STB SYSTEMS, INC.
3,000,000 SHARES
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
March __, 1998
CIBC Oppenheimer Corp.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.
The Buckingham Research Group, Incorporated
c/o Oppenheimer & Co., Inc.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
On behalf of the Several
Underwriters named in
Schedule I attached hereto
Ladies/Gentlemen:
STB Systems, Inc., a Texas corporation (the "Company"), and each person
listed under the caption "Selling Shareholders" on Schedule II to this Agreement
(individually, a "Selling Shareholder" and collectively the "Selling
Shareholders") propose to sell to you and the other underwriters named in
Schedule I to this Agreement (the "Underwriters"), for whom you are acting as
Representatives, an aggregate of 3,000,000 shares of the Company's common stock,
$0.01 par value (the "Common Stock"), of which 2,775,000 shares are to be issued
and sold by the Company (the "Company Firm Shares") and 225,000 shares are to be
sold by the Selling Shareholders (the "Selling Shareholder Firm Shares"). The
Company Firm Shares and the Selling Shareholder Firm Shares are hereinafter
referred to collectively as the "Firm Shares." In addition, the Company and the
Selling Shareholders propose to grant to the Underwriters the option to purchase
up to an aggregate of 450,000 shares of Common Stock (collectively, the "Option
Shares") for the purpose of covering over-allotments in connection with the sale
of the Firm Shares. Of the total of 450,000 Option Shares, the Company proposes
to grant to the Underwriters the option to purchase up to an aggregate of
225,000 shares (the "Company Option Shares") and (ii) and each of the three
Selling Shareholders, severally and not jointly, proposes to grant to the
Underwriters the option to purchase up to an aggregate of 75,000 shares
(individually, the "Selling Shareholder Option Shares"). The Company Firm
Shares and the Company Option Shares are hereinafter called the "Company Shares"
and the Selling Shareholder Shares and the Selling Shareholder Option Shares of
each Selling Shareholder are hereinafter referred to collectively as the
"Selling Shareholder Shares." The Company Shares and the Selling Shareholder
Shares are hereinafter referred to collectively as the "Shares."
1. SALE AND PURCHASE OF THE SHARES
.
On the basis of the representations, warranties and agreements contained
in, and subject to the terms and conditions of, this Agreement:
(a) Each of the Company and the Selling Shareholders agrees, severally and
not jointly, to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company and the Selling
Shareholders, at $_____ per share (the "Initial Price"), the respective number
of Company Firm Shares and Selling Shareholder Firm Shares set forth opposite
the names of the Company and the Selling Shareholders on Schedule II to this
Agreement. The obligation of each Underwriter to the Company and to each
Selling Shareholder shall be to purchase from the Company or such Selling
Shareholder that number of Company Firm Shares or Selling Shareholder Firm
Shares, as the case may be, which (after adjustment by the Representatives to
eliminate fractions) is in the same proportion to the number of Company Firm
Shares or Selling Shareholder Firm Shares, as the case may be, set forth
opposite the name of the Company or such Selling Shareholder in Schedule II
hereto as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I to this Agreement (subject to adjustment as provided
in Section 10 hereto) bears to the total number of Firm Shares to be sold by the
Company and the Selling Shareholders pursuant to this Agreement.
(b) For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Shares, the Company and each of the Selling
Shareholders, severally and not jointly, hereby grants to the several
Underwriters an option to purchase, severally and not jointly, all or any part
of the Option Shares at the Initial Price. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage (after adjustment by
the Representatives to eliminate fractions) of the total number of Option Shares
to be purchased by the Underwriters as such Underwriter is purchasing of the
Firm Shares. Such option may be exercised only to cover over-allotments in the
sale of the Firm Shares by the Underwriters and may be exercised in whole or in
part at any time on or before 12:00 noon, New York City time, on the business
day before the Firm Shares Closing Date (as defined below), and only once
thereafter within 30 days after the date of this Agreement, in each case upon
written or telegraphic notice, or verbal or telephonic notice confirmed by
written or telegraphic notice, by the Representatives to the Company no later
than 12:00 noon, New York City time, on the business day before the Firm Shares
Closing Date or at least two business days before the Option Shares Closing Date
(as defined below), as the case may be, setting forth the number of Option
Shares to be purchased and the time and date (if other than the Firm Shares
Closing Date) of such purchase.
2. DELIVERY AND PAYMENT.
Delivery by the Company and the Selling Shareholders of the Firm Shares to
the Representatives for the respective accounts of the several Underwriters, and
payment of the purchase price by certified or official bank check or checks
payable (or wire transfer or transfers) in New York Clearing House funds (or
similar next day funds) to the Company and the Custodian (as hereinafter
defined) or the benefit of the Selling Shareholders, shall take place at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 6:00 a.m., local time, on the third
business day following the date of this Agreement, or at such time on such other
date, not later than 10 business days after the date of this Agreement, as shall
be agreed upon by the Company and the Representatives (such time and date of
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delivery and payment are called the "Firm Shares Closing Date"); provided,
however, that if the Company has not made available to the Representatives
copies of the Prospectus (as defined below) within the time provided in Section
6.I.(d) hereof, the Closing Date shall be postponed until the second full
business day following delivery of copies of the Prospectus to the
Representatives.
In the event the option with respect to the Option Shares is exercised,
delivery by the Company of the Option Shares to the Representatives for the
respective accounts of the Underwriters and payment of the purchase price by
certified or official bank check or checks payable in New York Clearing House
funds (or similar next day funds) to the Company shall take place at the offices
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, specified above
at the time and on the date (which may be the same date as, but in no event
shall be earlier than, the Firm Shares Closing Date) specified in the notice
referred to in Section 1(b) (such time and date of delivery and payment are
called the "Option Shares Closing Date"). The Firm Shares Closing Date and the
Option Shares Closing Date are called, individually, a "Closing Date" and,
together, the "Closing Dates."
The certificates in negotiable form for the Selling Shareholder Firm Shares
have been placed in custody under the Custody Agreement (as defined below) and
this Agreement. Each Selling Shareholder agrees that the certificates for the
Selling Shareholder Firm Shares of such Selling Shareholder so held in custody
are subject to the interests of the Underwriters hereunder, that the
arrangements made by such Selling Shareholder for such custody, including the
Power of Attorney is to that extent irrevocable and that the obligations of such
Selling Shareholder hereunder shall not be terminated by the act of such Selling
Shareholder or by operation of law, whether by the death or incapacity of such
Selling Shareholder or the occurrence of any other event, except as specifically
provided herein or in the Custody Agreement. If any Selling Shareholder should
die or be incapacitated, or if any other such event should occur, before the
delivery of the certificates for the Selling Shareholder Firm Shares hereunder,
the Selling Shareholder Firm Shares to be sold by such Selling Shareholder
shall, except as specifically provided herein or in the Custody Agreement, 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 the Custodian shall have received notice of such death or
other event.
Certificates evidencing the Shares shall be registered in such names and
shall be in such denominations as the Representatives shall request at least two
full business days before the Firm Shares Closing Date or, in the case of Option
Shares, on the day of notice of exercise of the option as described in
Section 1(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, at least one
full business day before the Firm Shares Closing Date (or the Option Shares
Closing Date in the case of the Option Shares).
It is understood that you, individually, and not as the Representatives of
the several Underwriters, may (but shall not be obligated to) make payment of
the purchase price on behalf of any Underwriter or Underwriters whose check or
checks shall not have been received by you prior to the Closing Date for the
Firm Shares or the Option Shares to be purchased by such Underwriter or
Underwriters. Any such payment by you shall not relieve any such Underwriter or
Underwriters of any of its or their obligations hereunder.
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3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING.
The Company has prepared in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Securities Act Rules") adopted by the
Securities and Exchange Commission (the "Commission"), a registration statement
on Form S-3 (No. 333-_______), including a prospectus subject to completion
relating to the Shares, and has filed with the Commission the registration
statement and such amendments to such registration statement, such amended
prospectuses subject to completion and such abbreviated registration statements
pursuant to Rule 462(b) of the Securities Act Rules as may have been required to
the date of this Agreement. Copies of such registration statement and
amendments and of each related prospectus subject to completion (the
"preliminary prospectuses"), including all documents incorporated by reference
therein, and of any abbreviated registration statement pursuant to Rule 462(b)
of the Securities Act Rules have heretofore been delivered by the Company to
you. The Company and the transactions contemplated by this Agreement meet the
requirements for using Form S-3 under the Securities Act.
The registration statement as amended at the time and on the date it became
effective (the "Effective Date"), including all exhibits and information, if
any, deemed to be part of the registration statement pursuant to Rule 424(a),
Rule 430A and Rule 434 of the Securities Act Rules, is called the "Registration
Statement" (except that if any amendment to the Registration Statement, or any
abbreviated registration statement deemed to be part of the Registration
Statement pursuant to Rule 462(b) of the Securities Act Rules, shall be filed
after the Effective Date, the term "Registration Statement" shall also mean
(from and after the effectiveness of such amendment or such abbreviated
registration statement) such Registration Statement as so amended. The term
"Prospectus" means the prospectus included in the Registration Statement at the
time of effectiveness (including, if the Company omitted information from the
Registration Statement pursuant to Rule 430A(a) or Rule 434 of the Securities
Act Rules, the information deemed to be a part of the Registration Statement at
the time it became effective pursuant to Rule 430A(b) or Rule 434(d), as the
case may be, of the Securities Act Rules), except that if any revised prospectus
shall be provided to the Underwriters by the Company for use in connection with
the offering of the Shares which differs from the prospectus on file with the
Commission at the time the registration statement became or becomes, as the case
may be, effective (whether or not such revised prospectus is required to be
filed with the Commission pursuant to Rule 424 of the Securities Act Rules), the
term "Prospectus" shall refer to such revised prospectus from and after the time
it is first provided to the Underwriters for such use. Any reference to the
Registration Statement or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act, as of the date of the Registration Statement or the
Prospectus, as the case may be, and any reference to any amendment or supplement
to the Registration Statement or the Prospectus shall be deemed to refer to and
include any documents filed after such date under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As used
in this Agreement, the term "Incorporated Documents" means the documents which
at the time are incorporated by reference in the Registration Statement, the
Prospectus or any amendment or supplement thereto.
The Company and the Selling Shareholders understand that the Underwriters
propose to make a public offering of the Shares, as set forth in and pursuant to
the Prospectus, as soon after the Effective Date and the date of this Agreement
as the Representatives deem advisable. The Company and the Selling Shareholders
hereby confirm that the Underwriters and dealers have been authorized to
distribute or cause to be distributed
[4]
each preliminary prospectus and are authorized to distribute the Prospectus
(as from time to time amended or supplemented if the Company furnishes
amendments or supplements thereto to the Underwriters).
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
I. The Company hereby represents and warrants to each Underwriter and
each Selling Shareholder as follows:
(a) The Registration Statement was declared effective under the Securities
Act by the Commission at [__:00 _.m. on March _, 1998. On the Effective Date
the Registration Statement complied, and on the date of the Prospectus, on the
date any post-effective amendment to the Registration Statement shall become
effective, on the date any supplement or amendment to the Prospectus is filed
with the Commission and on each Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will comply, in all
material respects, with the applicable provisions of the Securities Act and the
Securities Act Rules; the Registration Statement did not, as of the Effective
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and on the other dates referred to above
neither the Registration Statement nor the Prospectus, nor any amendment thereof
or supplement thereto, will contain any untrue statement of a material fact or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading. When any related
preliminary prospectus was first filed with the Commission (whether filed as
part of the Registration Statement or any amendment thereto or pursuant to
Rule 424(a) of the Securities Act Rules) and when any amendment thereof or
supplement thereto was first filed with the Commission, such preliminary
prospectus as amended or supplemented complied in all material respects with the
applicable provisions of the Securities Act and the Securities Act Rules and did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; provided, however, that none of the
representations and warranties contained in this subparagraph shall apply to
information contained in or omitted from the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company by any Underwriter
through the Representatives specifically for inclusion therein or written
information provided to the Representatives by any Selling Shareholder in such
Selling Shareholder's capacity as such specifically for inclusion therein. The
Company makes no representation or warranty as to (i) the last paragraph on the
outside front cover page of the Prospectus, (ii) the paragraphs with respect to
stabilization and passive market making on the inside front cover page of the
Prospectus and (iii) the statements contained in the third and fifth paragraphs
under the caption "Underwriting" in any preliminary prospectus and in the
Prospectus. The Company and each of the Selling Shareholders acknowledge that
the statements referred to in the previous sentence constitute the only
information furnished in writing by the Representatives on behalf of the several
Underwriters specifically for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus or any Incorporated Document. The
Commission has not issued any order preventing or suspending the use of any
preliminary prospectus.
The Incorporated Documents heretofore filed, when they were filed (or, if
any amendment with respect to any such document was filed, when such amendment
was filed), conformed in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder (the "Exchange Act Rules"); any further Incorporated Documents so
filed will, when they are filed, conform in all material respects with the
requirements of the Exchange Act and the Exchange Act Rules; no
[5]
such document when it was filed (or, if an amendment with respect to any such
document was filed, when such amendment was filed), 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;
and no such further amendment will 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.
(b) The consolidated financial statements (including all notes and
schedules thereto) of the Company included or incorporated by reference in
the Registration Statement and the Prospectus comply with the requirements of
the Securities Act and the Securities Act Rules and present fairly on a
consolidated basis the financial position, the results of operations and cash
flows and the shareholders' equity and deficit and the other information
purported to be shown therein of the Company at the respective dates and for
the respective periods to which they apply; and such financial statements
have been prepared in conformity with generally accepted accounting
principles, consistently applied throughout the periods involved except as
may be otherwise stated therein, and all adjustments necessary for a fair
presentation of the results for such periods have been made; and the other
financial and statistical information and data included or incorporated by
reference in the Registration Statement and the Prospectus present fairly the
information shown therein and have been prepared on a basis consistent with
such financial statements and the books and records of the Company.
(c) Price Waterhouse LLP, whose reports are included or incorporated by
reference in the Registration Statement, are and, during the periods covered by
their reports, were independent public accountants as required by the Securities
Act and the Securities Act Rules.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Texas. Each of STB
Assembly, Inc., a Texas corporation, ("STB Assembly"), STB de Mexico, S.A. de
C.V., a Mexican corporation ("STB Mexico"), Maquilados Continentales de
Chihuahua, a Mexican corporation ("Maquilados Continentales"), Symmetric
Simulation Systems, Inc., a Texas corporation ("Symmetric") (collectively, the
"subsidiaries"), has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with all requisite corporate power and authority to own or lease
its properties and conduct its business as described in the Registration
Statement and the Prospectus. Neither the Company nor any of its subsidiaries
owns, directly or indirectly, any interest in, or controls, directly or
indirectly, any corporation, partnership, joint venture, association or other
business organization other than as disclosed in the Registration Statement and
the Prospectus. Each of the Company and its subsidiaries is duly qualified and
in good standing as a foreign corporation in each jurisdiction in which the
character or location of their assets or properties (owned, leased or licensed)
or the nature of their business makes such qualification necessary except for
such jurisdictions where the failure to so qualify would not have a material
adverse effect on the assets or properties, business, results of operations or
condition (financial or otherwise) of the Company and its subsidiaries
considered as one enterprise. As of the date hereof, all of the issued and
outstanding shares of capital stock of each of its subsidiaries are owned,
directly or indirectly, by the Company free and clear of any pledge, lien,
encumbrance, security interest, restriction, claim, equitable interest or other
defect in title. All of the issued and outstanding shares of capital stock of
each subsidiary have been validly authorized and issued and are fully paid and
non-assessable, and there are outstanding no other equity or other securities or
any securities convertible into capital stock of any subsidiary, nor are there
any rights to acquire capital stock or other equity securities of any subidiary.
The Company does not own or control, directly or indirectly, any corporation,
association or other entity other than STB Assembly, STB Mexico, Maquilados
Continentales and Symmetric,
[6]
all of which are listed on Exhibit 21.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 31, 1997.
(e) Neither the Company nor any of its subsidiaries owns, leases or
licenses any asset or property or conducts any business outside the United
States of America that is required to be disclosed in the Registration Statement
and the Prospectus other than as disclosed in the Registration Statement and the
Prospectus. Each of the Company and its subsidiaries has the requisite
corporate power and authority, and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity domestic or
foreign ("Permits"), to own, lease and license their assets and properties and
conduct their businesses as now being conducted and as described in the
Registration Statement and the Prospectus, except where the lack of such Permit
would not have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of the
Company and its subsidiaries considered as one enterprise; no such Permit
contains a materially burdensome restriction other than as disclosed in the
Registration Statement and the Prospectus; the Company and its subsidiaries have
fulfilled and performed in all material respects their obligations with respect
to such Permits and, to the knowledge of the Company, no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination thereof or any other material impairment of the rights of the holder
thereof; and the Company has the requisite corporate power and authority, and
such authorizations, approvals, consents, orders, licenses, certificates and
permits to enter into, deliver and perform this Agreement and to issue and sell
the Shares (except as may be required under the Securities Act, the Exchange
Act, under state and foreign Blue Sky laws and from the National Association of
Securities Dealers, Inc. (the "NASD").
(f) The Company or its subsidiaries owns each of the patents and patent
applications referred to in the Registration Statement and the Prospectus under
the caption "Business -- Intellectual Property" (the "Patents and Patent
Applications") and, except as disclosed in the Registration Statement and the
Prospectus, (i) each of the Company and its subsidiaries owns or possesses, or
could obtain ownership or possession of (on terms not materially adverse to the
consolidated financial position, shareholders' equity, results of operations of
the Company and its subsidiaries considered as one enterprise) adequate and
enforceable rights to use all other patent applications, patents, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how and other similar rights and proprietary
knowledge (collectively with the Patents and Patent Applications, the
"Intangibles") necessary for the conduct of their businesses as described in the
Registration Statement and the Prospectus and (ii) neither the Company nor any
subsidiary has infringed, is infringing, or has received any notice of
infringement of any Intangible of any other person other than patents or
trademarks, and neither the Company nor any subsidiary has received any notice
of infringement of, or to the knowledge of the Company, has infringed or is
infringing, any patents or trademarks of any other person that, if the subject
of an unfavorable decision, ruling or finding, could reasonably be expected to
have a material adverse effect upon the assets or properties, business, results
of operations, prospects or condition (financial or otherwise) of the Company
and its subsidiaries considered as one enterprise and the Company knows of any
basis therefor. The expiration of any Intangibles would not have a material
adverse effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company and its
subsidiaries considered as one enterprise.
(g) Each of the Company and its subsidiaries has good and marketable title
in fee simple to each of the items of real property and good title to each of
the items of personal property which are reflected in the financial statements
referred to in Section 4.I.(b) or are referred to in the Registration Statement
and the
[7]
Prospectus as being owned by them, and valid and enforceable leasehold
interests in each of the items of real and personal property which are
referred to in the Registration Statement and the Prospectus as being leased
by them (except as the enforcement of such leasehold interests may be limited
by bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance, moratorium or other similar laws relating to or affecting
creditors' rights generally and by general principles of equity, regardless
of whether considered in a proceeding in equity or at law), in each case free
and clear of any pledge, lien, encumbrance, security interest, restriction,
claim, equitable interest or other defect in title, other than those
described in the Registration Statement and the Prospectus and those which do
not and will not have a material adverse effect upon the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company and its subsidiaries considered as
one enterprise.
(h) The Company and its subsidiaries carry, or are covered by, insurance
in such amounts and covering such risks as is generally deemed adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses in
similar industries.
(i) There is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board pending
or, to the knowledge of the Company, threatened (and neither the Company nor any
subsidiary knows of any basis therefor) against, or involving the assets,
properties or business of, the Company or any subsidiary or, to the knowledge of
the Company, any of their respective officers or directors that could be
reasonably likely to affect materially and adversely the value or the operation
of any such assets or properties or the business, results of operations,
prospects or condition (financial or otherwise) of the Company and its
subsidiaries considered as one enterprise.
(j) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as described therein,
there has not been any material adverse change in the assets or properties,
business, results of operations, prospects or condition (financial or otherwise)
of the Company and its subsidiaries considered as one enterprise, whether or not
arising from transactions in the ordinary course of business; there has not been
any material change in the capital stock or material increase in the short-term
or long-term debt of the Company and its subsidiaries considered as one
enterprise nor has the Company or any subsidiary sustained any material loss or
interference with its assets, businesses or properties (whether owned or leased)
from fire, explosion, earthquake, flood, wind or other calamity, whether or not
covered by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree; and since the date of the latest
balance sheet included in the Registration Statement and the Prospectus, except
as reflected therein, neither the Company nor any subsidiary has undertaken any
liability or obligation, direct or contingent, except for liabilities or
obligations undertaken in the ordinary course of business.
(k) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus (or any Incorporated
Document) or any or to be filed as an exhibit to the Registration Statement (or
any Incorporated Document) that is not described or filed as required by the
Securities Act Rules or the Exchange Act or the Exchange Act Rules. Each
agreement listed in the Exhibits to the Registration Statement (or any
Incorporated Document) is either (i) in full force and effect and is valid and
enforceable by the Company or its subsidiaries, as the case may be, in
accordance with its terms, assuming the due authorization, execution and
delivery thereof by each of the other parties thereto and except as the
enforcement of such agreement may be limited by bankruptcy, insolvency,
reorganization, arrangement,
[8]
fraudulent conveyance, moratorium or other similar laws relating to or
affecting creditors' rights generally and by general principles of equity
(regardless of whether considered in a proceeding in equity or at law) or
(ii) has expired by its terms. Neither the Company nor any subsidiary, nor
to the knowledge of the Company, any other party is in material default in
the observance or performance of any term or obligation to be performed by it
under any such agreement, and no event has occurred which with notice or
lapse of time or both would constitute such a material default, in any such
case which material default or event would have a material adverse effect on
the assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company and its subsidiaries
considered as one enterprise. No material default exists, and no event has
occurred which with notice or lapse of time or both would constitute a
material default, in the due performance and observance of any material term,
covenant or condition, by the Company or any subsidiary, as the case may be,
under any such agreement or any other bond, debenture, note or other evidence
of indebtedness, or any lease, contract, indenture, mortgage, deed of trust,
loan agreement, license or other material agreement or instrument to which
the Company or any subsidiary, as the case may be, is a party or by which it
or its properties or businesses may be bound or affected, which default or
event would have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Company and its subsidiaries considered as one enterprise.
(l) Each of the Company and its subsidiaries is not in violation of any
term or provision of its charter, bylaws or other organizational documents.
Neither the Company nor any subsidiary is in violation of any term or provision
of any franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation would have a material
adverse effect on the assets or properties, business, results of operations, or
condition (financial or otherwise) of the Company and its subsidiaries
considered as one enterprise.
(m) Neither the execution, delivery and performance of this Agreement by
the Company nor the consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale of the Company Firm Shares
by the Company or the sale of the Selling Shareholder Firm Shares) will
(i) violate any provision of the charter, bylaws or other organizational
documents of the Company or any of its subsidiaries, or (ii) give rise to a
right to terminate or accelerate the due date of any payment due under, or
conflict with or result in a material breach of any term or provision of, or
constitute a material default (or an event which with notice or lapse of time or
both would constitute a material default) under, or require any consent or
waiver under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or any subsidiary
pursuant to the terms of, any bond, debenture, note or other evidence of
indebtedness, or any lease, contract, indenture, mortgage, deed of trust, loan
agreement, license or other material agreement or instrument, to which the
Company or any subsidiary is a party or by which they or any of their properties
is bound, or (iii) result in the material violation of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation applicable to the
Company or any subsidiary (except for such consents or waivers which have
already been obtained and are in full force and effect).
(n) The Company and each subsidiary 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 or any subsidiary would have any liability; neither the
Company nor any subsidiary has incurred or expects to incur liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Section 412 or 4971 of the Internal Revenue Code of 1986,
as amended, including the regulations and
[9]
published interpretations thereunder (the "Internal Revenue Code"); and each
"pension plan" for which the Company or any subsidiary would have any
liability that is intended to be qualified under Section 401(a) of the
Internal Revenue 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.
(o) The authorized, issued and outstanding capital stock of the Company on
(i) an actual basis (prior to the sale of the Company Firm Shares), and (ii) on
an as adjusted basis (after giving effect to the sale of the Company Firm
Shares) is as set forth under the caption "Capitalization" in the Prospectus
(including the assumptions set forth in the introductory paragraph to the table
and the footnote to the table) as of the date specified therein. All of the
issued and outstanding securities of the Company and its subsidiaries have been
duly and validly issued and are fully paid (and, in the case of any equity
securities, nonassessable) and were issued and sold in compliance with (or, as
of the date hereof, all such issuances and sales have been brought into
compliance with) all applicable United States federal and state securities laws,
and none of them was issued in violation of any preemptive right, co-sale right,
registration right, right of first refusal or other similar right that, as of
the date hereof, has not been legally and validly waived by each holder of such
rights. The Company Shares, when sold pursuant to this Agreement, will be duly
and validly issued, fully paid and nonassessable, will be free and clear of any
pledge, lien, encumbrance, security interest, restriction, claim, equitable
interest or other defect in title, and no preemptive right, co-sale right,
registration right, right of first refusal or other similar right of
securityholders exists with respect to any of such Shares or the issue and sale
thereof by the Company and the sale thereof by the Selling Shareholders pursuant
to this Agreement. As of the date hereof, there are no shares of convertible
preferred stock outstanding of the Company or outstanding options, convertible
notes and warrants of the Company except for any stock options exercisable for
the Company's Common Stock only. Except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding option, warrant or other
right calling for the issuance of, and no commitment, plan or arrangement to
issue, any capital stock of the Company or any subsidiary or any security
convertible into, or exercisable or exchangeable for, any capital stock of the
Company or any subsidiary. The Company's Preferred Stock (the "Preferred
Stock") and Common Stock described under the caption "Description of Capital
Stock" and the Shares conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.
(p) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as described or referred
to therein, neither the Company nor any subsidiary has (i) issued any securities
or incurred any liability or obligation that is material to the Company and its
subsidiaries considered as one enterprise, direct or contingent, for borrowed
money, (ii) entered into any transaction that is material to the Company and its
subsidiaries considered as one enterprise, except transactions in the ordinary
course of business, or (iii) declared or paid any dividend or made any
distribution on any shares of its capital stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire any shares
of its capital stock.
(q) All necessary corporate action has been duly and validly taken by the
Company to authorize the execution, delivery and performance of this Agreement
and the issuance and sale of the Company Shares. This Agreement has been duly
and validly authorized, executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company, enforceable against it,
in accordance with its terms, except as the enforcement hereof may be limited by
(i) bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance,
moratorium or other similar laws relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether considered
in a proceeding in equity or at law) and
[10]
(ii) the extent to which the rights to indemnity or contribution under this
Agreement may be limited by federal and state securities laws or the public
policy underlying such laws.
(r) Neither the Company nor any subsidiary is involved in any labor
dispute nor, to the knowledge of the Company, is any such dispute threatened,
which dispute would have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or otherwise)
of the Company and its subsidiaries considered as one enterprise.
(s) 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
subsidiary (or, to the knowledge of the Company, any of its predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or any subsidiary, 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, individually or in
the aggregate with all such violations and remedial actions, a material adverse
effect on the assets or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Company and its subsidiaries
considered as one enterprise; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or caused
by the Company or any subsidiary or with respect to which the Company or any
subsidiary 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, individually or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of the
Company and its subsidiaries considered as one enterprise; 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.
(t) No transaction has occurred between or among the Company or any
subsidiary and any of their officers, directors or five percent shareholders or
any affiliate or affiliates of any such officer, director or five percent
shareholder that is required to be described in and is not described in the
Registration Statement and the Prospectus.
(u) Neither the Company nor any subsidiary has taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of any of the Shares.
(v) The Company and each of its subsidiaries has duly filed with the
appropriate taxing authorities all Tax Returns (as hereinafter defined) required
to be filed through the date of this Agreement by any of them, or have received
extensions thereof, and has paid all taxes shown on such returns and all
assessments received by them to the extent that the same are material to the
Company and its subsidiaries considered as one enterprise and have become due.
The term "Tax Returns" means any return supplied by the Company or any
subsidiary to, or any assessment received from, a taxing authority in the United
States, Mexico or elsewhere.
[11]
(w) The Company maintains a system of internal 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 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.
(aa) Neither the Company nor any subsidiary, nor, to the knowledge of the
Company, any affiliate of the Company or any subsidiary or any other person
acting on its or their behalf has directly or indirectly (i) used any corporate
funds for any unlawful payment to any foreign or domestic governmental or
judicial officials or employees, (ii) made any unlawful payment (including any
bribe, rebate, payoff, kickback or influence payment) to any person or entity,
private or public, whether in the form of cash, property, services or otherwise,
(iii) violated or is in violation of any provision of federal or state laws
relating to corruption of governmental officials or representatives, including
the Foreign Corrupt Practices Act of 1977 and similar laws, (iv) established or
maintained any fund of monies or other assets for the purposes specified in
clauses (i) or (ii) above or (v) made any false or fictitious entry on the books
or records of the Company or any subsidiary relating to any payment referred to
in clauses (i) or (ii) above.
(bb) The Company is not and, upon sale of the Shares to be issued and sold
in accordance herewith and the application of the net proceeds to the Company of
such sale as described in the Prospectus under the caption "Use of Proceeds"
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company Act"), and the rules
and regulations thereunder.
(cc) The Shares have been duly authorized for quotation on the National
Association of Securities Dealers Automated Quotation ("Nasdaq") National
Market, subject to official notice of issuance. The Company has duly filed a
Nasdaq National Market Notification Form for Listing of Additional Shares and
has filed or will file a Form 10-C with respect to the sale and issuance of the
Shares in accordance with the rules and regulations of the NASD and the
Commission.
(dd) The Company has complied with all of the requirements and filed the
required forms as specified in Florida Statutes Section 517.075.
(ee) The Company has duly filed on a timely basis with the Commission all
reports, registration statements and other documents required by the Securities
Act, the Securities Act Rules, the Exchange Act and the Exchange Act Rules. All
of such reports, registration statements and other documents, when they were
filed with the Commission, conformed in all material respects to the
requirements of the Securities Act, the Securities Act Rules, the Exchange Act
and the Exchange Act Rules, as appropriate. None of such reports, registration
statements or other documents 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.
(ff) Each of the Company's officers and directors and each of Selling
Shareholders has agreed in writing that they will not, for a period of 90 days
after the date of the Prospectus (the "Lock-up Period"), offer to sell, contract
to sell, or otherwise sell, dispose of, loan, pledge or grant any rights with
respect to (collectively, a "Disposition") any shares of Common Stock, any
options or warrants to purchase any shares
[12]
of Common Stock or any securities convertible into or exchangeable for shares
of Common Stock (collectively, "Securities") now owned or hereafter acquired
directly by such person or with respect to which such person has or hereafter
acquires the power of disposition, otherwise than (i) as a bona fide gift or
gifts, provided the donee or donees thereof agree in writing to be bound by
this restriction, (ii) as a distribution to partners or shareholders of such
person, provided that the distributees thereof agree in writing to be bound
by the terms of this restriction, or (iii) with the prior written consent of
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. The foregoing restriction has been expressly agreed
to preclude the holder of the Securities from engaging in any hedging or
other transaction which 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 such holder. Such
prohibited hedging or other transactions would 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 Securities. Furthermore, such person has
also agreed and consented to the entry of stop transfer instructions with the
Company's transfer agent against the transfer of the Securities held by such
person except in compliance with this restriction. The Company has provided
to counsel for the Underwriters true, accurate and complete copies of all of
the agreements pursuant to which its officers and directors and the Selling
Shareholders have agreed to such or similar restrictions (the "Lock-up
Agreements") presently in effect or effected hereby. The Company hereby
represents and warrants that it will not release any of its officers or
directors or the Selling Shareholders from any Lock-up Agreements currently
existing or hereafter effected without the prior written consent of CIBC
▇▇▇▇▇▇▇▇▇▇▇ Corp.
II. Each Selling Shareholder, severally and not jointly and only as to
himself, represents and warrants and agrees with each Underwriter, the Company
and each other Selling Shareholder that:
(a) Such Selling Shareholder is on the date hereof the sole lawful owner
of the Shares to be sold by it pursuant to this Agreement; such Selling
Shareholder, at all times prior to each applicable Closing Date, shall be the
sole lawful owner of the Shares to be sold by it pursuant to this Agreement, and
has, and on such Closing Date will have, valid marketable title to the Shares to
be sold by it pursuant to this Agreement, free and clear of any pledge, lien,
encumbrance, security interest, restriction, claim, equitable interest or other
defect in title and, upon the delivery of and payment for the Shares to be sold
by such Selling Shareholder as contemplated in this Agreement, each of the
Underwriters will receive valid marketable title to the Shares purchased by it
from such Selling Shareholder, free and clear of any pledge, lien, encumbrance,
security interest, restriction, claim, equitable interest or other defect in
title; and there are no outstanding options, warrants, rights or other
agreements or arrangements requiring such Selling Shareholder at any time to
transfer any Shares to be sold by it to the several Underwriters pursuant to
this Agreement, except pursuant to the terms of this Agreement.
(b) Such Selling Shareholder has on the date hereof and, on each
applicable Closing Date will have, full legal right, power and authority to
enter into and to perform its obligations under this Agreement and to sell,
transfer, assign and deliver the Shares to be sold by such Selling Shareholder
to the several Underwriters pursuant to this Agreement; if such Selling
Shareholder is not a natural person, such Selling Shareholder has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its organization and this Agreement has been duly authorized by
such Selling Shareholder by all necessary action (corporate, partnership or
otherwise); this Agreement has been duly executed and delivered by or on behalf
of such Selling Shareholder and is a valid and binding obligation of such
Selling
[13]
Shareholder, enforceable against such Selling Shareholder in accordance with
its terms, except as the enforcement hereof may be limited by (i) bankruptcy,
insolvency, reorganization, arrangement, fraudulent conveyance, moratorium or
other similar laws relating to or affecting creditors' rights generally and
by general principles of equity (regardless of whether considered in a
proceeding in equity or at law) and (ii) the extent to which the rights to
indemnity or contribution under this Agreement may be limited by federal and
state securities laws or the public policy underlying such laws; and the
performance of this Agreement and the consummation of the transactions herein
contemplated will not result in a breach of or a default under any bond,
debenture, note or other evidence of indebtedness, or any lease, contract,
indenture, mortgage, deed of trust, loan agreement, license or other material
agreement or instrument to which such Selling Shareholder is a party or by
which its properties or businesses or the Shares to be sold by such Selling
Shareholder hereunder may be bound or affected or, to the best of such
Selling Shareholder's knowledge, result in any violation of any applicable
law, order, rule, regulation, writ, injunction or decree of any court or
governmental agency or body having jurisdiction over such Selling Shareholder
or, if such Selling Shareholder is other than a natural person, result in the
violation of any provisions of the charter, bylaws or other organizational
documents of such Selling Shareholder.
(c) Such Selling Shareholder has duly authorized (if applicable), executed
and delivered, in the form heretofore furnished to the Representatives, an
irrevocable Power of Attorney (the "Power of Attorney") appointing ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ as attorneys-in-fact (collectively, the "Attorneys"
and individually, an "Attorney") and a Letter of Transmittal and Custody
Agreement (the "Custody Agreement") with ChaseMellon Shareholder Services,
L.L.C., as custodian (the "Custodian"), (ii) such Selling Shareholder has full
right, power and authority to sell, transfer, assign and deliver the Shares to
be sold by such Selling Shareholder pursuant to this Agreement and such Custody
Agreement; if such Selling Shareholder is not a natural person, such Selling
Shareholder's Custody Agreement has been duly authorized by such Selling
Shareholder by all necessary action (corporate, partnership or otherwise); such
Selling Shareholder's Custody Agreement has been duly executed and delivered by
or on behalf of such Selling Shareholder and is a valid and binding obligation
of such Selling Shareholder, enforceable against such Selling Shareholder in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance,
moratorium or other similar laws relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether considered
in a proceeding in equity or at law); and the performance of such Selling
Shareholder's Custody Agreement and the consummation of the transactions therein
contemplated will not result in a breach of or a default under any bond,
debenture, note or other evidence of indebtedness, or any lease, contract,
indenture, mortgage, deed of trust, loan agreement, license or other material
agreement or instrument to which such Selling Shareholder is a party or by
which its properties or businesses or the Shares to be sold by such Selling
Shareholder hereunder may be bound or affected or, to the best of such Selling
Shareholder's knowledge, result in any violation of any applicable law, order,
rule, regulation, writ, injunction or decree of any court or governmental agency
or body having jurisdiction over such Selling Shareholder or, if such Selling
Shareholder is other than a natural person, result in the violation of any
provisions of the charter, bylaws or other organizational documents of such
Selling Shareholder.
(d) Each Attorney-in-Fact, acting alone, has been duly authorized to
execute and deliver this Agreement and the certificate referenced in Section
5(f) hereof on behalf of the Selling Shareholder that appointed him as
Attorney-in-Fact, to determine the purchase price to be paid by the several
Underwriters to such Selling Shareholder as provided in Section 1(a) hereof,
to authorize the delivery to the several Underwriters of the Shares to be
sold by each Selling Shareholder, against payment therefor, to duly endorse
[14]
(in blank or otherwise) the certificate or certificates representing such
Shares or a stock power or powers with respect thereto, to accept payment
therefor, and otherwise to act on behalf of such Selling Shareholder in
connection with this Agreement. This Agreement has been duly executed and
delivered by or on behalf of such Selling Shareholder.
(e) The appointment of the Attorney-in-Fact by each Selling Shareholder is
irrevocable; and the obligations of such Selling Shareholder pursuant to this
Agreement shall not be terminated except as provided in this Agreement and such
Selling Shareholder's Custody Agreement, by any act of such Selling Shareholder,
by operation of law or otherwise, whether in the case of an individual Selling
Shareholder by the death or incapacity of such Selling Shareholder, or by the
occurrence of any other event.
(f) The Attorney-in-Fact has received from each Selling Shareholder, and
immediately upon receipt therefrom, delivered to the Custodian a certificate or
certificates in negotiable form evidencing the Shares to be sold by each Selling
Shareholder pursuant to such Selling Shareholders' Custody Agreement and this
Agreement; such Custody Agreement and the authority of the Custodian thereunder
are irrevocable and are not subject to termination by such Selling Shareholder,
except as provided in such Custody Agreement, or by operation of law, whether by
the death or incapacity of such Selling Shareholder (if such Selling Shareholder
is an individual), the death or incapacity of any trustee or executor or the
termination of any trust or estate (if such Selling Shareholder is a trust or
estate), the dissolution or liquidation of any corporation, partnership or other
organization (if such Selling Shareholder is a corporation, partnership or other
organization), or the occurrence of any other event. If any event referred to
in the preceding sentence should occur before the delivery of the Shares to the
several Underwriters hereunder, certificates for such Shares shall be delivered
by the Custodian, on behalf of such Selling Shareholder in accordance with the
terms and conditions of this Agreement and such Selling Shareholder's Custody
Agreement, and any action taken by the Custodian pursuant to such Selling
Shareholder's Custody Agreement shall be as valid as if such event had not
occurred, whether or not the Custodian, the Custody Attorney-in-Fact, or any one
of them, shall have received notice of such event.
(g) No transaction has occurred between such Selling Shareholder and the
Company or any subsidiary that is required to be described in and is not
described in the Registration Statement and the Prospectus; such Selling
Shareholder has not distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the Shares other
than a preliminary prospectus or the Prospectus; such Selling Shareholder is not
prompted to sell the Shares to be sold by such Selling Shareholder hereunder by
any information concerning the Company or any of its subsidiaries that is not
set forth in the Registration Statement, any preliminary prospectus or the
Prospectus; such Selling Shareholder has not taken and will not take, directly
or indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which will reasonably be
expected to constitute, stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of any of the Shares.
(h) Such Selling Shareholder does not have, or has waived prior to the
date hereof, any preemptive right, co-sale right, registration right, right of
first refusal or other similar right to purchase any of the Shares to be sold to
the several Underwriters by the Company or any other Selling Shareholder
pursuant to this Agreement; and such Selling Shareholder does not own any
warrants, options or similar rights to acquire, and does not have any right or
arrangement to acquire, any capital stock, rights, warrants, options or other
securities of the Company or any subsidiary, other than those described in the
Registration Statement and the Prospectus.
[15]
(i) In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Internal Revenue Code of 1986, as amended,
such Selling Shareholder will deliver to the Representatives on or prior to each
applicable Closing Date a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department Regulations in lieu thereof).
(j) Such Selling Shareholder hereby repeats and confirms as if set forth
herein each of the representations, warranties and agreements made by such
Selling Shareholder in its Custody Agreement and agrees that such
representations, warranties and agreements are made hereby for the benefit of,
and may be relied upon by, (i) the Representatives, the Underwriters and Wilson,
Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, as counsel to the
Underwriters, (ii) the Company and Lock ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇, as counsel to the
Company, (iii) __________, as counsel to the Selling Shareholders and (iii) each
other Selling Shareholder.
(k) Such Selling Shareholder will review the Prospectus and will comply
with all agreements and satisfy all conditions on its part to be complied with
or satisfied pursuant to this Agreement on or prior to each applicable Closing
Date; and will advise one of its Attorneys and CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. prior to
each applicable Closing Date if any statement to be made on behalf of such
Selling Shareholder in the certificate contemplated by Section 5(f) would be
inaccurate if made as of the applicable Closing Date.
(l) Each Selling Shareholder will not, during the Lock-Up Period, effect
the Disposition of any Securities now owned or hereafter acquired directly by
such Selling Shareholder or with respect to which such Selling Shareholder has
or hereafter acquires the power of disposition, otherwise than (i) as a bona
fide gift or gifts, provided the donee or donees thereof agree in writing to be
bound by this restriction, (ii) as a distribution to partners or shareholders of
such Selling Shareholder, provided that the distributees thereof agree in
writing to be bound by the terms of this restriction, or (iii) with the prior
written consent of CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. The foregoing restriction is
expressly agreed to preclude the holder of the Securities from engaging in any
hedging or other transaction which 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 Selling
Shareholder. Such prohibited hedging or other transactions would including,
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 Securities. Such Selling
Shareholder also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent against the transfer of the securities held by
such Selling Shareholder except in compliance with this restriction.
(m) Certificates in negotiable form for all Shares to be sold by such
Selling Shareholder under this Agreement, together with a stock power or powers
duly endorsed in blank by such Selling Shareholder, have been placed in custody
with the Custodian for the purpose of effecting delivery hereunder.
III. In addition to the representations and warranties set forth in Section
4.II. hereof, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, in his individual capacity as a Selling
Shareholder and not as an officer or director of the Company, severally and not
jointly and only as to himself, represents and warrants and agrees with each
Underwriter, the Company and each other Selling Shareholder that
[16]
(a) He has read the Registration Statement and the Prospectus and, to the
best of his knowledge: (i) the Registration Statement did not, as of the
Effective Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading; and (ii) the Prospectus did not, as of
each applicable Closing Date, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) He is not aware that any of the representations and warranties of the
Company set forth in Section 4.I. above is untrue or inaccurate in any material
respect.
5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS.
The obligations of the Underwriters under this Agreement are several and
not joint. The respective obligations of the Underwriters to purchase the
Shares are subject to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 6.I.(a) hereof.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been issued or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for such purpose shall be pending before or threatened
by the Commission, and any requests for additional information on the part of
the Commission (to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the satisfaction of the
Representatives.
(c) Subsequent to the effective date of this Agreement, there shall not
have occurred (i) any material adverse change, or any development involving a
prospective material adverse change, in or affecting the assets or properties,
business, results of operations, prospects or condition (financial or otherwise)
of the Company and its subsidiaries considered as one enterprise not
contemplated by the Prospectus, which in your reasonable judgment, as
Representatives of the several Underwriters, would materially and adversely
affect the market for the Shares, or (ii) any event or development relating to
or involving the Company or any of its subsidiaries or any officer or director
of the Company or any of its subsidiaries which makes any statement made in
the Prospectus untrue or which, in the opinion of the Company and its counsel
or the Underwriters and their counsel, requires the making of any addition to
or change in the Prospectus in order to state a material fact required by the
Securities Act or any other law to be stated therein, or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, if amending or supplementing the Prospectus
to reflect such event or development would, in your reasonable judgment, as
Representatives of the several Underwriters, materially and adversely affect
the market for the Shares.
(d) The representations and warranties of the Company and the Selling
Shareholders contained in this Agreement and in the certificates delivered
pursuant to Sections 5(e) and 5(f) shall be true, correct and complete in all
material respects when made and on and as of each Closing Date as if made on
such date and each of the Company and the Selling Shareholders shall have
performed all covenants and agreements and
[17]
satisfied all the conditions contained in this Agreement required to be
performed or satisfied by it at or before such Closing Date.
(e) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
signed by the Company's (i) Chairman of the Board and Chief Executive Officer,
(ii) Chief Financial Officer and Vice President of Strategic Marketing and (iii)
Vice President of Administration and General Counsel,to the effect that, and the
Representatives 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 applicable
Closing Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the applicable Closing Date;
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Securities Act;
(iii) When the Registration Statement became effective and at all
times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto (and the Incorporated Documents, when such Incorporated
Documents became effective or were filed with the Commission), contained
all material information required to be included therein by the Securities
Act and the Securities Act Rules (or the Exchange Act and the Exchange Act
Rules, as the case may be), and in all material respects conformed to the
requirements of the Securities Act and the Securities Act Rules (or the
Exchange Act Rules, as the case may be), the Registration Statement, and
any amendment or supplement thereto, did not and does 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, the Prospectus, and any amendment or supplement thereto,
did not and does not include any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
and, since the effective date of the Registration Statement, there has
occurred no event required to be set forth in an amended or supplemented
Prospectus which has not been so set forth; and
(iv) 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 in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise, (b) any transaction that is
material to the Company and its 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 its subsidiaries considered as one enterprise, incurred by the Company
or its subsidiaries, except obligations incurred in the ordinary course of
business, (d) any change in the capital stock or outstanding indebtedness
of the Company or any of its subsidiaries that is material to the Company
and its 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 any of its subsidiaries, or (f) any loss or damage (whether or
not insured) to the property of the Company or any of its subsidiaries
which has been sustained or will have been
[18]
sustained which has a material adverse effect on the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise.
(f) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date, of
each Selling Shareholder (or, if such Selling Shareholder is not a natural
person, an authorized officer thereof) to the effect that the representations
and warranties of such Selling Shareholder in this Agreement are true, correct
and complete in all material respects on and as of such Closing Date with the
same effect as if made on such Closing Date and such Selling Shareholder has
performed all covenants and agreements and satisfied all conditions contained in
this Agreement required to be performed or satisfied by such Selling Shareholder
at or prior to such Closing Date.
(g) The Representatives shall have received at the time this Agreement is
executed and on each Closing Date a letter or letters signed by Price Waterhouse
LLP, addressed to the Company and the Representatives and dated, respectively,
the date of this Agreement and each such Closing Date, in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants within the meaning of the Securities Act and the Securities Act
Rules, that the response to Item 10 of the Registration Statement is correct
insofar as it relates to them and stating in effect that:
(i) in their opinion the audited consolidated financial statements
and financial statement schedules included in the Registration Statement
and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the Securities Act Rules;
(ii) on the basis of carrying out certain procedures (but not an
examination in accordance with generally accepted auditing standards) which
would not necessarily reveal matters of significance with respect to the
comments set forth in such letter, a reading of the minutes of the meetings
of the shareholders and directors of the Company and its subsidiaries, and
inquiries of certain officials of the Company who have responsibility for
financial and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to the date of the latest audited
financial statements, nothing came to their attention which caused them to
believe that:
(iii) There were, at a specified date not more than five business
days prior to the date of the letter, any increases in the long-term
liabilities of the Company and its subsidiaries considered as one
enterprise, any increases in the capital stock of the Company or, as of the
latest month-end for which financial statements are available, any
decreases in working capital or shareholders' equity of the Company and its
subsidiaries considered as one enterprise, as compared with the amounts
shown on the January 31, 1998 consolidated balance sheet included in the
Registration Statement and the Prospectus, or (B) for the period from
February 1, 1998 to the latest month-end for which financial statements are
available, there was any decrease in total net sales, any increase in
losses before provision for income taxes or any decrease in income before
provision for income taxes as compared with the corresponding amounts in
the corresponding period in the quarter ended January 31, 1998 included in
the Registration Statement and the Prospectus, except for those increases
or decreases set forth in the letter, in which case the Company shall
deliver to the Representatives a letter containing
[19]
an explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Representatives; and
(iv) They have performed certain other procedures as a result of
which they determined that certain information of an accounting, financial
or statistical nature (which is limited to accounting, financial or
statistical information derived from the general accounting records of the
Company) set forth in the Registration Statement and the Prospectus and
reasonably specified by the Representatives agrees with the accounting
records of the Company.
References to the Registration Statement and the Prospectus in this
paragraph (g) are to such documents as amended and supplemented at the date
of the letter.
(h) The Representatives shall have received on each Closing Date from
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇, counsel for the Company, an opinion, addressed to
the Representatives and dated such Closing Date, and stating in effect that:
(i) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Texas. The
Company is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its assets or
properties (owned, leased or licensed) or the nature of its businesses
makes such qualification necessary, except for such jurisdictions where the
failure to so qualify would not have a material adverse effect on the
assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company and its subsidiaries
considered as one enterprise.
(ii) Each of STB Assembly and Symmetric has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of California. Each of STB Assembly and Symmetric is duly qualified
and in good standing as a foreign corporation in each jurisdiction in which
the character or location of its assets or properties (owned, leased or
licensed) or the nature of its businesses makes such qualification
necessary, except for such jurisdictions where the failure to so qualify
would not have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Company and its subsidiaries considered as one
enterprise. All the outstanding shares of capital stock STB Assembly and
Symmetric have been duly authorized and validly issued, are fully paid and
nonassessable and, to the best of such counsel's knowledge, are
wholly-owned by the Company, free and clear of any pledge, lien,
encumbrance, security interest, restriction, claim, equitable interest or
other defect in title.
(iii) To the best of such counsel's knowledge, neither the Company
nor any of its subsidiaries owns, directly or indirectly, any interest in,
or controls, directly or indirectly, any corporation, partnership, joint
venture, association or other business organization other than as disclosed
in the Registration Statement and the Prospectus.
(iv) The Company has the requisite corporate power and authority to
own, lease and license its assets and properties and conduct its business
as described in the Registration Statement and the Prospectus.
[20]
(v) No consent, approval, authorization, permit, or other order of,
or registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official or any financial
institution is required on the part of the Company (except such as may be
required under state securities or Blue Sky laws governing the purchase and
distribution of the Shares or in connection with the clearance of the terms
of the underwriting arrangements by the NASD, as to which such counsel need
not express an opinion) for the execution, delivery and performance of this
Agreement by the Company or the consummation of the transactions
contemplated hereby.
(vi) The Company has the requisite corporate power and authority to
enter into this Agreement and to issue, sell and deliver the Company Firm
Shares to be sold by it to the several Underwriters as provided herein; all
necessary corporate action has been duly and validly taken by the Company
to authorize the execution, delivery and performance of this Agreement;
this Agreement has been duly authorized, executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company.
(vii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization"; all of the outstanding shares of Common Stock (including
the Selling Shareholder Firm Shares) have been, and the Company Firm
Shares, upon issuance and delivery and payment therefor in the manner
described herein, will be, duly authorized, validly issued, fully-paid and
nonassessable.
(viii) The authorized capital stock of the Company conforms in all
material respects as to legal matters to the descriptions thereof contained
in the Prospectus under the caption "Description of Capital Stock".
(ix) The form of certificate evidencing the Shares conforms to the
requirements of the Texas Business Corporation Act.
(x) The Company Firm Shares to be issued and sold to the several
Underwriters by the Company under this Agreement have been duly authorized
and, when issued and delivered to the several Underwriters against payment
therefor in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable and free of any preemptive right, co-
sale right, registration right, right of first refusal or other similar
right contained in the Articles of Incorporation or Bylaws of the Company
or any bond, debenture, note or other evidence of indebtedness, or any
lease, contract, indenture, mortgage, deed of trust, loan agreement,
license or other material agreement or instrument known to such counsel to
which the Company or any of its subsidiaries is a party or by which their
properties are bound (collectively, the "Reviewed Documents") to which the
Company or any of its subsidiaries is a party or by which they or any of
their properties is bound.
(xi) To such counsel's knowledge, except as described in the
Registration Statement and the Prospectus (and any Incorporated Document),
there are no outstanding options, warrants or other rights calling for the
issuance of, and, to the knowledge of such counsel, there is no agreement,
plan or arrangement to issue, any shares of capital stock of the Company or
any security convertible into, exchangeable or exercisable for capital
stock of the Company.
[21]
(xii) Except as described in the Registration Statement and the
Prospectus (and any Incorporated Document), to the best of such counsel's
knowledge, there is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board
pending or overtly threatened against, or involving the assets, properties
or businesses of, the Company or any of its subsidiaries, or any of their
respective officers, directors or five percent shareholders which if
determined adversely could have a material adverse effect upon the assets
or properties, business, results of operations or condition (financial or
otherwise) of the Company and its subsidiaries considered as one
enterprise.
(xiii) To such counsel's knowledge, there is no bond, debenture,
note or other evidence of indebtedness, or any lease, contract, indenture,
mortgage, deed of trust, loan agreement, license or other material
agreement or instrument that is required to be described in the
Registration Statement or the Prospectus (or any Incorporated Document) or
to be filed as an exhibit to the Registration Statement (or any
Incorporated Document) that is not described or filed as required, as the
case may be.
(xiv) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including the issuance and sale of the Company Firm
Shares by the Company to the several Underwriters) will (i) conflict with
the Articles of Incorporation or Bylaws of the Company or (ii) conflict
with or result in a material breach or violation of, or constitute a
material default (or an event that with the passage of time, notice of or
both would constitute a material default) under, or result in the
imposition of any lien, charge or encumbrance upon any properties or assets
of the Company or any of its subsidiaries pursuant to, the terms of any
Reviewed Document or (iii) result in any material violation of (A) any
applicable law, rule or regulation of the United States of America, the
State of Texas (other than the bylaws and rules of the NASD or any state
securities or Blue Sky laws applicable to the offering and sale of the
Shares, as to which such counsel need not express an opinion) or (B) any
order, decree or judgment known to such counsel to be applicable to the
Company or any of its subsidiaries of any United States federal, state or
local governmental authority or any court, regulatory body, administrative
agency, governmental body or arbitrator.
(xv) The Registration Statement and the Prospectus and each amendment
or supplement thereto (except for the financial statements and notes and
schedules and other financial and statistical data included therein, as to
which such counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Securities Act and the
Securities Act Rules; and each of the Incorporated Documents (except for
the financial statements and notes and schedules and other financial and
statistical data included therein, as to which such counsel need not
express any opinion) complied when filed pursuant to the Exchange Act as to
form in all material respects with the requirements of the Securities Act
and the Securities Act Rules and the Exchange Act and the Exchange Act
Rules.
(xvi) The Registration Statement has become effective under the
Securities Act, and 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, to the best of such counsel's
knowledge, are threatened or contemplated.
[22]
(xvii) To the knowledge of such counsel, except as set forth in the
Registration Statement and the Prospectus (or any Incorporated Document),
no holders of Common Stock or other securities of the Company have
registration rights with respect thereto and, except as set forth in the
Registration Statement and the Prospectus (or any Incorporated Document),
all holders of securities of the Company having rights to registration of
shares of Common Stock, or other securities, because of the filing of the
Registration Statement by the Company have, with respect to the offering
contemplated hereby, 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 Common Stock in the
Registration Statement pursuant to the exercise of such rights.
To the extent deemed advisable by such counsel, they may rely as to matters
of fact on certificates of responsible officers of the Company and its
subsidiaries, the Selling Shareholders, and public officials, and may deliver
the opinions of other counsel satisfactory to the Representatives as to matters
which are governed by laws other than the laws of the States of Texas and New
York and the federal laws of the United States in place of the opinions required
above from such counsel, but only to the extent such replaced opinions relate
solely to matters governed by such other laws. Copies of such certificates and
other opinions shall be addressed to and furnished to the Representatives and
furnished to counsel for the Underwriters.
In addition, such counsel shall state that such counsel has participated in
conferences with representatives of the Representatives and with representatives
of the Company and its independent public accountants concerning the
Registration Statement and the Prospectus and have considered the matters
required to be stated therein and the statements contained therein, although
such counsel has not independently verified and is not passing upon the
accuracy, completeness or fairness of such statements (except as specified in
the foregoing opinion). Based upon and subject to the foregoing, nothing has
come to the attention of such counsel that leads such counsel to believe that
the Registration Statement at the time it became effective, and any Incorporated
Document, when such documents became effective or were filed with the Commission
(except with respect to the financial statements and notes and schedules thereto
and other financial and statistical data, as to which such counsel need make no
comment) contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus (and any Incorporated Document)
(except with respect to the financial statements and notes and schedules thereto
and other financial and statistical data, as to which such counsel need make no
comment) at the time it was first provided to the Underwriters for use in
connection with the offering of the Shares or at the date of such counsel's
opinion contained any untrue statement of a material fact or omitted 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.
(i) The Representatives shall have received on each Closing Date from
__________, Mexican counsel for the Company, an opinion, addressed to the
Representatives and dated such Closing Date, and stating in effect that:
(i) Each of STB Mexico and Maquilados Continentales been duly
organized and is validly existing as a corporation in good standing under
the laws of Mexico. Each of STB Mexico and Maquilados Continentales is
duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or properties
(owned, leased or licensed) or the nature of its businesses makes such
qualification necessary, except for such jurisdictions where the failure to
so qualify would not have a material adverse effect on the assets or
properties, business,
[23]
results of operations, prospects or condition (financial or otherwise) of
the Company and its subsidiaries considered as one enterprise.
(ii) The consummation of any of the transactions contemplated hereby
(including the issuance and sale of the Company Shares by the Company to
the several Underwriters) will not (i) conflict with the organizational
documents of STB Mexico or Maquilados Continentales or (ii) conflict with
or result in a material breach or violation of, or constitute a material
default (or an event that with the passage of time, notice of or both would
constitute a material default) under, or result in the imposition of any
lien, charge or encumbrance upon any properties or assets of STB Mexico or
Maquilados Continentales pursuant to, the terms of any bond, debenture,
note or other evidence of indebtedness, or any lease, contract, indenture,
mortgage, deed of trust, loan agreement, license or other material
agreement or instrument known to such counsel to which STB Mexico or
Maquilados Continentales is a party or by which they or any of their
properties is bound or (iii) result in any material violation of (A) any
applicable law, rule or regulation of any court or any governmental agency
or body having jurisdiction over STB Mexico or Maquilados Continentales or
(B) any order, decree or judgment applicable to STB Mexico or Maquilados
Continentales of any governmental authority or any court, regulatory body,
administrative agency, governmental body or arbitrator.
(iii) Except as described in the Registration Statement and the
Prospectus (or any Incorporated Document), to the best of such counsel's
knowledge, there is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board
pending or overtly threatened against, or involving the assets, properties
or businesses of, STB Mexico or Maquilados Continentales, or any of their
respective officers or directors which if determined adversely could have a
material adverse effect upon the assets or properties, business, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries considered as one enterprise.
To the extent deemed advisable by such counsel, they may rely as to matters
of fact on certificates of responsible officers of STB Mexico and
Maquilados Continentales and public officials. Copies of such certificates
and other opinions shall be addressed to and furnished to the
Representatives and furnished to counsel for the Underwriters.
(j) The Representatives shall have received on each Closing Date from
_________, counsel to the Selling Shareholders, an opinion, addressed to the
Representatives and dated such Closing Date, and stating in effect that:
(i) This Agreement is a valid and binding obligation of each Selling
Shareholder, enforceable against such Selling Shareholder in accordance
with its terms, except as the enforcement hereof may be limited by
(i) bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance, moratorium or other similar laws relating to or affecting
creditors' rights generally and by general principles of equity (regardless
of whether considered in a proceeding in equity or at law) and (ii) the
extent to which rights to indemnity or contribution under this Agreement
may be limited by federal and state securities laws or the public policy
underlying such laws; and to the best of such counsel's knowledge, the
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach of or a default under any
bond, debenture, note or other evidence of indebtedness, or any lease,
contract, indenture, mortgage, deed of trust, loan
[24]
agreement, license or other material agreement or instrument known to such
counsel to which such Selling Shareholder is a party or by which his
properties or businesses or the Shares to be sold by such Selling
Shareholder hereunder may be bound or affected or result in any violation
of any law, order, rule, regulation, writ, injunction or decree of any
court or governmental agency or body known to such counsel that is
applicable to the sale of the Shares by such Selling Shareholder to the
several Underwriters pursuant to this Agreement.
(ii) The Custody Agreement of each Selling Shareholder is a valid and
binding obligation of such Selling Shareholder, enforceable against such
Selling Shareholder in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium or other similar laws
relating to or affecting creditors' rights generally and by general
principles of equity (regardless of whether considered in a proceeding in
equity or at law); and, to such counsel's knowledge, the performance of
each Selling Shareholder's Custody Agreement and the consummation of the
transactions therein contemplated will not result in a breach of or a
default under any bond, debenture, note or other evidence of indebtedness,
or any lease, contract, indenture, mortgage, deed of trust, loan agreement,
license or other material agreement or instrument known to such counsel to
which such Selling Shareholder is a party or by which his properties or
businesses or the Shares to be sold by such Selling Shareholder hereunder
may be bound or affected or result in any violation of any law, order,
rule, regulation, writ, injunction or decree of any court or governmental
agency or body known to such counsel that is applicable to the transactions
contemplated by such Selling Shareholder's Custody Agreement.
(iii) No consent, approval, authorization, permit or order of any
court or governmental agency or body or, to the knowledge of such counsel,
any financial institution is required to be obtained by any Selling
Shareholder for the execution, delivery and performance of this Agreement
or its Custody Agreement or the sale by such Selling Shareholder of the
Shares to be sold by him hereunder, except such as have been obtained under
the Securities Act and such as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of such
Shares by the several Underwriters (as to which such counsel need not make
any comment) and such as may be required under the rules of the NASD with
respect to the underwriting arrangements reflected in this Agreement (as to
which such counsel need not make any comment).
(iv) Each Selling Shareholder has valid and marketable title to the
Shares to be sold by it to the several Underwriters pursuant to this
Agreement, free and clear of any pledge, lien, encumbrance, security
interest, restriction, claim, equitable interest or other defect in title
other than pursuant to this Agreement; each Selling Shareholder has full
right, power and authority to sell, assign, transfer and deliver the Shares
to be sold by such Selling Shareholder hereunder, and, upon the delivery of
and payment for the Shares to be sold by such Selling Shareholder to the
several Underwriters pursuant to this Agreement, each of the Underwriters
will receive valid and marketable title to the Shares purchased by it from
such Selling Shareholder, free and clear of any pledge, lien, encumbrance,
security interest, restriction, claim, equitable interest or other defect
in title.
(k) All proceedings taken in connection with the sale of the Firm Shares
and the Option Shares as herein contemplated shall be satisfactory in form and
substance to the Representatives and their counsel and the Underwriters shall
have received from Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation,
a favorable opinion, addressed to the Representatives and dated such Closing
Date, with respect to the Shares,
[25]
the Registration Statement and the Prospectus, and such other related matters
as the Representatives may request, and the Company and the Selling
Shareholders shall have furnished to Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Professional Corporation, such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(l) The Representatives shall have received on each Closing Date a
certificate, including exhibits thereto, addressed to the Representatives and
dated such Closing Date, of the Secretary or an Assistant Secretary of the
Company, signed in such officer's capacity as such officer, as to (i) its
organizational documents, (ii) its board of directors and shareholders actions
authorizing (A) the preparation, execution and filing of the Registration
Statement, (B) the execution and delivery of this Agreement and the Custody
Agreements, (C) the performance of the transactions contemplated by this
Agreement, the Custody Agreements, the Registration Statement and the Prospectus
and (D) the offering of the Shares and (iii) the incumbency of the person or
persons authorized to execute and deliver the Registration Statement, this
Agreement, the Custody Agreements and any other documents contemplated by the
offering of the Shares.
(m) The Representatives shall have received on each Closing Date,
certificates of the Secretaries of State (or other relevant authorities) where
the Company and each of its subsidiaries is incorporated and doing business
as to the good standing of the Company and each of its subsidiaries, listing all
charter documents on file, qualification of the Company to do business as a
foreign corporation, payment of taxes and filing of annual reports. In
addition, the Representatives shall have received copies of all charter
documents of the Company and each of its subsidiaries certified by the Secretary
of State (or other relevant authorities) of the jurisdiction of incorporation of
each of the Company and each subsidiary.
(n) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives, and dated such Closing Date, of
an executive officer of the Company to the effect that the signer of such
certificate has reviewed and understands the provisions of Section 517.075 of
the Florida Statutes, and represents that the Company has complied, and at all
times will comply, with all provisions of Section 517.075 and further, that as
of such Closing Date, neither the Company nor any of its affiliates does
business with the Government of Cuba or with any person or affiliate located in
Cuba.
6. COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS.
I. The Company covenants and agrees with each of the Selling Shareholders
and each of the several Underwriters as follows:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible; the Company will use its best efforts to
cause any abbreviated registration statement pursuant to Rule 462(b) of the
Securities Act Rules as may be required subsequent to the date the Registration
Statement is declared effective to become effective as promptly as possible; the
Company will notify you, promptly after it shall receive notice thereof, of the
time when the Registration Statement, any subsequent amendment to the
Registration Statement or any abbreviated registration statement has become
effective or any supplement to the Prospectus has been filed; if the Company
omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a) of the Securities
Act Rules, the Company will provide evidence satisfactory to you that the
Prospectus contains such information and has been filed, within the time period
prescribed, with the Commission pursuant to
[26]
subparagraph (1) or (4) of Rule 424(b) of the Securities Act Rules or as part
of a post-effective amendment to such Registration Statement as originally
declared effective which is declared effective by the Commission; the Company
shall promptly advise the Representatives (i) of any request by the Commission
for any amendment of the Registration Statement or the Prospectus or for any
additional information, (ii) of the prevention or suspension of the use of any
preliminary prospectus or the Prospectus or of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement
or the institution or threatening of any proceeding for that purpose and (iii)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose. The Company
shall not file any amendment of the Registration Statement or supplement to
the Prospectus unless the Company has furnished the Representatives a copy for
their review prior to filing and shall not file any such proposed amendment or
supplement to which the Representatives shall reasonably object. The Company
shall use its best efforts to prevent the issuance of any such stop order and,
if issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is required
to be delivered under the Securities Act and the Securities Act Rules, any event
occurs as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to amend
or supplement the Prospectus to comply with the Securities Act or the Securities
Act Rules, the Company promptly shall prepare and file with the Commission,
subject to the second sentence of paragraph (a) of this Section 6.I., an
amendment or supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
(c) The Company shall make generally available to its security holders and
to the Representatives as soon as practicable, but not later than 45 days after
the end of the twelve month period beginning at the end of the fiscal quarter of
the Company during which the Effective Date occurs (or 90 days thereafter if
such 12-month period coincides with the Company's fiscal year), an earnings
statement (which need not be audited) of the Company and its consolidated
subsidiaries, covering such twelve month period, which shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 of the Securities
Act Rules.
(d) The Company shall furnish to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration Statement
(including all exhibits thereto and amendments thereof) and to each other
Underwriter a copy of the Registration Statement (without exhibits thereto) and
all amendments thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or the Securities
Act Rules, as many copies of any preliminary prospectus and the Prospectus and
any amendments thereof and amendments thereto as the Representatives may
reasonably request; provided, however, that the Company shall use reasonable
efforts to furnish copies of the Prospectus and any term sheet or abbreviated
term sheet under Rule 434 no later than the first full business day following
the first day that Shares are traded.
(e) The Company shall cooperate with the Representatives and their counsel
in endeavoring to qualify the Shares for offer and sale under the laws of such
jurisdictions as the Representatives may designate and shall maintain such
qualifications in effect so long as required for the distribution of the Shares;
provided, however, that the Company shall not be required in connection
therewith, as a condition thereof, to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
[27]
(f) For a period of five years after the date of this Agreement, the
Company shall supply to the Representatives, and to each other Underwriter who
may so request in writing, copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock and to furnish to the
Representatives a copy of each annual or other report it shall be required to
file with the Commission. During such five-year period, if the Company shall
continue to have active subsidiaries, the foregoing financial statements shall
be on a consolidated basis to the extent that the accounts of the Company and
its subsidiaries are consolidated, and shall be accompanied by similar financial
statements for any significant subsidiary which is not so consolidated.
(g) The Company will apply the net proceeds from the sale of the Shares
being sold by it in the manner set forth under the caption "Use of Proceeds" in
the Registration Statement and the Prospectus. The Company will 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 the Investment
Company Act and the rules and regulations thereunder.
(h) The Company will maintain a Transfer Agent and, if necessary under the
jurisdiction of incorporation of the Company, a Registrar (which may be the same
entity as the Transfer Agent) for its Common Stock.
(i) Without the prior written consent of CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., for a
period of 90 days after the date of this Agreement, the Company shall not issue,
sell or register with the Commission, or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any securities convertible
into or exercisable or exchangeable for equity securities of the Company),
except for (i) the issuance of the Shares pursuant to the Registration
Statement, (ii) the issuance of shares pursuant to the exercise of outstanding
options or the grant or issuance of options under the Company's existing stock
option plans and (iii) the issuance of shares upon the exercise of warrants
outstanding on the date hereof.
(j) The Shares to be purchased on such Closing Date by the several
Underwriters shall have been approved for quotation on The Nasdaq National
Market subject to notice of official issuance and, on or before completion of
the transactions contemplated herein, the Company shall have made all filings
required under applicable securities laws and by The Nasdaq National Market
(including any required registration under the Exchange Act).
II. Each of the Selling Shareholders, severally and not jointly, covenants
and agrees with the Company, each other Selling Shareholder and the several
Underwriters as follows:
(a) The Company agrees with each of the Selling Shareholders and the
several Underwriters to pay, or reimburse if paid by the Representatives,
whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses of the Company and the Selling
Shareholders incident to the public offering of the Shares and the performance
of the obligations of the Company under this Agreement including those relating
to (i) the preparation, printing, filing and distribution of the Registration
Statement (including the exhibits thereto), each preliminary prospectus, the
Prospectus, all amendments and supplements to the Registration Statement and the
Prospectus, and the printing, filing and distribution of this Agreement;
(ii) the preparation and delivery of certificates for the Shares to the
Underwriters; (iii) the registration or qualification of the Shares for offer
and sale under the securities or Blue Sky laws of the various jurisdictions
referred to in Section 6.I.(e), including the fees and disbursements of
[28]
counsel for the Underwriters in connection with such registration and
qualification and the preparation, printing, distribution and shipment of
preliminary and supplementary Blue Sky memoranda; (iv) the furnishing
(including costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of each preliminary prospectus, the Prospectus and all
amendments or supplements to the Prospectus, and of the several documents
required by this Section to be so furnished, as may be reasonably requested
for use in connection with the offering and sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold; (v) the filing fees of
the NASD in connection with its review of the terms of the public offering and
the fees and disbursements of counsel to the Underwriters incurred in
connection therewith; (vi) the furnishing (including costs of shipping and
mailing) to the Representatives and to the Underwriters of copies of all
reports and information required by Section 6.I.(i); and (vii) inclusion of
the Shares for quotation in The Nasdaq National Market. Subject to the
provisions of Section 7, the Underwriters agree to pay, whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of the
obligations of the Underwriters under this Agreement not payable by the
Company pursuant to the preceding sentence, including, without limitation, the
fees and disbursements of counsel for the Underwriters; provided, however,
that in the event that the transactions contemplated hereby are not
consummated by reason of any failure, refusal or inability on the part of the
Company or any Selling Shareholder to perform any agreement on their
respective parts to be performed hereunder, or to fulfill any condition of the
Underwriters' obligations hereunder, or if the Company shall terminate this
Agreement pursuant to Section 9(a) hereof, or if the Underwriters shall
terminate this Agreement pursuant to Section 9(b)(i), the Company will
reimburse the several Underwriters for all out-of-pocket expenses (including
fees and disbursements of counsel for the Underwriters) incurred by the
Underwriters in investigating or preparing to market or marketing the Shares.
(b) Any additional expenses incurred as a result of the sale of the Shares
by the Selling Shareholders will be borne collectively by the Company and the
Selling Shareholders. The provisions of this Section 6.II.(b) are intended to
relieve the Underwriters from the payment of the expenses and costs which the
Selling Shareholders and the Company hereby agree to pay, but shall not affect
any agreement which the Selling Shareholders and the Company may make, or may
have made, for the sharing of any of such expenses and costs. Such agreements
shall not impair the obligations of the Company and the Selling Shareholders
hereunder to the several Underwriters.
(c) In addition to its other obligations under Section 7(a) hereof, the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding described in Section 7(a)
hereof, it will reimburse the Underwriters on a monthly basis for all reasonable
legal or other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse the Underwriters for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Underwriters
shall promptly return such payment to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing) listed from time to
time in The Wall Street Journal which represents the base rate on corporate
loans posted by a substantial majority of the nation's thirty (30) largest banks
(the "Prime Rate"). Any such interim reimbursement payments which are not made
to the Underwriters within thirty days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request.
[29]
(d) In addition to its other obligations under Section 7(b) hereof, each
Selling Shareholder agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding described in
Section 7(b) hereof, he will reimburse the Underwriters on a monthly basis for
all reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of such Selling Shareholders's obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To
the extent that any such interim reimbursement payment is so held to have been
improper, the Underwriters shall promptly return such payment to such Selling
Shareholder together with interest, compounded daily, determined on the basis of
the Prime Rate. Any such interim reimbursement payments which are not made to
the Underwriters within thirty days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request.
(e) In addition to their other obligations under Section 7(c) hereof, the
Underwriters severally and not jointly agree that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
described in Section 7(c) hereof, they will reimburse the Company and each
Selling Shareholder on a monthly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company and each such Selling
Shareholder for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Company and each such Selling Shareholder shall promptly return
such payment to the Underwriters together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim reimbursement
payments which are not made to the Company and each such Selling Shareholder
within thirty (30) days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request.
(f) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 6.II.(c) and 6.II.(d)
hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the reimbursing parties, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or a written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Any such arbitration will be limited to the operation of
the interim reimbursement provisions contained in Sections 6.II.(c) and 6.II.(d)
hereof and will not resolve the ultimate propriety or enforceability of the
obligation to indemnify for expenses which is created by the provisions of
Sections 7(a) and 7(c) hereof or the obligation to contribute to expenses which
is created by the provisions of Section 8 hereof.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages and liabilities, joint or several (including any
[30]
reasonable investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which such Underwriter or such person may become
subject under the Securities Act, the Exchange Act or other federal or state
law or regulation, at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities arise out of
or are based upon (i) any breach of any representation, warranty, agreement
or covenant of the Company herein contained or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment
thereof or supplement thereto, or arise out of or are based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter and each such person for any legal and other
expenses as such expenses are reasonably incurred by such Underwriter or such
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of any
losses, claims, damages or liabilities arising from the sale of the Shares to
any person by such Underwriter if such untrue statement or omission or
alleged untrue statement or omission was made in such preliminary prospectus,
the Registration Statement or the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with information furnished in
writing to the Company by the Representatives on behalf of any Underwriter
specifically for use therein; and, provided further, that the indemnity
agreement provided in this Section 7(a) with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any losses, claims, damages, liabilities or expenses based
upon any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state therein a material fact purchased
Shares, if a copy of the Prospectus in which such untrue statement or alleged
untrue statement or omission or alleged omission was corrected has not been
sent or given to such person within the time required by the Securities Act
and the Securities Act Rules (provided that copies of the Prospectus shall
have been provided to such Underwriter in a timely fashion by the Company in
compliance with Section 6.I.(d). This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each Selling Shareholder (to the extent set forth below), severally
and not jointly, agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act against any and all losses,
claims, damages and liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which such Underwriter or such person may become subject under the
Securities Act, the Exchange Act or other federal or state law or regulation, at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as such
losses, claims, damages or liabilities arise out of or are based upon (i) any
breach of any representation, warranty, agreement or covenant of the Selling
Shareholder herein contained or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto, or arise out of or are based upon any 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, and 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 information
furnished in writing to the Company by such Selling Shareholder specifically for
use therein, and will reimburse each Underwriter and each such person for any
legal and other expenses as such expenses are reasonably incurred by such
Underwriter or such person in connection with investigating, defending,
settling,
[31]
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the indemnity agreement provided in this
Section 7(b) with respect to any preliminary prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting any losses,
claims, damages, liabilities or expenses based upon any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
to state therein a material fact purchased Shares, if a copy of the
Prospectus in which such untrue statement or alleged untrue statement or
omission or alleged omission was corrected has not been sent or given to such
person within the time required by the Securities Act and the Securities Act
Rules (provided that copies of the Prospectus shall have been provided to
such Underwriter in a timely fashion by the Company in compliance with
Section 6.I.(d)); and provided further, that such Selling Shareholder shall
only be liable under this paragraph for an amount equal to the initial public
offering price of the Shares sold by such Selling Shareholder to the
Underwriters pursuant to this Agreement minus the amount of the underwriting
discount paid thereon to the Underwriters by such Selling Shareholder
pursuant to this Agreement. This indemnity agreement will be in addition to
any liability which the Company or the Selling Shareholders may otherwise
have.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Shareholders, each person, if any, who
controls the Company or any Selling Shareholder within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, each director of the
Company, and each officer of the Company who signs the Registration Statement,
to the same extent as the foregoing indemnity from the Company and the Selling
Shareholders to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon (i) any breach of any
representation, warranty, agreement or covenant of such Underwriter herein
contained or (ii)any untrue statement or omission or alleged untrue statement or
omission which was made in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment thereof or supplement thereto,
contained in any written information furnished to the Company by such
Underwriter, directly or through you, specifically for use in therein; provided,
however, that the obligation of each Underwriter to indemnify the Company and
the Selling Shareholders (including any controlling person, director or officer
thereof) shall be limited to an amount equal to the initial public offering
price of the Company Firm Shares sold by the Company to the Underwriters
pursuant to this Agreement minus the amount of the underwriting discount paid
thereon to the Underwriters by the Company pursuant to this Agreement, or, with
respect to a Selling Shareholder, an amount equal to the initial public offering
price of the Shares sold by such Selling Shareholder to the Underwriters
pursuant to this Agreement minus the amount of the underwriting discount paid
thereon to the Underwriters by such Selling Shareholder pursuant to this
Agreement.
(d) The Company and the Selling Shareholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to their respective amounts of liability for which they each shall
be responsible pursuant to Section 7(a) and Section 7(b) hereof.
(e) Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Sections 7(a), 7(b) or 7(c) shall be available to any party who shall fail to
give notice as provided in this Section 7(e) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was prejudiced by the failure to give such notice, but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
[32]
it from any liability that it may have to any indemnified party for contribution
or indemnification otherwise than under this Section. In case any such action,
suit or proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses, except as provided below
and except for the reasonable costs of investigation subsequently incurred by
such indemnified party in connection with the defense thereof. The indemnified
party shall have the right to employ its separate counsel in any such action,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the indemnified
party shall have reasonably concluded that there may be a conflict of interest
between the indemnifying parties and the indemnified party in the conduct of the
defense of such action (in which case the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the indemnified
party) or (iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying parties. An indemnifying party
shall not be liable for any settlement of any action, suit, proceeding or claim
effected without its written consent.
(f) The provisions of this Section 7 and of Section 8 hereto relating to
the indemnification and contribution obligations of the Company and the Selling
Shareholders to the Underwriters and of the Underwriters to the Company and the
Selling Shareholders supersede the indemnification and contribution provisions
contained in any registration rights or other agreements or instruments between
the Company and any of their respective securityholders.
8. CONTRIBUTION.
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in Section 7(a), 7(b) or 7(c) is due in
accordance with its terms but for any reason is held to be unavailable from the
indemnifying party, the Company, the Selling Shareholders and the Underwriters
shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting any contribution received
by the Company from persons other than the Underwriters, such as the Selling
Shareholders, persons who control the Company within the meaning of the
Securities Act, officers of the Company who signed the Registration Statement
and directors of the Company, who may also be liable for contribution) to which
the Company, the Selling Shareholders and one or more of the Underwriters may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Shareholders on the one hand and the
Underwriters on the other from the offering of the Shares or, if such allocation
is not permitted by applicable law or indemnification is not available as a
result of the indemnifying party not having received notice as provided in
Section 7 hereof, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company
and the Selling Shareholders on the one hand and the Underwriters on the other
in connection with the untrue statements or omissions or alleged untrue
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, the Selling Shareholders
[33]
and the Underwriters shall be deemed to be in the same proportion as (i) the
total proceeds from the offering (net of underwriting discounts but before
deducting expenses) received by the Company and the Selling Shareholders, as
set forth in the table on the cover page of the Prospectus, bear to (ii) the
underwriting discounts received by the Underwriters, as set forth in the
table on the cover page of the Prospectus. The relative fault of the
Company, the Selling Shareholders and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact related to information supplied by the Company, the Selling
Shareholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8, (i) in
no case shall any Underwriter (except as may be provided in the Agreement
Among Underwriters) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder, (ii) the Company shall be liable and responsible for any amount in
excess of such underwriting discount, (iii) in no case shall a Selling
Shareholder be liable or responsible for any amount in excess of the total
proceeds received by such Selling Shareholder from the sale of the Shares
sold by such Selling Shareholder to the Underwriters (net of underwriting
discounts) and (iv) no Selling Shareholder shall be required to contribute
any amount under this Section 8 unless the losses, claims, damages,
liabilities and expenses which are the subject hereof arise out of or are
based on statements included in a preliminary prospectus, the Registration
Statement or the Prospectus, any amendment or supplement thereto, or not
included therein, on the basis of information furnished in writing to the
Company by such Selling Shareholder specifically for use therein; provided,
however, that 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. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each person, if any, who controls the
Company or a Selling Shareholder within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company or such
Selling Shareholder, as the case may be, subject in each case to clauses (i),
(ii), (iii) and (iv) in the immediately preceding sentence of this Section 8.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect
of which a claim for contribution may be made against another party or
parties under this Section, notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties from whom contribution may be sought shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this Section. No party shall
be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent. The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to their
respective underwriting commitments and not joint.
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 without limitation the
provisions of Sections 7 and 8 hereof, and are fully informed regarding said
provisions. They further acknowledge that the provisions of Sections 7 and 8
hereof fairly allocate the risks in light of the ability of the parties to
investigate the Company and their businesses in order to assure that adequate
disclosure is
[34]
made in the Registration Statement and the Prospectus as required by the
Securities Act and the Exchange Act. The parties are advised that federal or
state public policy, as interpreted by the courts in certain jurisdictions,
may be contrary to certain of the provisions of Sections 7 and 8 hereof, and
the parties hereto hereby expressly waive and relinquish any right or ability
to assert such public policy as a defense to a claim under Sections 7 or 8
hereof and further agree not to attempt to assert any such defense.
9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at the earlier of (i) 9:30 A.M.,
New York time, on the first full business day following the effective date of
the Registration Statement, or (ii) the time of the initial public offering of
any of the Shares by the Underwriters after the Registration Statement becomes
effective. The time of the initial public offering shall mean the time of the
release by you, for publication, of the first newspaper advertisement relating
to the Shares, or the time at which the Shares are first generally offered by
the Underwriters to the public by letter, telephone, telegram or telecopy,
whichever shall first occur. By giving notice as set forth in Section 11 before
the time this Agreement becomes effective, you, as Representatives of the
several Underwriters, or the Company, may prevent this Agreement from becoming
effective without liability of any party to any other party, except as provided
in Sections 6.II.(a), 7 and 8 hereof.
(b) You, as Representatives of the several Underwriters, shall have the
right to terminate this Agreement by giving notice as hereinafter specified at
any time on or prior to the Closing Date or on or prior to any later date on
which Option Shares are to be purchased, as the case may be, (i) if the Company
or any Selling Shareholder shall have failed, refused or been unable to perform
any agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled is not fulfilled,
including, without limitation, any change in the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of the
Company and its subsidiaries considered as one enterprise from that set forth in
the Registration Statement or Prospectus, which, in your sole judgment, is
material and adverse, or (ii) if additional material governmental restrictions,
not in force and effect on the date hereof, shall have been imposed upon trading
in securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock Exchange or
in the over the counter market by the NASD, or trading in securities generally
shall have been suspended on either such exchange or in the over the counter
market by the NASD, or if a banking moratorium shall have been declared by
federal, New York or California authorities, or (iii) if the Company or any of
its subsidiaries shall have sustained a loss by strike, fire, flood, wind
earthquake, accident or other calamity of such character as to interfere
materially with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured, or (iv) if there
shall have been a material adverse change in the general political or economic
conditions or financial markets as in your reasonable judgment makes it
inadvisable or impracticable to proceed with the offering, sale and delivery of
the Shares, or (v) if there shall have been an outbreak or escalation of
hostilities or of any other insurrection or armed conflict or the declaration by
the United States of a national emergency which, in the reasonable opinion of
the Representatives, makes it impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. In the event
of termination pursuant to subparagraph (i) above, the Company shall, in
accordance with the provisions of Section 6.II.(b) hereof, reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contemplation of performing their
obligations hereunder, including, but not limited to, the costs and expenses set
forth in Section 6.II.(a). Any
[35]
termination pursuant to any of subparagraphs (ii) through (v) above shall be
without liability of any party to any other party except as provided in
Sections 7 and 8 hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 9 you shall promptly notify
the Company by telephone, telecopy or telegram, in each case confirmed by
letter. If the Company shall elect to prevent this Agreement from becoming
effective, the Company shall promptly notify you by telephone, telecopy or
telegram, in each case, confirmed by letter.
No Underwriter who shall have failed or refused to purchase the Shares
agreed to be purchased by it under this Agreement, without some reason
sufficient hereunder to justify cancellation or termination of its obligations
under this Agreement, shall be relieved of liability to the Company, the Selling
Shareholders or to the other Underwriters for damages occasioned by its failure
or refusal.
10. SUBSTITUTION OF UNDERWRITERS.
If one or more of the Underwriters shall fail (other than for a reason
sufficient to justify the cancellation or termination of this Agreement under
Section 9) to purchase and make payment for on any Closing Date the Shares
agreed to be purchased on such Closing Date by such Underwriter or Underwriters,
the Representatives shall use diligent efforts to find one or more substitute
underwriters to purchase such Shares or make such other arrangements as the
Representatives may deem advisable or one or more of the remaining Underwriters
may agree to purchase such Shares in such proportions as may be approved by the
Representatives, in each case within 24 hours after notification of the
defaulting underwriter and upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting Underwriters
on such Closing Date shall not exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, then each of the
non-defaulting Underwriters shall be obligated to purchase such Shares on the
terms herein set forth in proportion to their respective obligations hereunder;
provided, however, that in no event shall the maximum number of Shares that any
Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant
to this Section 10 by more than one-ninth of such number of Shares without the
written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting Underwriters
on such Closing Date shall exceed 10% of the Shares that all the Underwriters
are obligated to purchase on such Closing Date, then the Company shall be
entitled to an additional business day within which it may, but is not obligated
to, find one or more substitute underwriters reasonably satisfactory to the
Representatives to purchase such Shares upon the terms set forth in this
Agreement.
In any such case, either the Representatives or the Company shall have the
right to postpone the applicable Closing Date for a period of not more than five
business days in order that necessary changes and arrangements (including any
necessary amendments or supplements to the Registration Statement or the
Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for
[36]
the purchase of the Shares that the defaulting Underwriters agreed to
purchase, this Agreement shall terminate with respect to the Shares to be
purchased on such Closing Date without liability on the part of any
nondefaulting Underwriter to the Company or the Selling Shareholders and
without liability on the part of the Company and the Selling Shareholders to
any nondefaulting Underwriter, except in both cases as provided in Sections
6.II., 7, 8 and 9. The provisions of this Section shall not in any way
affect the liability of any defaulting Underwriter to the Company, the
Selling Shareholders or the nondefaulting Underwriters arising out of such
default. A substitute underwriter hereunder shall become an Underwriter for
all purposes of this Agreement.
11. MISCELLANEOUS.
The respective agreements, representations, warranties, indemnities and
other statements of the Company or its officers, the Selling Shareholders and of
the Underwriters set forth in or made pursuant to this Agreement shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter, any Selling Shareholder, the Company, or any of the officers,
directors or controlling persons referred to in Sections 7 and 8 hereof, and
shall survive delivery of and payment for the Shares. The provisions of
Sections 7, 8 and 9 shall survive the termination or cancellation of this
Agreement.
This Agreement has been and is made for the benefit of the Underwriters,
the Company, the Selling Shareholders and their respective successors and
assigns, and, to the extent expressed herein, for the benefit of persons
controlling any of the Underwriters, the Company or the Selling Shareholders,
and directors and officers of the Company, the Selling Shareholders, if any, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and mailed
or delivered or by facsimile or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; telephone number
(▇▇▇) ▇▇▇-▇▇▇▇; facsimile number (▇▇▇) ▇▇▇-▇▇▇▇; Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇; (b) if to the Company, to STB Systems, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; telephone number (▇▇▇) ▇▇▇-▇▇▇▇; facsimile
number (▇▇▇) ▇▇▇-▇▇▇▇; Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇; and (c) if to a Selling
Shareholder, to the address set forth in their respective Custody Agreements.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to the choice of law or
conflicts of laws principles thereof.
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
[37]
Please confirm that the foregoing correctly sets forth the agreement among
us by signing and returning to us seven counterparts of this Agreement.
Very truly yours,
STB SYSTEMS, INC.
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman of the Board
SELLING SHAREHOLDERS
By:
-------------------------------------
As Attorney-in-Fact acting on
behalf of each of the Selling
Shareholders named in Schedule II
to this Agreement
Confirmed:
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO.
THE BUCKINGHAM RESEARCH GROUP, INCORPORATED
Acting severally on behalf of
themselves and as representatives of the several
Underwriters named in Schedule I to this Agreement.
By CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.
By:
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Director
[38]
SCHEDULE I
NUMBER OF
FIRM SHARES TO
NAME BE PURCHASED
---------------------------------------------------- --------------
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. . . . . . . . . . . . . . .
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC. . . . . . . . . . . . . . .
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.. . . . . . . . . . .
The Buckingham Research Group, Incorporated. . . .
---------
Total . . . . . . . . . . . . . . . . . . . . . 3,000,000
---------
---------
SCHEDULE II
NUMBER OF OPTION
SHARES TO BE SOLD IF
NUMBER OF FIRM SHARES MAXIMUM OPTION
TO BE SOLD EXERCISED
--------------------- --------------------
COMPANY. . . . . . . . . . . . . . . 2,275,000 225,000
SELLING SHAREHOLDERS:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ . . . . . . . . 75,000 75,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. . . . 75,000 75,000
▇▇▇▇ ▇. ▇▇▇▇. . . . . . . . . . 75,000 75,000
--------- -------
Total. . . . . . . . . . . 3,000,000 450,000
--------- -------
--------- -------