Prospectus" means such final prospectus, as
first filed with the Commission pursuant to paragraph (1) or (4)
of Rule 424(b) of the Rules and Regulations. The Commission has
not issued any order preventing or suspending the use of any
Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration
Statement or the Prospectus will, when they become effective or
are filed with the Commission, as the case may be, conform in all
respects to the requirements of the Securities Act and the Rules
and Regulations and do not and will not, as of the applicable
effective date (as to the Registration Statement and any
amendment thereto) and as of the applicable filing date (as to
the Prospectus and any amendment or supplement thereto) contain
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; provided that no
representation or warranty is made as to information contained in
or omitted from the Registration Statement or the Prospectus or
any further amendments to the Registration Statement or
Prospectus, in reliance upon and in conformity with written
information furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically for inclusion
therein.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business
and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the
conduct of its business requires such qualification, except where
the failure to be so qualified would not have a material adverse
effect on the business, financial condition or results of
operations of the Company, and has all power and authority
necessary to own or hold its properties and to conduct the
business as described in the Registration Statement and
Prospectus; and the Company has no subsidiaries.
(d) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description
thereof contained in the Prospectus.
(e) The unissued shares of the Stock to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment
therefor as provided herein, will be duly
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and validly issued, fully paid and non-assessable; and the Stock
will conform to the description thereof contained in the
Prospectus.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated
hereby will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company is a party, or
by which the Company is bound or to which any of the property or
assets of the Company is subject, nor will such actions result in
any violation of the provisions of the charter or by-laws of the
Company or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its properties or assets; and except for the
registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act, the
National Association of Securities Dealers, Inc. and applicable
state securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required
for the execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated
hereby.
(h) There are no contracts, agreements or understandings between
the Company and any person granting such person the right (other
than rights which have been waived or satisfied) to require the
Company to include such securities in the securities registered
pursuant to the Registration Statement. Except as described in
the Prospectus there are no contracts, agreements or
understandings between the Company and any person granting such
person the right to require the Company to register or include
such securities pursuant to any other registration statement
filed by the Company under the Securities Act.
(i) Except as described in the Prospectus, the Company has not
sold or issued any shares of Common Stock during the six-month
period preceding the date of the Prospectus, including any sales
pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act, other than shares issued pursuant to employee
benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants.
(j) The Company has not sustained, since the date of the latest
audited financial statements included in the Prospectus, any
material loss or interference with its business including from
fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there has
not been any material change in the capital stock
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or long-term debt of the Company or any material adverse change,
or any development reasonably likely to involve a prospective
material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results
of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement
or included in the Prospectus present fairly the financial
condition and results of operations of the entities purported to
be shown thereby, at the dates and for the periods indicated, and
have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout
the periods involved.
(l) PricewaterhouseCoopers LLP, whose report appears in the
Prospectus and who have delivered the initial letter referred to
in Section 7(h) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
(m) The Company has good and marketable title in fee simple to
all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not materially interfere with the use made and
proposed to be made of such property by the Company as described
in the Prospectus; and all real property and buildings held under
lease by the Company are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company as described in the
Prospectus.
(n) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of
its business and the value of its respective property and as is
customary for companies engaged in similar businesses in similar
industries.
(o) The Company owns or possesses adequate rights to use all
material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service ▇▇▇▇ registrations,
copyrights and licenses (the "Intellectual Property") necessary
for the conduct of its business, except where the failure to so
own or possess such Intellectual Property would not, singularly
or in the aggregate, have a material adverse effect on the
business, financial condition or results of operations of the
Company, and the Company has no reason to believe that the
conduct of its business will conflict with the Intellectual
Property Rights of others, and have not received any notice of
any claim of conflict with, any such Intellectual Property Rights
of others.
(p) There are no legal or governmental proceedings pending to
which the Company is a party or of which any property or assets
of the Company is the
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subject which, if determined adversely to the Company, might have
a material adverse effect on the business financial position or
results of operations of the Company; and to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(q) There are no contracts or other documents which are required
to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or
filed as exhibits to the Registration Statement.
(r) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company on the other
hand, which is required to be described in the Prospectus which
is not so described.
(s) No labor disturbance by the employees of the Company exists
or, to the knowledge of the Company, is imminent which might be
expected to have a material adverse effect on the business
financial position, or results of operations of the Company.
(t) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA");
no "reportable event" (as defined in ERISA) has occurred with
respect to any "pension plan" (as defined in ERISA) for which the
Company would have any liability; the Company has not incurred
and does not expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would
cause the loss of such qualification.
(u) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date
hereof and has paid all taxes due thereon, and no tax deficiency
has been determined adversely to the Company which has had (nor
does the Company have any knowledge of any tax deficiency which,
if determined adversely to the Company, might have a material
adverse effect on the business, financial position, results of
operations of the Company.
(v) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise
be disclosed in the Prospectus, the Company has not (i) issued or
granted any securities, (ii) incurred any liability or
obligation, direct or contingent, other than liabilities and
obligations which were
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incurred in the ordinary course of business, (iii) entered into
any transaction not in the ordinary course of business or (iv)
declared or paid any dividend on its capital stock.
(w) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are
recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability
for its assets is compared with existing assets at reasonable
intervals.
(x) The Company is not (i) in violation of its charter or by-
laws, (ii) in default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject or (iii) in
violation in any respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or
assets may be subject or has failed to obtain any license,
permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its
property or to the conduct of its business.
(y) Neither the Company, nor any director, officer, agent,
employee or other person associated with or acting on behalf of
the Company, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official
or employee from corporate funds; violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977; or
made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(z) To the Company's knowledge, there has been no storage,
disposal, generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, medical wastes, hazardous
wastes or hazardous substances by the Company (or any of its
predecessors in interest) at, upon or from any of the property
now or previously owned or leased by the Company in violation of
any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have,
singularly or in the aggregate with all such violations and
remedial actions, a material adverse effect on the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company; to the Company's knowledge,
there has been no material spill, discharge, leak, emission,
injection,
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escape, dumping or release of any kind onto such property or into
the environment surrounding such property of any toxic wastes,
medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or with respect to
which the Company has knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release
which would not have or would not be reasonably likely to have,
singularly or in the aggregate with all such spills, discharges,
leaks, emissions, injections, escapes, dumpings and releases, a
material adverse effect on the business, financial position, or
results of operations of the Company; and the terms "hazardous
wastes", "toxic wastes", "hazardous substances" and "medical
wastes" shall have the meanings specified in any applicable
local, state, federal and foreign laws or regulations with
respect to environmental protection.
(aa) The Company is not an "investment company" within the
meaning of such term under the Investment Company Act of 1940 and
the rules and regulations of the Commission thereunder.
(bb) The execution and delivery of the Agreement and Plan of
Merger dated as of September 29, 1998 (the "Merger Agreement")
between the Company and the Predecessor, effecting the
reincorporation of the Predecessor under the laws of the State of
Delaware, was duly authorized by all necessary corporate action
on the part of each of the Company and the Predecessor. Each of
the Company and the Predecessor had all corporate power and
authority to execute and deliver the Merger Agreement and the
Certificate of Merger between the Company and the Predecessor
complying with Section 252 of the Delaware General Corporation
Law and referencing the Merger Agreement (the "Certificate of
Merger"), to file the Certificate of Merger with the Secretary of
State of California and the Secretary of State of Delaware and to
consummate the reincorporation contemplated by the Merger
Agreement, and the Merger Agreement at the time of execution and
filing constituted a valid and binding obligation of each of the
Company and the Predecessor, enforceable in accordance with its
terms. The merger of the Predecessor with and into the Company
has been consummated in compliance with applicable law. The
Company has succeeded to all of the rights, privileges, powers
and franchises, and is subject to all of the restrictions,
disabilities and duties, of the Predecessor. The Company has
succeeded to all of the contract rights of the Predecessor, and
all required consents with respect to such contracts have been
obtained. All of the previously outstanding shares of capital
stock of the Predecessor have been converted into that number of
shares of capital stock of the Company having the same rights,
preferences and privileges (except for differences resulting from
the reverse stock split described in the Prospectus, applicable
law and applicable by-laws) as described in the Prospectus. All
of the previously outstanding options and warrants of the
Predecessor are exercisable for that number of shares of Common
Stock of the Company as described in the Prospectus. The
consummation of the Reincorporation did not conflict with, or
result in any breach of, or constitute a default under (nor
constitute any event which with notice, lapse of time or both
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would constitute a breach of or default under), any indenture,
mortgage, deed of trust, loan agreement, or other agreement or
instrument material to the Company's business as described in the
Registration Statement and Prospectus to which the Company is a
party or by which it is bound or to which any of its properties
or assets is subject. The consummation of the Reincorporation
did not and will not conflict with, or result in a violation of,
any federal, state, local or foreign law, regulation or rule or
any decree, judgment or order applicable to the Company, or
immediately prior to the Reincorporation, the Predecessor, the
result of which could have a material adverse effect on the
business, financial position, or results of operations of the
Company. The issuance of capital stock by the Company in the
Reincorporation was in compliance with all applicable state
securities or blue sky laws and was exempt from registration
under the Securities Act.
2. Purchase of the Stock by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 2,500,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto. The respective
purchase obligations of the Underwriters with respect to the Firm Stock shall be
rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 375,000 shares of Option Stock. Such option is granted for the
purpose of covering over-allotments in the sale of Firm Stock and is exercisable
as provided in Section 4 hereof. Shares of Option Stock shall be purchased
severally for the account of the Underwriters in proportion to the number of
shares of Firm Stock set opposite the name of such Underwriters in Schedule 1
hereto. The respective purchase obligations of each Underwriter with respect to
the Option Stock shall be adjusted by the Representatives so that no Underwriter
shall be obligated to purchase Option Stock other than in 100 share amounts.
The price of both the Firm Stock and any Option Stock shall be $_____ per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on any Delivery Date (as hereinafter defined), as the case may be,
except upon payment for all the Stock to be purchased on such Delivery Date as
provided herein.
3. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of the Firm
Stock, the several Underwriters propose to offer the Firm Stock for sale upon
the terms and conditions set forth in the Prospectus.
It is understood that _______ shares of the Firm Stock will initially
be reserved by the several Underwriters for offer and sale upon the terms and
conditions set forth in the Prospectus and in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc. to employees
and persons having business relationships with the Company, who have heretofore
delivered to the Representatives offers or indications of interest to purchase
shares of Firm Stock in form satisfactory to the Representatives, and that any
allocation of such Firm Stock among such persons will be made in
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accordance with timely directions received by the Representatives from the
Company; provided, that under no circumstances will the Representatives or any
Underwriter be liable to the Company or to any such person for any action taken
or omitted in good faith in connection with such offering to employees and
persons having business relationships with the Company. It is further understood
that any shares of such Firm Stock which are not purchased by such persons will
be offered by the Underwriters to the public upon the terms and conditions set
forth in the Prospectus.
4. Delivery of and Payment for the Stock. Delivery of and payment
for the Firm Stock shall be made at the office of Wilson, Sonsini, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, at 10:00 A.M., New York City time, on the fourth full business day
following the date of this Agreement or at such other date or place as shall be
determined by agreement between the Representatives and the Company. This date
and time are sometimes referred to as the "First Delivery Date." On the First
Delivery Date, the Company shall deliver or cause to be delivered certificates
representing the Firm Stock to the Representatives for the account of each
Underwriter against payment to or upon the order of the Company of the purchase
price by wire transfer in immediately available funds. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Firm Stock shall be registered in such names and in such
denominations as the Representatives shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company shall make the certificates representing the Firm Stock available
for inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the First Delivery Date.
The option granted in Section 2 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by the Representatives. Such notice
shall set forth the aggregate number of shares of Option Stock as to which the
option is being exercised, the names in which the shares of Option Stock are to
be registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been exercised
nor later than the fifth business day after the date on which the option shall
have been exercised. The date and time the shares of Option Stock are delivered
are sometimes referred to as a "Second Delivery Date" and the First Delivery
Date and any Second Delivery Date are sometimes each referred to as a "Delivery
Date."
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on such
Second Delivery Date. On such Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Option Stock shall
be registered in such names and in such denominations as the Representatives
shall request in the aforesaid written notice. For the purpose of expediting
the checking and packaging of the certificates for the Option Stock, the Company
shall make the certificates representing the Option Stock
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available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., New York City time, on the business day prior to such Second
Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than Commission's close
of business on the second business day following the execution
and delivery of this Agreement or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Securities
Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted
herein; to advise the Representatives, promptly after it receives
notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representatives with copies thereof; to
advise the Representatives, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or
of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification, to use promptly
its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, and each
amendment thereto filed with the Commission, including all
consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto
(in each case including exhibits other than this Agreement and
the computation of per share earnings) and (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at
any time after the Effective Time in connection with the offering
or sale of the Stock or any other securities relating thereto and
if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary to amend or supplement
the Prospectus in order to comply with the Securities Act, to
notify the Representatives and, upon their
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request, to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as
many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which
will correct such statement or omission or effect such
compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested
by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to
furnish a copy thereof to the Representatives and counsel for the
Underwriters and obtain the consent of the Representatives to the
filing;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to
deliver to the Representatives an earnings statement of the
Company (which need not be audited) complying with Section 11(a)
of the Securities Act and the Rules and Regulations (including,
at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to
furnish to the Representatives copies of all materials furnished
by the Company to its shareholders and all public reports and all
reports and financial statements furnished by the Company to the
principal national securities exchange upon which the Common
Stock may be listed pursuant to requirements of or agreements
with such exchange or to the Commission pursuant to the Exchange
Act or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for
offering and sale under the securities laws of such jurisdictions
as the Representatives may request and to comply with such laws
so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete
the distribution of the Stock; provided that in connection
therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of
process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus, not
to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any
shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the Stock and shares
issued pursuant to currently outstanding options, warrants or
rights under employee benefit plans, qualified stock option plans
or
-11-
other employee compensation plans existing on the date
hereof), or sell or grant options, rights or warrants with
respect to any shares of Common Stock or securities convertible
into or exchangeable for Common Stock (other than the grant of
options pursuant to option plans existing on the date hereof), or
(2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or other securities,
in cash or otherwise, in each case without the prior written
consent of ▇▇▇▇▇▇ Brothers Inc.; and to cause each officer and
director of the Company to furnish to the Representatives, prior
to the First Delivery Date, a letter or letters, in form and
substance satisfactory to counsel for the Underwriters, pursuant
to which each such person shall agree not to, directly or
indirectly, (x) offer for sale, sell, pledge or otherwise dispose
of (or enter into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person
at any time in the future of) any shares of Common Stock or
securities convertible into or exchangeable for Common Stock or
(y) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (x) or (y) above
is to be settled by delivery of Common Stock or other securities,
in cash or otherwise, in each case for a period of 180 days from
the date of the Prospectus, without the prior written consent of
▇▇▇▇▇▇ Brothers Inc.;
(j) Prior to the Effective Date, to apply for the inclusion of
the Stock on the National Market System and to use its best
efforts to complete that listing, subject only to official notice
of issuance and evidence of satisfactory distribution, prior to
the First Delivery Date;
(k) To file with the Commission all reports containing such
information as may be required under Rule 463 under the
Securities Act;
(l) To apply the net proceeds from the sale of the Stock being
sold by the Company as set forth in the Prospectus; and
(m) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of
the Commission thereunder.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus, all as provided in
this Agreement; (d) the costs of producing and distributing this Agreement
-12-
and any other related documents in connection with the offering, purchase, sale
and delivery of the stock; (e) the filing fees incident to, and the reasonable
fees and expenses of counsel for the Underwriters in connection with, securing
any required review by the National Association of Securities Dealers, Inc. of
the terms of sale of the Stock; (f) any applicable listing or other fees; (g)
the fees and expenses of qualifying the Stock under the securities laws of the
several jurisdictions as provided in Section 5(h) and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); and (h) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement; provided
that, except as provided in this Section 6 and in Section 11 the Underwriters
shall pay their own costs and expenses, including the costs and expenses of
their counsel, any transfer taxes on the Stock which they may sell and the
expenses of advertising any offering of the Stock made by the Underwriters, and
any transfer taxes payable in connection with its respective sales of Stock to
the Underwriters and reimburse the Company for its pro rata share of the fees
and expenses paid by the Company in connection with the offering of the Stock.
7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order
suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement
thereto contains an untrue statement of a fact which, in the
opinion of ▇▇▇▇▇▇ Godward LLP, counsel for the Underwriters, is
material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the
Stock, the Registration Statement and the Prospectus, and all
other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory
in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to
pass upon such matters.
(d) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ shall have furnished to the
Representatives its written opinion, as counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in
form and substance reasonably satisfactory to the
Representatives, to the effect that:
-13-
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business
and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the
conduct of its business requires such qualification, except where
the failure to be so qualified would not have a material adverse
effect on the business, financial condition or results of
operations of the Company, and has all power and authority
necessary to own or hold its properties and to conduct the
business in which it is engaged; and the Company has no
subsidiaries;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company (including the shares of Stock being
delivered on such Delivery Date) have been duly and validly
authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the Prospectus;
the Common Stock to be issued upon conversion of the Preferred
Stock and upon exercise of the warrant issued to Microsoft
Corporation when issued and delivered will be duly and validly
issued, fully paid and non-assessable;
(iii) There are no preemptive or other rights to subscribe
for or to purchase, nor any restriction upon the voting or
transfer of, any shares of the Stock pursuant to the Company's
Articles of Incorporation, by-laws, any agreement material to the
Company's business as described in the Registration Statement and
Prospectus, or, to such counsel's knowledge, any other
instrument;
(iv) There are no legal or governmental proceedings pending
to which the Company is a party or of which any property or
assets of the Company is the subject which, if determined
adversely to the Company, might have a material adverse effect on
the business, financial position, and results of operations of
the Company; and, to such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(v) The Registration Statement was declared effective
under the Securities Act as of the date and time specified in
such opinion, the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date specified
therein and no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the knowledge of
such counsel, no proceeding for that purpose is pending or
threatened by the Commission;
(vi) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company
prior to such Delivery Date (other than the financial statements,
financial data and related schedules therein, as to which such
counsel need express no opinion) comply as
-14-
to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations;
(vii) The statements in the Registration Statement and
Prospectus under the captions "Certain Transactions,"
"Description of Capital Stock" and "Shares Eligible for Future
Sale" and in the Registration Statement in Items 14 and 15,
insofar as they are descriptions of contracts, agreements or
other legal documents, or refer to statements of law or legal
conclusion, are accurate and present fairly the information
required to be shown;
(viii) To such counsel's knowledge, after due inquiry,
there are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described or filed as exhibits to
the Registration Statement or incorporated therein by reference
as permitted by the Rules and Regulations;
(ix) This Agreement has been duly authorized, executed and
delivered by the Company;
(x) The issue and sale of the shares of Stock being
delivered on such Delivery Date by the Company and the compliance
by the Company with all of the provisions of this Agreement and
the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, or other
agreement material to the Company's business as described in the
Registration Statement and Prospectus, or other instrument known
to such counsel to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the
Company is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any
statute or any order, rule or regulation known to such counsel of
any court or governmental agency or body having jurisdiction over
the Company or any of its properties or assets; and, except for
the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase
and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required
for the execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated
hereby; and
(xi) To such counsel's knowledge, after due inquiry, there
are no contracts, agreements or understandings between the
Company and any person granting such person the right (other than
rights which have been waived or satisfied) to require the
Company to include such securities in the securities registered
pursuant to the Registration Statement. To such counsel's
knowledge,
-15-
after due inquiry, except as described in the Prospectus there
are no contracts, agreements or understandings between the
Company and any person granting such person the right to require
the Company to register or include such securities pursuant to
any other registration statement filed by the Company under the
Securities Act.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the state of California and
the General Corporation Law of the State of Delaware. Such
counsel shall also have furnished to the Representatives a
written statement, addressed to the Underwriters and dated such
Delivery Date, in form and substance satisfactory to the
Representatives, to the effect that (i) such counsel has acted as
counsel to the Company on a regular basis, has acted as counsel
to the Company in connection with previous financing transactions
and has acted as counsel to the Company in connection with the
preparation of the Registration Statement, and (ii) although such
counsel has not verified the accuracy, completeness or fairness
of the statements contained in the Registration Statement or
Prospectus (except for those matters referred to in subsections
(vi), (vii) and (xi) of this Section 7(d)), based on the
foregoing, no facts have come to the attention of such counsel
which lead it to believe that the Registration Statement (other
than the financial statements, financial data and related
schedules therein, as to which such counsel need express no
opinion), as of the Effective Date, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, or that the Prospectus (other
than the financial statements, financial data and related
schedules therein, as to which such counsel need express no
opinion), as of the Delivery Date, contains any untrue statement
of a material fact or omits to state a material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(e) Blakely, Sokoloff, ▇▇▇▇▇▇ & Zafman LLP shall have furnished
to the Representatives its written opinion as patent counsel to
the Company addressed to the Underwriters and dated such Delivery
Date, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
Such counsel is familiar with the technology used by the
Company in its business and the manner of its use thereof and has
read the Registration Statement and the Prospectus, including
particularly the portions of the Registration Statement and the
Prospectus referring to patents, trade secrets, trademarks,
service marks or other proprietary information or materials and:
(i) The statements in the Registration Statement and the
Prospectus under the captions "Risk Factors -- Dependence on
Proprietary Technology; Protection of Intellectual Property
Rights," "Use of Proceeds," "Certain Transactions" and
"Business -- Proprietary Rights" and under the caption
"Business" generally to the extent such statements relate solely
to patent matters
-16-
(the "Intellectual Property Portion") to the best of such
counsel's knowledge and belief, are accurate statements or
summaries of the matters therein set forth and nothing has come
to such counsel's attention that causes such counsel to believe
that the Intellectual Property Portion of the Registration
Statement, as of the Effective Date, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Intellectual
Property Portion of the Prospectus, as of the Delivery Date,
contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(ii) There are no legal or governmental proceedings
pending relating to patent rights, trade secrets, trademarks,
service marks or other proprietary information or materials of
the Company which, if determined adversely to the Company, might
have a material adverse effect on the business, financial
position or results of the operations of the Company and to the
best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or others;
(iii) To such counsel's knowledge, after due inquiry,
there are no contracts or other documents, relating to the
Company's patents, trade secrets, trademarks, service marks or
other proprietary information or materials of a character
required to be filed as an exhibit to the Registration Statement
or required to be described in the Registration Statement or the
Prospectus that are not filed or described as required;
(iv) To such counsel's knowledge, the Company is not
infringing or otherwise violating any patents, trade secrets,
trademarks, service marks or other proprietary information or
materials, of others; and
(v) To such counsel's knowledge, the Company owns or
possesses sufficient licenses or other rights to use all patents,
trade secrets, trademarks, service marks or other proprietary
information or materials necessary to conduct the business now
being or proposed to be conducted by the Company as described in
the Prospectus.
(f) The Representatives shall have received from ▇▇▇▇▇▇ Godward
LLP, counsel for the Underwriters, such opinion or opinions,
dated such Delivery Date, with respect to the issuance and sale
of the Stock, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel
such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(g) At the time of execution of this Agreement, the
Representatives shall have received from PricewaterhouseCoopers
LLP a letter, in form and substance reasonably satisfactory to
the Representatives, addressed to the Underwriters and dated the
date hereof (i) confirming that they are independent public
accountants
-17-
within the meaning of the Securities Act and are in compliance
with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission,
and (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective
dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the
date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings.
(h) With respect to the letter of PricewaterhouseCoopers LLP
referred to in the preceding paragraph and delivered to the
Representatives concurrently with the execution of this Agreement
(the "initial letter"), the Company shall have furnished to the
Representatives a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated such
Delivery Date (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, (ii) stating, as of the date of the bring-down
letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date
not more than five days prior to the date of the bring-down
letter), the conclusions and findings of such firm with respect
to the financial information and other matters covered by the
initial letter, and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(i) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the
Board, its President or a Vice President and its Chief Financial
Officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery
Date; the Company has complied with all its agreements contained
herein; and the conditions set forth in Sections 7(a), 7(j) and
7(l) have been fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective
Date, the Registration Statement and Prospectus did not include
any untrue statement of a material fact and did not omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since the
Effective Date no event has occurred which should have been set
forth in a supplement or amendment to the Registration Statement
or the Prospectus.
(j) (1) The Company shall not have sustained since the date of
the latest audited financial statements included in the
Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or
-18-
decree, otherwise than as set forth or contemplated in the
Prospectus or (2) since such date there shall not have been any
change in the capital stock or long-term debt of the Company or
any change, or any development involving a prospective change, in
or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in clause (1) or
(2), is, in the reasonable judgment of the Representatives, so
material and adverse as to make it impracticable or inadvisable
to proceed with the public offering or the delivery of the Stock
being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(k) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading
in securities generally on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in
the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such
market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction,
(ii) a banking moratorium shall have been declared by Federal or
state authorities, (iii) the United States shall have become
engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been
a declaration of a national emergency or war by the United States
or (iv) there shall have occurred such a material adverse change
in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the reasonable
judgment of a majority in interest of the several Underwriters,
impracticable or inadvisable to proceed with the public offering
or delivery of the Stock being delivered on such Delivery Date on
the terms and in the manner contemplated in the Prospectus.
(l) The National Market System shall have approved the Stock for
inclusion, subject only to official notice of issuance.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall 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, from and against any loss, claim, damage or liability, joint
or several, or any action in respect thereof (including, but not
limited to, any loss, claim, damage, liability or action relating
to purchases and sales of Stock), to which that Underwriter,
officer, employee or controlling person may become subject, under
the Securities Act or otherwise,
-19-
insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or (B) in
any blue sky application or other document prepared or executed
by the Company (or based upon written information furnished by
the Company) specifically for the purpose of qualifying any or
all of the Stock under the securities laws of any state or other
jurisdiction (any such application, document, or information
being hereinafter called a "Blue Sky Application"), (ii) the
omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in
any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii)
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 Stock or the offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered
by clause (i) or (ii) above (provided that the Company shall not
be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent
jurisdiction 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
gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably
incurred by that Underwriter, officer, employee or controlling
person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that
any such loss, claim, damage, liability or action arises out of,
or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in
any such amendment or supplement, in reliance upon and in
conformity with written information concerning such Underwriter
furnished to the Company through the Representatives by or on
behalf of any Underwriter specifically for inclusion therein
which information consists solely of the information specified in
Section 8(e). The foregoing indemnity agreement is in addition to
any liability which the Company may otherwise have to any
Underwriter or to any officer, employee or controlling person of
that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company, its officers and employees, each
of its directors, and each person, if any, who controls the
Company within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several,
or any action in respect thereof, to which the Company or any
such director, officer or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises
-20-
out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or (B) in
any Blue Sky Application or (ii) the omission or alleged omission
to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact
required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of that
Underwriter specifically for inclusion therein, and shall
reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably
incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending
or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company or any such
director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the claim
or the commencement of that action; provided, however, that the
failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 8 except
to the extent it has been materially prejudiced by such failure
and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which
it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against
an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs
of investigation; provided, however, that the Representatives
shall have the right to employ counsel to represent jointly the
Representatives and those other Underwriters and their respective
officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity
may be sought by the Underwriters against the Company under this
Section 8 if, in the reasonable judgment of the Representatives,
it is advisable for the Representatives and those Underwriters,
officers, employees and controlling
-21-
persons to be jointly represented by separate counsel, and in
that event the fees and expenses of such separate counsel shall
be paid by the Company. No indemnifying party shall (i) without
the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld), settle or compromise
or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for
any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but
if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to or insufficient to hold harmless
an indemnified party under Section 8 (a) or 8(c) in respect of
any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the
Stock or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company,
on the one hand and the Underwriters on the other with respect to
the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits
received by the Company, on the one hand and the Underwriters on
the other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering
of the Stock purchased under this Agreement (before deducting
expenses) received by the Company, on the one hand, and the total
underwriting discounts and commissions received by the
Underwriters with respect to the shares of the Stock purchased
under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the shares of the Stock under this
Agreement, 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 whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, or
the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the
Underwriters agree that it
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would not be just and equitable if contributions pursuant to this
Section were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by
any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid
or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof,
referred to above in this Section shall be deemed to include, for
purposes of this Section 8(d), 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 Section 8(d), no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Stock
underwritten by it and distributed to the public was offered to
the public exceeds the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 8(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations
to contribute as provided in this Section 8(d) are several in
proportion to their respective underwriting obligations and not
joint.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public
offering of the Stock by the Underwriters set forth on the cover
page of, the legend concerning over-allotments on the inside
front cover page of and the concession and reallowance figures
appearing under the caption "Underwriting" in, the Prospectus are
correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf
of the Underwriters specifically for inclusion in the
Registration Statement and the Prospectus.
9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining non-
defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total number
of shares of the Stock which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds 9.09% of the total number of shares
of the Stock to be purchased on such Delivery Date, and any remaining non-
defaulting Underwriter shall not be obligated to purchase more than 110% of the
number of shares of the Stock which it agreed to purchase on such Delivery Date
pursuant to the terms of Section 2. If the foregoing maximums are exceeded, the
remaining non-defaulting Underwriters, or those other underwriters satisfactory
to the Representatives who so agree, shall have the right, but shall not be
obligated, to purchase, in such proportion as may be agreed upon among them, all
the Stock to be purchased on such Delivery Date. If the remaining Underwriters
or other underwriters satisfactory to the Representatives do not elect to
purchase the shares which the
-23-
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any non-
defaulting Underwriter or the Company, except that the Company will continue to
be liable for the payment of expenses to the extent set forth in Sections 8 and
11. As used in this Agreement, the term "Underwriter" includes, for all purposes
of this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 9, purchases Firm Stock which a
defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Stock of a defaulting
or withdrawing Underwriter, either the Representatives or the Company may
postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 7(j) or 7(k), shall have occurred
or if the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If the Company shall
fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the U.S. Underwriters for all
reasonable out-of-pocket expenses (including fees and disbursements of counsel)
incurred by the Underwriters in connection with this Agreement and the proposed
purchase of the Stock, and upon demand the Company shall pay the full amount
thereof to the Representative(s). If this Agreement is terminated pursuant to
Section 9 by reason of the default of one or more Underwriters, the Company
shall not be obligated to reimburse any defaulting Underwriter on account of
those expenses.
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12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., Three
World Financial Center, New York, New York 10285, Attention:
Syndicate Department (Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the
case of any notice pursuant to Section 8(c), to the Director of
Litigation, Office of the General Counsel, ▇▇▇▇▇▇ Brothers Inc.,
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇;
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: ▇▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇; Fax:
(▇▇▇) ▇▇▇-▇▇▇▇;
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by ▇▇▇▇▇▇ Brothers Inc.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, and
their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control any Underwriter within the meaning of Section 15 of
the Securities Act and (B) the indemnity agreement of the Underwriters contained
in Section 8(b) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 13, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
15. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
-25-
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF NEW YORK.
Each party irrevocably agrees that 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 of New York or the
courts of the State of New York in each case located in the Borough of Manhattan
in the City of New York (collectively, the "Specified Courts"), and 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. The parties further agree that 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 lawsuit, action or
other proceeding brought in any such court. The parties hereby irrevocably and
unconditionally waive any objection to the laying of venue of any lawsuit,
action or other proceeding in the Specified Courts, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such lawsuit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
17. Waiver of Immunity. With respect to any Related Proceeding, each
party irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.
18. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
TUT SYSTEMS, INC.
By ____________________________________
▇▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇, President and
Chief Executive Officer
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By ▇▇▇▇▇▇ BROTHERS INC.
By ________________________________
Authorized Representative
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SCHEDULE 1
Number of
Underwriters Shares
------------ ---------
▇▇▇▇▇▇ Brothers Inc. ..............................
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇...............................
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇...............................
---------
Total............................................
=========
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