THRUSTMASTER, INC.
(an Oregon Corporation)
1,500,000 Shares of Common Stock
UNDERWRITING AGREEMENT
December *__*, 1997
▇▇▇ ▇▇▇▇▇▇ & COMPANY
As Representative of the several
Underwriters named in Schedule I,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
ThrustMaster, Inc., an Oregon corporation (the "Company"), proposes to
issue and sell 1,200,000 shares of its Common Stock (the "Common Stock"), and
the shareholders named in Schedule II hereto (the "Selling Shareholders"),
acting severally and not jointly, propose to sell an aggregate of 300,000
shares of Common Stock (collectively, the "Firm Stock") to the several
Underwriters named in Schedule I hereto (the "Underwriters", which term shall
also include any underwriter purchasing Stock pursuant to Section 8 hereof).
The Company proposes to grant to the Underwriters an option to purchase up to
an additional 225,000 shares of the Common Stock on the terms and for the
purposes set forth in Section 2(b) (the "Option Stock"). The Firm Stock and
any Option Stock purchased pursuant to this Agreement are referred to below
as the "Stock." ▇▇▇ ▇▇▇▇▇▇ & Company is acting as representative of the
several Underwriters and in that capacity is referred to in this Agreement as
the "Representative."
The Company hereby confirms its agreement with respect to the purchase
of the Stock by the several Underwriters as set forth below.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
(a) The Company hereby represents and warrants to, and agrees with,
each Underwriter as follows:
(i) A Registration Statement (Registration No. 333- *____* ) on
Form S-1 under the Securities Act of 1933, as amended (the "Securities Act"),
including such amendments to such registration statement as may have been
required to the date of this Agreement, relating to the Stock has been
prepared by the Company under and in conformity with the provisions of the
Securities Act and the rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission. After the execution of this Agreement, the
Company will file with the Commission either (A) if such registration
statement, as it may have been amended, has been declared by the Commission
to be effective under the Securities Act, either (I) if the Company relies on
Rule 434
under the Securities Act, a Term Sheet (defined below) relating to the Stock,
that identifies the Preliminary Prospectus (defined below) that it
supplements and contains such information as is required or permitted by
Rules 434, 430A and 424(b) of the Rules and Regulations or (II) if the
Company does not rely on Rule 434 under the Securities Act, a prospectus in
the form most recently included in an amendment to such registration
statement (or, if no such amendment has been filed, in such registration
statement), with such changes or insertions as are required by Rule 430A of
the Rules and Regulations or permitted by Rule 424(b) of the Rules and
Regulations, and in the case of either (i)(A) or (i)(B) of this sentence, as
has been provided to and approved by the Representative prior to the
execution of this Agreement, or (B) if such registration statement, as it may
have been amended, has not been declared by the Commission to be effective
under the Securities Act, an amendment to such registration statement,
including a form of prospectus, a copy of which amendment has been furnished
to and approved by the Representative prior to the execution of this
Agreement. As used in this Agreement, the term "Registration Statement"
means such registration statement, as amended at the time when it was or is
declared effective, including all financial schedules, exhibits thereto and
all documents incorporated by reference therein and including any information
omitted therefrom pursuant to Rule 430A of the Rules and Regulations and
included in the Prospectus (defined below), as well as any additional
registration statement filed in connection with the offering of the Stock
pursuant to Rule 462(b) under the Securities Act; the term "Preliminary
Prospectus" means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); the term
"Prospectus" means:
(A) if the Company relies on Rule 434 under the Securities Act,
the Term Sheet relating to the Securities that is first filed pursuant to Rule
424(b)(7) under the Securities Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the
Securities Act, the prospectus first filed with the Commission pursuant to Rule
424(b) under the Securities Act; or
(C) if the Company does not rely on Rule 434 under the
Securities Act and if no prospectus is required to be filed pursuant to Rule
424(b) under the Securities Act, the prospectus included in the Registration
Statement;
provided that if any revised prospectus that is provided to the Underwriters by
the Company for "use in connection with the offering of the Stock" differs from
the prospectus on file with the Commission at the time the Registration
Statement became or becomes, as the case may be, effective, whether or not the
revised prospectus is required to be filed with the Commission pursuant to Rule
424(b)(3) of the Rules and Regulations, the term "Prospectus" shall mean such
revised prospectus from and after the time it is first provided to the
Underwriters for such use. The term "Term Sheet" as used in this Agreement
means any term sheet that satisfies the
-2-
requirements of Rule 434 under the Securities Act. Any reference in this
Agreement to the "date" of a prospectus that includes a Term Sheet means the
date of such Term Sheet.
(ii) No order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Preliminary Prospectus or
the Prospectus has been issued and no proceedings for that purpose are pending
or, to the best knowledge of the Company, threatened or contemplated by the
Commission; no order suspending the sale of the Stock in any jurisdiction has
been issued and no proceedings for that purpose are pending or, to the best
knowledge of the Company, threatened or contemplated, and any request of the
Commission for additional information (to be included in the Registration
Statement, any Preliminary Prospectus or the Prospectus or otherwise) has been
complied with.
(iii) When any Preliminary Prospectus was filed with the Commission
it (A) contained all statements required to be contained therein and complied
in all respects with the requirements of the Securities Act, the Rules and
Regulations, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder (the
"Exchange Act Rules and Regulations") and (B) did not include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. When the Registration Statement or any
amendment thereto was or is declared effective, it (A) contained or will
contain all statements required to be contained therein and complied or will
comply in all respects with the requirements of the Securities Act, the Rules
and Regulations, the Exchange Act and the Exchange Act Rules and Regulations
and (B) did not or will not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein
not misleading. When the Prospectus or any amendment or supplement to the
Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or such amendment or supplement is not required to be so filed,
when the Registration Statement or the amendment thereto containing such
amendment or supplement to the Prospectus was or is declared effective) and
at all times subsequent thereto up to and including the Closing Date (defined
below) and any date on which Option Stock is to be purchased, the Prospectus,
as amended or supplemented at any such time, (A) contained or will contain
all statements required to be contained therein and complied or will comply
in all respects with the requirements of the Securities Act, the Rules and
Regulations, the Exchange Act and the Exchange Act Rules and Regulations and
(B) did not or will not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The foregoing provisions of this paragraph (iii) do not apply to
statements or omissions made in any Preliminary Prospectus, the Registration
Statement or any amendment thereto or the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative specifically for use therein.
(iv) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has full power (corporate
and other) and authority to own or lease its properties
-3-
and conduct its business as described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and as currently being conducted and proposed to be
conducted by it and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property owned or
leased or the nature of the business transacted by it makes qualification
necessary (except where the failure to be so qualified would not have a
material effect on the business, properties, condition (financial or
otherwise), results of operations or prospects of the Company or its
subsidiaries). Each of the Company and each of its subsidiaries are in
possession of and operating in compliance with all authorizations, licenses,
certificates, consents, orders and permits from federal, state, local,
foreign and other governmental or regulatory authorities that are material to
the conduct of its business, all of which are valid and in full force and
effect. Except as may be disclosed in the Registration Statement, the
Company owns all of the outstanding capital stock of each of its
subsidiaries, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest of any type, kind or nature. None
of the subsidiaries of the Company is a "significant subsidiary" as such term
is defined in Rule 405 under the Securities Act. As used in this Agreement,
the word "subsidiary" means any corporation, partnership, limited liability
company or other entity of which the Company directly or indirectly owns 50%
or more of the equity or that the Company directly or indirectly controls.
The Company does not have any subsidiaries that are not corporations.
(v) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), there has not been any
material loss or interference with the business of the Company or any of its
subsidiaries from fire, explosion, flood, volcano, tidal wave, earthquake or
other calamity, whether or not covered by insurance, or from any court or
governmental action, order or decree, or any changes in the capital stock or
long-term debt of the Company or any of its subsidiaries, or any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company, or any material change, or a development known to the Company that
might cause or result in a material change, in or affecting the business,
properties, condition (financial or otherwise), results of operation or
prospects of the Company and its subsidiaries taken as a whole, whether or
not arising from transactions in the ordinary course of business, in each
case other than as may be set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and since such dates, except in the ordinary course
of business, neither the Company nor any of its subsidiaries has entered into
any material transaction not described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(vi) There is no agreement, contract, license, lease or other
document required to be described in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. All contracts
described in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), if any, are in full force and effect on
the date hereof, and neither the Company nor any of its subsidiaries nor,
-4-
to the best knowledge of the Company, any other party thereto is, or with the
giving of notice or the passage of time or both would be, in material breach
of or default under any such contract.
(vii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and the description of
the capital stock therein conforms with and accurately describes the rights
set forth in the instruments defining the same. The shares of the Stock have
been duly and validly authorized, is (or, in the case of shares of the Stock
to be sold by the Company, will be, when issued and delivered against payment
therefor as provided herein) duly and validly issued, fully paid and
non-assessable, and conforms to the description thereof in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus). The issuance of the shares of Stock by the Company is not
subject to any preemptive or similar rights. No further approval or
authority of the shareholders or the Board of Directors of the Company will
be required for the transfer and sale of the Stock to be sold by the Selling
Shareholders or the issuance and sale of the Stock contemplated herein.
(viii) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all applicable federal and
state securities laws and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities.
All of the issued shares of capital stock of each subsidiary of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned by the Company, free and clear of all liens or
encumbrances. The description of the Company's stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted or
exercised thereunder, set forth in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), accurately and
fairly present the information required to be shown with respect to such
plans, arrangements, options and rights. Other than this Agreement and the
options and warrants to purchase the Common Stock described in the
Prospectus, there are no options, warrants or other rights outstanding to
subscribe for or purchase any shares of the Company's capital stock. There
are no preemptive rights applicable to any shares of capital stock of the
Company.
(ix) The Company has full right, power and authority to enter into
this Agreement and to carry out all the terms and provisions hereof. This
Agreement has been duly authorized, executed and delivered by the Company,
and constitutes the valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable federal or state securities laws. The
filing of the Registration Statement does not give rise to any rights, other
than those which have been waived, for or relating to the registration of any
capital stock of the Company.
(x) Neither the Company nor any of its subsidiaries is, or with the
giving of notice or lapse of time or both would be, in violation of or in
default under, nor will the execution or delivery of this Agreement or the
completion of the transactions contemplated by this Agreement result in a
violation of or constitute a breach of or a default (including without
-5-
limitation with the giving of notice, the passage of time or otherwise)
under, the certificate or articles of incorporation, bylaws or other
governing documents of the Company or any of its subsidiaries or any
obligation, agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any contract,
indenture, mortgage, deed of trust, loan agreement, lease, license, joint
venture or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of its or their properties may be
bound or affected. Except as set forth in the Prospectus (or if the
Prospectus is not in existence, the most recent Preliminary Prospectus), the
Company has not incurred any liability, direct or indirect, for any finders'
or similar fees payable on behalf of the Company or the Underwriters in
connection with the transactions contemplated by this Agreement. The
performance by the Company of its obligations under this Agreement will not
violate any law, ordinance, rule or regulation, or any order, writ,
injunction, judgment or decree of any governmental agency or body or of any
court having jurisdiction over the Company, its subsidiaries or any of their
respective properties, or result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or asset of the Company or any
of its subsidiaries. Except for permits and similar authorizations required
under the Securities Act, the Exchange Act or under other securities or Blue
Sky laws of certain jurisdictions and for such permits and authorizations
that have been obtained, no consent, approval, authorization or order of any
court, governmental agency or body, financial institution or any other person
is required in connection with the completion of the transactions
contemplated by this Agreement.
(xi) The Company and each of its subsidiaries owns, or has valid
rights to use, all items of real and personal property which are material to
the business of the Company and its subsidiaries taken as a whole and free
and clear of all liens, encumbrances and claims that might materially
interfere with the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company and its subsidiaries taken
as a whole.
(xii) Each of the Company and each of its subsidiaries owns or
possesses adequate rights to use all material patents, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names
and copyrights described or referred to in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) as owned by or used by any of them, or which are
necessary for the conduct of their business as described in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus); and, except as set forth in the
Prospectus (or if the Prospectus is not in existence, the most recent
Preliminary Prospectus), neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, tradenames or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, might have a material effect on the business, properties, condition
(financial or otherwise), results of operations or prospects of the Company
and its subsidiaries taken as a whole.
(xiii) There is no litigation or governmental proceeding to which
the Company or any of its subsidiaries is a party or to which any property of
the Company or any of its
-6-
subsidiaries is subject which is pending or, to the best knowledge of the
Company, is threatened or contemplated against the Company or any of its
subsidiaries that might have a material effect on the business, properties,
condition (financial or otherwise), results of operations or prospects of the
Company and its subsidiaries taken as a whole, that might prevent
consummation of the transactions contemplated by this Agreement or that are
required to be disclosed in the Registration Statement or Prospectus (or, if
the Prospectus is not in existence, in the most recent Preliminary
Prospectus) and are not so disclosed.
(xiv) Neither the Company nor any of its subsidiaries is in
violation of, and neither the Company nor any of its subsidiaries has
received any notice or claim from any governmental agency or third party that
any of them is in violation of, any law, order, ordinance, rule or
regulation, or any order, writ, injunction, judgment or decree of any agency
or body or of any court, to which it or its properties (whether owned or
leased) may be subject, which violation might have a material effect on the
business, properties, condition (financial or otherwise), results of
operations or prospects of the Company and its subsidiaries taken as a whole.
(xv) The Company has not taken and shall not take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to cause or result in,
under the Exchange Act, the Exchange Act Rules and Regulations or otherwise,
the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Stock. No bid or purchase by the
Company and, to the best knowledge of the Company, no bid or purchase that
could be attributed to the Company (as a result of bids or purchases by an
"affiliated purchaser" within the meaning of Rule 10b-6 under the Exchange
Act) for or of the Stock, the Common Stock, any securities of the same class
or series as the Common Stock or any securities convertible into or
exchangeable for or that represent any right to acquire the Common Stock is
now pending or in progress or will have commenced at any time prior to the
completion of the distribution of the Stock.
(xvi) Coopers & ▇▇▇▇▇▇▇ LLP, whose reports appear in the
Registration Statement and the Prospectus, are, and during the periods
covered by their reports in the Registration Statement were, independent
accountants as required by the Securities Act and the Rules and Regulations.
The financial statements and schedules included in the Registration
Statement, each Preliminary Prospectus and the Prospectus present fairly (or,
if the Prospectus has not been filed with the Commission, as to the
Prospectus, will present fairly) the financial condition, results of
operations, cash flow and changes in stockholders' equity and the financial
statements and schedules included in the Registration Statement present
fairly the financial information required to be stated therein. Such
financial statements, schedules and information have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods presented. The selected and summary
financial and statistical data included in the Registration Statement and the
Prospectus present fairly (or, if the Prospectus has not been filed with the
Commission, as to the Prospectus, will present fairly) the financial
information shown therein and have been compiled on a basis consistent with
the audited financial statements presented therein. No other financial
information, statements or schedules are required to be included in the
Registration Statement.
-7-
(xvii) The books, records and accounts of the Company and each of
its subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in and dispositions of the assets of the Company and each of its
subsidiaries. The systems of internal accounting controls maintained by the
Company and each of its subsidiaries are sufficient to provide reasonable
assurances that: (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are recorded
as necessary (x) to permit preparation of financial statements in conformity
with generally accepted accounting principles and (y) to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xviii) The Company will not, and the Company has delivered to the
Representative the written agreement of each of its officers and directors
and all persons who own more than 1% of the outstanding shares of Common
Stock (collectively, "Material Holders") to the effect that each of the
Material Holders will not, in each case for a period of 80 days following the
date of this Agreement, in each case without the prior written consent of the
Representative, offer, sell or contract to sell, or otherwise dispose of, or
announce the offer of, any Common Stock, without the prior written consent of
the Representative, except that: (A) the Company may grant options in the
ordinary course pursuant to its stock option plans and issue shares of Common
Stock upon exercise thereof; and (B) the Representative will allow sales of
up to 40,000 shares of Common Stock 60 days after the date of this Agreement.
(xix) No labor disturbance by the employees of the Company or any
of its subsidiaries exists, is imminent or, to the best knowledge of the
Company, is contemplated or threatened; and the Company is not aware of an
existing, imminent or threatened labor disturbance by the employees of any
principal suppliers, contract manufacturing organizations, manufacturers,
authorized dealers or distributors that might be expected to result in any
material change in the business, properties, condition (financial or
otherwise), results of operations or prospects of the Company and its
subsidiaries taken as a whole. No collective bargaining agreement exists
with any of the Company's or any of the Company's subsidiaries' employees
and, to the best knowledge of the Company, no such agreement is imminent.
(xx) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
they are engaged; neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for; and neither the Company
nor any such subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect the
condition (financial or otherwise), business prospects, net worth or results
of operations of the Company and its subsidiaries, except as described in or
-8-
contemplated by the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
(xxi) Each of the Company and each of its subsidiaries has filed
all federal, state, local and foreign tax returns that are required to be
filed or has requested extension thereof and has paid all taxes, including
withholding taxes, penalties and interest, assessments, fees and other
charges to the extent that the same have become due and payable. No tax
assessment or deficiency has been made or proposed against the Company or any
of its subsidiaries nor has the Company or any of its subsidiaries received
any notice of any proposed tax assessment or deficiency.
(xxii) Except as set forth in the Prospectus (or if the Prospectus
is not in existence, the most recent Preliminary Prospectus) there are no
outstanding loans, advances or guaranties of indebtedness by the Company to
or for the benefit of any of (A) its "affiliates," as such term is deemed in
the Rules and Regulations, (B) any of the officers or directors of any of its
subsidiaries or (C) any of the members of the families of any of them.
(xxiii) Neither the Company nor any of its subsidiaries has,
directly or indirectly, at any time: (A) made any contributions to any
candidate for political office in violation of law; (B) made any payment to
any local, state, federal or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties; or (C)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended.
(xxiv) Except as may be disclosed in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) neither the Company nor any of its subsidiaries has
any liability, absolute or contingent, relating to: (A) public health or
safety; (B) worker health or safety; or (C) workers' compensation insurance
premiums.
(xxv) The Company has not distributed and will not distribute prior
to the Closing Date or on or prior to any date on which the Option Stock is
to be purchased, as the case may be, any prospectus or other offering
material in connection with the offering and sale of the Stock other than the
Prospectus, the Registration Statement and any other material which may be
permitted by the Securities Act and the Rules and Regulations.
(xxvi) Since March 3, 1995, the Company has filed in a timely
manner all reports and other documents required to be filed with the
Commission under the Exchange Act and with the National Association of
Securities Dealers, Inc. (the "NASD"), and each such report or other document
contained, at the time it was filed, such information as was required to be
included in such report or other document and all such information was
correct and complete in all material respects; to the Company's best
knowledge, except as disclosed in the Registration Statement, no event has
occurred or is likely to occur that required or would require an amendment to
any report or document referred to in this section that has not been filed or
distributed as required.
-9-
(xxvii) The Stock has been approved for inclusion for listing on
the Nasdaq National Market, subject only to official notice of issuance.
(xxviii) The Company is not now, and intends to conduct its affairs
in the future in such a manner so that it will not become, an investment
company within the meaning of the Investment Company Act of 1940, as amended.
(xxix) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) for which the Company would have any liability has occurred; the
Company has not incurred and does not expect to incur liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Company would
have any liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.
(xxx) Except as may be disclosed in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) neither the Company nor any of its subsidiaries has
any liability, absolute or contingent, relating to pollution, damage to or
protection of the environment, including, without limitation, relating to
damage to natural resources, emissions, discharges, releases or threatened
releases of hazardous materials into the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or otherwise relating to the manufacture, processing, use,
treatment, storage, generation, disposal, transport or handling of any
hazardous materials. There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the best knowledge of the Company,
any of their predecessors in interest) at, upon or from any of the property
now or previously owned or leased by the Company or its subsidiaries in
violation of any applicable law, ordinance, rule, regulation, order,
judgment, decree or permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which would not have, or
could not be reasonably likely to have, singularly or in the aggregate with
all such violations and remedial actions, a material effect on the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole; 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 of its
subsidiaries or with respect to which the Company or any of its subsidiaries
have knowledge, except for any such spill, discharge, leak, emission,
injection, escape, dumping or release which would not have or would not be
reasonably likely to have, singularly or in the
-10-
aggregate with all such spills, discharges, leaks, emissions, injections,
escapes, dumpings and releases, a material effect on the general affairs,
management, financial position, stockholders' equity or results of operations
of the Company and its subsidiaries taken as a whole. As used herein,
"hazardous material" includes chemical substances, wastes, pollutants,
contaminants, hazardous or toxic substances, constituents, materials or
wastes, whether solid, gaseous or liquid in nature.; 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.
(b) Each Selling Shareholder severally and not jointly represents and
warrants to, and agrees with, each of the several Underwriters that:
(i) Such Selling Shareholder, if other than a natural person, has
been duly incorporated and is validly existing and in good standing under the
laws of the jurisdiction of its organization as the type of entity that it
purports to be; such Selling Shareholder has full right, power and authority to
enter into this Agreement and to sell, assign, transfer and deliver to the
Underwriters the Stock to be sold by such Selling Shareholder hereunder in
accordance with the terms of this Agreement; and this Agreement has been duly
executed and delivered by such Selling Shareholder and constitutes the valid
and binding obligation of such Selling Shareholder, enforceable against it in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable federal or state securities laws.
(ii) Such Selling Shareholder has duly executed and delivered a power
of attorney and custody agreement (with respect to such Selling Shareholder,
the "Power-of-Attorney" and the "Custody Agreement", respectively), each in the
form heretofore delivered to the Selling Shareholders, appointing *[NAME]* and
*[NAME]* and each of them as such Selling Shareholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute, deliver and perform this
Agreement on behalf of such Selling Shareholder and appointing U.S. Stock
Transfer Corporation as custodian thereunder (the "Custodian"). Certificates
in negotiable form, endorsed in blank or accompanied by blank stock powers duly
executed, with signatures appropriately guaranteed, representing the Stock to
be sold by such Selling Shareholder hereunder have been deposited with the
Custodian pursuant to the Custody Agreement for the purpose of delivery
pursuant to this Agreement. Such Selling Shareholder has full power to enter
into the Custody Agreement and the Power-of-Attorney and to perform its
obligations under the Custody Agreement. The Custody Agreement and the
Power-of-Attorney have been duly executed and delivered by such Selling
Shareholder and, assuming due authorization, execution and delivery by the
Custodian, are the legal, valid, binding and enforceable instruments of such
Selling Shareholder. Such Selling Shareholder agrees that each of the shares
of Stock represented by the certificates on deposit with the Custodian is
subject to the interests of the Underwriters hereunder, that the arrangements
made for such custody, the appointment of the Attorneys-in-Fact and the right,
power and authority of the Attorneys-in-Fact, and each of them acting alone, to
execute and deliver this Agreement, to agree on the price at which the Stock
(including such Selling Shareholder's Stock) is to be sold to the Underwriters,
and to carry out the terms of this Agreement, are to that extent irrevocable
and that the
-11-
obligations of such Selling Shareholder hereunder shall not be terminated,
except as provided in this Agreement or the Custody Agreement, by any act of
such Selling Shareholder, by operation of law or otherwise, whether by the
death or incapacity of such Selling Shareholder, or by the occurrence of any
other event. If any Selling Shareholder should die or become incapacitated,
or if any such other event should occur, before the delivery of the Stock of
such Selling Shareholder hereunder, the certificates for such Stock deposited
with the Custodian shall be delivered by the Custodian in accordance with the
respective terms and conditions of this Agreement as if such death or other
event had not occurred, regardless of whether or not the Custodian or the
Attorneys-in-Fact, or either of them, shall have received notice thereof.
(iii) Such Selling Shareholder is the lawful owner of the Stock to
be sold by such Selling Shareholder hereunder and upon sale and delivery of,
and payment for, such Stock, as provided herein, such Selling Shareholder
will convey good and marketable title to such Stock, free and clear of any
security interests, liens, encumbrances, equities, claims or other defects.
(iv) Such Selling Shareholder has not, directly or indirectly, (A)
taken any action designed to cause or result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Stock or (B) since the filing of the Registration Statement
(I) sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Stock or (II) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company (except for the sale of Stock by the Selling Shareholders under this
Agreement).
(v) Such Selling Shareholder has reviewed the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and the
Registration Statement, and the information regarding such Selling Shareholder,
if any, set forth therein under the caption "Selling Shareholders" is complete
and accurate.
(vi) The sale of the Stock to the Underwriters by such Selling
Shareholder pursuant to this Agreement, the compliance by such Selling
Shareholder with the other provisions of this Agreement, the Custody Agreement
and the consummation of the other transactions herein contemplated do not (A)
require the consent, approval, authorization, registration or qualification of
or with any governmental authority, except such as have been obtained, such as
may be required under state securities or blue sky laws and, if the
Registration Statement filed with respect to the Stock (as amended) is not
effective under the Act as of the time of execution hereof, such as may be
required (and shall be obtained as provided in this Agreement) under the Act,
or (B) conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which such Selling Shareholder
is a party or by which such Selling Shareholder or any of such Selling
Shareholder's properties are bound, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority or any
arbitrator applicable to such Selling Shareholder.
-12-
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Code with respect to the
transactions herein contemplated, such Selling Shareholder shall deliver to the
Representative prior to or on the Closing Date, a properly completed and
executed United States Treasury Department Form W-8 or W-9 (or other applicable
form of statement specified by Treasury Department regulations in lieu
thereof).
2. PURCHASE, SALE AND DELIVERY OF THE STOCK.
(a) On the basis of the representations, warranties, covenants and
agreements herein, the Company agrees to issue and sell 1,200,000 shares of the
Stock to the several Underwriters, each Selling Shareholder agrees to sell to
the several Underwriters the number of shares of the Stock set forth in
Schedule II opposite the name of such Selling Shareholder, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company
and the Selling Shareholders, at a purchase price of $ *______* per share of
Stock (the "Purchase Price"), the respective number of shares of Firm Stock set
forth opposite the name of such Underwriter on Schedule I to this Agreement
(subject to adjustment as provided in Section 8 of this Agreement).
(b) On the basis of the several (and not joint) representations,
warranties, covenants and agreements of the Underwriters contained in this
Agreement and subject to the terms and conditions set forth in this Agreement,
the Company grants an option to the several Underwriters to purchase from the
Company, severally and not jointly, all or any portion of the Option Stock at
the Purchase Price. This option may be exercised only to cover over-allotments
in the sale of the Firm Stock by the Underwriters and may be exercised in whole
or in part at any time on or before the 45th day after the date of the
Prospectus upon written, telecopied or telegraphic notice by the Representative
to the Company setting forth the aggregate principal amount of Option Stock as
to which the several Underwriters are exercising the option and the settlement
date. The Option Stock shall be purchased severally, and not jointly, by each
Underwriter, if purchased at all, in the same proportion that the number of
shares of Firm Stock set forth opposite the name of the Underwriter in Schedule
I to this Agreement bears to the total number of shares of Firm Stock to be
purchased by the Underwriters under Section 2(a) above, subject to such
adjustments as the Representative in its absolute discretion shall make to
eliminate any fractional Stock. Delivery of Option Stock, and payment
therefor, shall be made as provided in Section 2(c) and Section 2(d) below.
(c) Delivery of the Firm Stock and the Option Stock (if the option
granted by the Company in Section 2(b) above has been exercised not later than
6:30 a.m., San Francisco time, on the date two business days preceding the
Closing Date), and payment therefor, shall be made at the office of ▇▇▇ ▇▇▇▇▇▇
& Company, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at 6:30 a.m.,
San Francisco time, on the third business day after the date of this Agreement,
or at such other location and/or at such time on such other day, not later than
seven full business days after such third business day, as shall be agreed upon
in writing by the Company and the Representative, or as provided in Section 8
of this Agreement. The date and hour of delivery and payment for the Firm
Stock are referred to in this Agreement as the "Closing Date." As used in
-13-
this Agreement, "business day" means a day on which the New York Stock
Exchange is open for trading and on which banks in New York, California and
Washington are open for business and not permitted by law or executive order
to be closed. Certificates for the Stock shall be in such denominations and
registered in such names as the Representative may request in writing at
least two business days before the Closing Date.
(d) If the option granted by the Company in Section 2(b) above is
exercised after 6:30 a.m., San Francisco time, on the date two business days
preceding the Closing Date, delivery of the Option Stock and payment therefor
shall be made at the office of ▇▇▇ ▇▇▇▇▇▇ & Company, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, or at such other location as is agreed upon by the
parties, at 6:30 a.m., San Francisco time, on the date specified by the
Representative (which shall be three or fewer business days after the exercise
of the option, but not in excess of the period specified in the Exchange Act
Rules and Regulations).
(e) Payment of the purchase price for the Stock purchased from the
Company shall be made by certified or official bank check or checks drawn in
next-day funds, payable to the order of the Company, and payment for the Stock
purchased from the Selling Shareholders shall be made payable to the Custodian,
for the account of the Selling Shareholders, by certified or official bank
check or checks drawn in next-day funds. Such payment shall be made upon
delivery of Stock to the Representative for the respective accounts of the
several Underwriters. The Stock to be delivered to the Representative shall be
registered in such name or names and shall be in such denominations as the
Representative may request at least two business days before the Closing Date,
in the case of Firm Stock, and at least one business prior to the purchase of
the Option Stock, in the case of the Option Stock. The Representative,
individually and not on behalf of the Underwriters, may (but shall not be
obligated to) make payment to the Company and the Selling Shareholders for
Stock to be purchased by any Underwriter whose check shall not have been
received by the Representative on the Closing Date or any later date on which
Option Stock is purchased for the account of such Underwriter. Any such
payment shall not relieve such Underwriter from any of its obligations
hereunder.
(f) The several Underwriters propose to offer the Stock for sale to the
public as soon as the Representative deems it advisable to do so. The Firm
Stock is to be initially offered to the public at the public offering price set
forth (or to be set forth) in the Prospectus. The Representative may from time
to time thereafter change the public offering price and other selling terms.
(g) The information set forth in the last paragraph on the front cover
page (insofar as such information relates to the Underwriters), the legend
respecting stabilization set forth on the inside front cover page and the
statements set forth under the caption "Underwriting" in any Preliminary
Prospectus and in the final form of Prospectus filed pursuant to Rule 424(b)
constitute the only information furnished by the Underwriters to the Company
for inclusion in any Preliminary Prospectus, the Prospectus or the Registration
Statement.
3. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING SHAREHOLDERS.
-14-
(a) The Company covenants and agrees with the several Underwriters as
follows:
(i) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the time of execution
of this Agreement, to become effective as promptly as possible. If the
Registration Statement has become or becomes effective pursuant to Rule 430A,
or filing of the Prospectus is otherwise required under Rule 424(b), the
Company will file the Prospectus, properly completed (and in form and substance
reasonably satisfactory to the Underwriters) pursuant to Rule 424(b) within the
time period prescribed and will provide evidence satisfactory to the
Representative of such timely filing. The Company will not file the
Prospectus, any amended Prospectus, any amendment (including post-effective
amendments) of the Registration Statement or any supplement to the Prospectus
without (A) advising the Representative of and, a reasonable time prior to the
proposed filing of such amendment or supplement, furnishing the Representative
with copies thereof and (B) obtaining the prior consent of the Representative
to such filing. The Company will prepare and file with the Commission,
promptly upon the request of the Representative, any amendment to the
Registration Statement or supplement to the Prospectus that may be necessary or
advisable in connection with the distribution of the Stock by the Underwriters.
The Company will make every reasonable effort to cause the Registration
Statement to become effective as promptly as possible.
(ii) The Company will promptly advise the Representative (A) when the
Registration Statement becomes effective, (B) when any post-effective amendment
thereof becomes effective, (C) of any request by the Commission for any
amendment of or supplement to the Registration Statement or the Prospectus or
for any additional information, (D) 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 (E) of the
receipt by the Company of any notification with respect to the suspension of
the registration, qualification or exemption from registration or qualification
of the Stock for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will make every reasonable effort
to prevent the issuance of any such stop order or suspension and, if issued, to
obtain as soon as possible the withdrawal thereof.
(iii) The Company will (A) on or before the Closing Date, deliver
to the Representative and its counsel a signed copy of the Registration
Statement as originally filed and of each amendment thereto filed prior to the
time the Registration Statement becomes effective and, promptly upon the filing
thereof, a signed copy of each post-effective amendment, if any, to the
Registration Statement (together with, in each case, all exhibits thereto
unless previously furnished to the Representative) and will also deliver to the
Representative, for distribution to the several Underwriters, a sufficient
number of additional conformed copies of each of the foregoing (excluding
exhibits) so that one copy of each may be distributed to each Underwriter, (B)
as promptly as possible deliver to the Representative and send to the several
Underwriters, at such office or offices as the Representative may designate, as
many copies of the Prospectus as the Representative may reasonably request and
(C) thereafter from time to time during the period
-15-
in which a prospectus is required by law to be delivered by an Underwriter or
a dealer, likewise to send to the Underwriters as many additional copies of
the Prospectus and as many copies of any supplement to the Prospectus and of
any amended Prospectus, filed by the Company with the Commission, as the
Representative may reasonably request for the purposes contemplated by the
Securities Act.
(iv) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or a dealer any event shall
occur as a result of which it is necessary to supplement or amend the
Prospectus in order to make the Prospectus not misleading or so that the
Prospectus will not omit to state a material fact necessary to be stated
therein, in each case at the time the Prospectus is delivered to a purchaser of
the Stock, or if it shall be necessary to amend or to supplement the Prospectus
to comply with the Securities Act or the Rules and Regulations, the Company
will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended Prospectus so that the Prospectus as so supplemented
or amended will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein not
misleading and so that it then will otherwise comply with the Securities Act
and the Rules and Regulations. If, after the public offering of the Stock by
the Underwriters and during such period, the Underwriters propose to vary the
terms of offering thereof by reason of changes in general market conditions or
otherwise, the Representative will advise the Company in writing of the
proposed variation and if, in the opinion either of counsel for the Company or
counsel for the Underwriters, such proposed variation requires that the
Prospectus be supplemented or amended, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus setting forth such
variation. The Company authorizes the Underwriters and all dealers to whom any
of the Stock may be sold by the Underwriters to use the Prospectus, as from
time to time so amended or supplemented, in connection with the sale of the
Stock in accordance with the applicable provisions of the Securities Act and
the Rules and Regulations for such period.
(v) The Company will cooperate with the Representative and its
counsel in the qualification or registration of the Stock for offer and sale
under the securities or blue sky laws of such jurisdictions as the
Representative may designate and, if applicable, in connection with exemptions
from such qualification or registration and, during the period in which a
Prospectus is required by law to be delivered by an Underwriter or a dealer, in
keeping such qualifications, registrations and exemptions in effect; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify to do business as a foreign corporation in any
jurisdiction in which it is not so qualified. The Company will, from time to
time, prepare and file such statements, reports and other documents as are or
may be required to continue such qualifications, registrations and exemptions
in effect for so long a period as the Representative may reasonably request for
the distribution of the Stock.
(vi) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to the Representative and to each
Underwriter who may so request in writing copies of (A) all periodic and
special reports furnished by it to shareholders of the Company, (B) all
information, documents and reports filed by it with the
-16-
Commission, any securities exchange on which any securities of the Company
are then listed, Nasdaq or its National Market System or the National
Association of Securities Dealers, Inc., (C) all press releases and material
news items or articles in respect of the Company or its affairs released or
prepared by the Company (other than promotional and marketing materials
disseminated solely to customers and potential customers of the Company in
the ordinary course of business) and (D) any additional information
concerning the Company or its business which the Representative may
reasonably request.
(vii) As soon as practicable, but not later than the 45th day
following the end of the fiscal quarter first ending after the first
anniversary of the Effective Date, the Company will make generally available to
its securities holders and furnish to the Representative an earnings statement
or statements in accordance with Section 11(a) of the Securities Act and Rule
158 of the Rules and Regulations.
(viii) The Company will apply the net proceeds from its sale of
the Stock in the offering in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(ix) The Company will comply with all provisions of all undertakings
contained in the Registration Statement.
(x) The Company will, and at all times for a period of at least
five years after the date of this Agreement, cause the Common Stock
(including the Stock) to be listed on the Nasdaq National Market, and the
Company will comply with all registration, filing, reporting and other
requirements of the Exchange Act and the Nasdaq National Market which may
from time to time be applicable to the Company.
(xi) The Company will use its best efforts to maintain insurance of
the types and in the amounts which it deems adequate for its business
consistent with insurance coverage maintained by companies of similar size and
engaged in similar businesses, including, but not limited to, product liability
insurance and general liability insurance covering all real and personal
property owned or leased by the Company against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against.
(xii) The Company will issue no press release prior to the
Closing Date with respect to the offering without the Representative's prior
written consent.
(xiii) The Company shall supply to the Representative and its
counsel, at the Company's cost, an aggregate of six bound volumes each
containing materials documents relating to the offering of the Stock within a
reasonable time after the Closing Date, not to exceed 90 days.
(b) Each of the Selling Shareholders covenants and agrees with each of
the Underwriters that:
-17-
(i) Such Selling Shareholder will use its best efforts to cause the
Company fully to comply with all of its covenants and agreements set forth in
this Agreement.
(ii) Such Selling Shareholder will not, directly or indirectly,
without the prior written consent of the Representatives, offer, sell, offer to
sell, contract to sell, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, contract of sale, grant of
any option to purchase or other sale or disposition) of any Common Stock
legally or beneficially owned by such Selling Shareholder or any securities
convertible into, or exchangeable or exercisable for, Common Stock for a period
of 80 days after the date hereof, except pursuant to this Agreement.
(iii) Such Selling Shareholder will not, directly or indirectly,
(A) take any action designed to cause or result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Stock or (B) (x) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Stock or (y) pay or agree to pay
to any person any compensation for soliciting another to purchase any other
securities of the Company (except for the sale of Stock by the Selling
Shareholders under this Agreement).
4. FEES AND EXPENSES.
(a) The Company and the Selling Shareholders agree with each Underwriter
that:
(i) The Company will pay and bear all costs and expenses in
connection with: the preparation, printing and filing of the Registration
Statement (including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus, any drafts of each of them and any amendments
or supplements to any of them; the duplication of this Agreement, the Agreement
Among Underwriters, any Selected Dealer Agreements, the Preliminary Blue Sky
Survey and any Supplemental Blue Sky Survey, the Underwriters' Questionnaire
and the Power of Attorney and the duplication and, if applicable, printing
(including all drafts thereof) of any other underwriting documents and material
(including but not limited to marketing memoranda and other marketing material)
in connection with the offering, purchase, sale and delivery of the Stock; the
issuance and delivery of the Stock under this Agreement to the several
Underwriters, including all expenses, taxes, duties, fees and commissions on
the purchase and sale of the Stock and stock exchange brokerage and transaction
levies with respect to the purchase and, if applicable, the sale of the Stock
(A) incident to the sale and delivery of the Stock by the Company and the
Selling Shareholders to the Underwriters and (B) incident to the sale and
delivery of the Stock by the Underwriters to the initial purchasers thereof;
the cost of printing the certificates for the Stock; the cost of furnishing to
the several Underwriters copies of the Registration Statement (including
appropriate exhibits), Preliminary Prospectus and the Prospectus, the
agreements and other documents and instruments referred to above and any
amendments or supplements to any of the foregoing; the Transfer Agents' and
Registrars' fees; the fees and disbursements of counsel for the Company and, if
applicable, the Selling Shareholders; all fees and other charges of the
Company's independent public accountants and
-18-
any other experts named in the Prospectus; the filing fees of the Commission
and the NASD; the cost of qualifying or registering the Stock (or obtaining
exemptions from qualification or registration) under the securities and Blue
Sky laws of such jurisdictions as the Representatives may designate
(including filing fees); fees and costs/disbursements of Underwriters'
counsel in connection with the NASD filings and state securities or Blue Sky
qualifications, registrations and exemptions and in preparing the preliminary
and any final Blue Sky Memorandum (which fees and costs/disbursements shall
be paid on or prior to the Closing Date); all fees and expenses in connection
with listing of the Stock on the Nasdaq National Market; any meetings with
prospective investors in the Stock (other than as shall have been approved in
writing by the Representatives to be paid for by the Underwriters);
advertising relating to the offering of the Stock (other than as shall have
been approved in writing by the Representatives to be paid for by the
Underwriters); and all other expenses incurred by the Company in connection
with the performance of its obligations hereunder. Any additional expenses
incurred as a result of the inclusion of the Stock to be sold by the Selling
Shareholders will be borne by the Company. If the sale of the Stock provided
for herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 5 hereof is not satisfied, because this
Agreement is terminated pursuant to Section 9 hereof or because of any
failure, refusal or inability on the part of the Company or the Selling
Shareholders to perform all obligations and satisfy all conditions on their
part to be performed or satisfied hereunder other than by reason of a default
by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including counsel fees
and disbursements) that shall have been incurred by them in connection with
the proposed purchase and sale of the Stock. The Company shall not in any
event be liable to any of the Underwriters for the loss of anticipated
profits from the transactions covered by this Agreement.
(ii) In addition to its obligations under Section 7(a) of this
Agreement, the Company and each Selling Shareholder jointly and severally
agrees that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
loss, claim, damage or liability described in Section 7(a) of this Agreement,
it will reimburse or advance to, or for the benefit of, the Underwriters, and
each of them, on a monthly basis (or more often, if requested) all legal and
other expenses incurred by the Underwriters 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 joint and several obligations of the Company and the
Selling Shareholders to reimburse or advance to, or for the benefit of, the
Underwriters such expenses or the possibility that such payments might later be
held to have been improper by a court of competent jurisdiction. To the extent
that any portion, or all, of any such interim reimbursement payments or
advances are so held to have been improper, the Underwriters receiving the same
shall promptly return such amounts to the party or parties who have paid such
amounts together with interest, compounded daily, at the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by Bank of America, NT&SA, San Francisco, California (the
"Prime Rate"), but not in excess of the maximum rate permitted by applicable
law. Any such interim reimbursement payments or advances that are not made to
or for the Underwriters within 30 days of a request for reimbursement or for an
advance
-19-
shall bear interest at the Prime Rate, compounded daily, but not in excess of
the maximum rate permitted by applicable law, from the date of such request
until the date paid.
(b) In addition to their obligations under Section 7(b) of this
Agreement, the Underwriters severally and in proportion to their obligation to
purchase Firm Stock as set forth on Schedule I hereto, agree that, as an
interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any loss, claim,
damage or liability described in Section 7(b) of this Agreement, they will
reimburse or advance to, or for the benefit of, the Company on a monthly basis
(or more often, if requested) all legal and other expenses incurred by the
Company in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety or enforceability of the
Underwriters' obligation to reimburse or advance to, or for the benefit of, the
Company such expenses and the possibility that such payments or advances might
later be held to have been improper by a court of competent jurisdiction. To
the extent that any portion, or all, of any such interim reimbursement payments
or advances are so held to have been improper, the Company shall promptly
return such amounts to the Underwriters together with interest, compounded
daily, at the Prime Rate, but not in excess of the maximum rate permitted by
applicable law. Any such interim reimbursement payments or advances that are
not made to the Company within 30 days of a request for reimbursement or for an
advance shall bear interest at the Prime Rate, compounded daily, but not in
excess of the maximum rate permitted by applicable law, from the date of such
request until the date paid.
(c) Any controversy arising out of the operation of the interim
reimbursement arrangements set forth in Sections 4(a)(ii) and 4(b) above,
including the amounts of requested reimbursement payments or advances, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the indemnifying parties, shall be settled by arbitration
conducted under the provisions of the Code of Arbitration Procedure of the
National Association of Securities Dealers, Inc. Any such arbitration must be
commenced by service of a written demand for arbitration or a written notice of
intention to arbitrate, therein electing the arbitration tribunal. If the
party demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to the demand or
notice is authorized to do so. Any such arbitration will be limited to the
interpretation and obligations of the parties under the interim reimbursement
and advance provisions contained in Sections 4(a)(ii) and 4(b) above and will
not resolve the ultimate propriety or enforceability of the obligation to
indemnify for or contribute to expenses that is created by the provisions of
Section 7 of this Agreement.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase and pay for the Stock shall be subject, in the
sole discretion of the Representative, to the accuracy as of the date of
execution of this Agreement, the Closing Date and the date and time at which
the Option Stock is to be purchased, as the case may be, of the representations
and warranties of the Company and the Selling Shareholders set forth in this
Agreement, to the accuracy of the statements of the Company and its officers,
and the Selling
-20-
Shareholders, made in any certificate delivered pursuant to this Agreement,
to the performance by the Company and the Selling Shareholders of all of
their obligations to be performed under this Agreement at or prior to the
Closing Date or any later date on which Option Stock is to be purchased, as
the case may be, to the satisfaction of all conditions to be satisfied or
performed by the Company and the Selling Shareholders at or prior to that
date and to the following additional conditions:
(a) The Registration Statement shall have become effective (or, if a
post-effective amendment is required to be filed pursuant to Rule 430A under
the Act, such post-effective amendment shall become effective and the Company
shall have provided evidence satisfactory to the Representative of such
filing and effectiveness) not later than 5:00 p.m., New York time, on the
date of this Agreement or at such later date and time as the Representative
may approve in writing and, at the Closing Date or, with respect to the
Option Stock, the date on which such Option Stock is to be purchased, no stop
order suspending the effectiveness of the Registration Statement or any
qualification, registration or exemption from qualification or registration
for the sale of the Stock in any jurisdiction shall have been issued and no
proceedings for that purpose shall have been instituted or threatened; and
any request for additional information on the part of the Commission shall
have been complied with to the reasonable satisfaction of the Representative
and its counsel.
(b) The Representative shall have received from Van Valkenberg ▇▇▇▇▇▇
Law Group P.L.L.C., counsel for the Underwriters, an opinion, on and dated as
of the Closing Date or, if applicable, the date on which Option Stock is to
be purchased, with respect to the issuance and sale of the Stock and such
other related matters as the Representative may reasonably require, and the
Company shall have furnished such counsel with all documents which they may
request for the purpose of enabling them to pass upon such matters.
(c) The Representative shall have received on the Closing Date or, if
applicable, the later date on which Option Stock is purchased, the opinion of
▇▇▇▇▇▇▇ Coie, counsel for the Company and the Selling Shareholders, addressed
to the Underwriters and dated the Closing Date or such later date, with
reproduced copies or signed counterparts thereof for each of the
Underwriters, covering the matters set forth in Annex A to this Agreement and
in form and substance satisfactory to the Representative.
(d) The Representative shall be satisfied that there has not been any
material change in the market for securities in general or in political,
financial or economic conditions as to render it impracticable in the
Representative's judgment to make a public offering of the Stock, or a
material adverse change in market levels for securities in general (or those
of companies in particular) or financial or economic conditions which render
it inadvisable to proceed.
(e) The Representative shall have received on the Closing Date and on
any later date on which Option Stock is purchased a certificate, dated the
Closing Date or such later date, as the case may be, and signed by the
President and the Chief Financial Officer of the Company stating that:
-21-
(i) the representations and warranties of the Company set forth in
Section 1 of this Agreement are true and correct with the same force and
effect as if expressly made at and as of the Closing Date or such later date,
and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date or such later date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that purpose have been
instituted or are pending or are threatened under the Securities Act;
(iii) the Stock has been approved for listing on the Nasdaq
National Market, subject only to notice of issuance, and the outstanding
shares of the Common Stock of the Company are listed on the Nasdaq National
Market; and
(iv) (A) the respective signers of such certificate have carefully
examined the Registration Statement in the form in which it originally became
effective and the Prospectus and any supplements or amendments to any of them
and, as of the Effective Date, the statements made in the Registration
Statement and the Prospectus were true and correct in all material respects
and neither the Registration Statement nor the Prospectus omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading, (B) since the effective date of the
Registration Statement, no event has occurred that should have been set forth
in an amendment to the Registration Statement or a supplement or amendment to
the Prospectus that has not been set forth in such an amendment or
supplement, (C) since the respective dates as of which information is given
in the Registration Statement in the form in which it originally became
effective and the Prospectus, there has not been any material change or any
development involving a prospective material change in or affecting the
business, properties, condition (financial or otherwise), results of
operations or prospects of the Company and its subsidiaries taken as a whole
and, since such dates, neither the Company nor any of its subsidiaries has
entered into any material transaction not referred to in the Registration
Statement in the form in which it originally became effective and the
Prospectus contained therein, (D) there are not any pending or known
threatened legal proceedings to which the Company or any of its subsidiaries
is a party or of which property of the Company or any of its subsidiaries is
the subject which are material and which are not disclosed in the
Registration Statement and the Prospectus and (E) there are not any license
agreements, contracts, leases or other documents that are required to be
filed as exhibits to the Registration Statement that have not been filed as
required.
(f) The Representative shall have received from Coopers & ▇▇▇▇▇▇▇, LLP
letters, addressed to the Underwriters and dated the date of the Preliminary
Prospectus, the Closing Date and any later date on which Option Stock is
purchased, confirming that they are independent accountants with respect to
the Company within the meaning of the Securities Act and the applicable Rules
and Regulations thereunder and, based upon the procedures described in their
letter delivered to the Representative concurrently with the execution of
this Agreement (the
-22-
"Original Letter"), but carried out to a date not more than five business
days prior to the Closing Date or such later date on which Option Stock is
purchased, (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing
Date or such later date, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter that are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information. Such letters shall not disclose any change, or any development
involving a prospective change, in or affecting the business, properties or
condition (financial or otherwise), results of operations or prospects of the
Company or any of its subsidiaries which, in the Representative's sole
judgment, makes it impractical or inadvisable to proceed with the public
offering of the Stock or the purchase of the Option Stock as contemplated by
the Prospectus. In addition, the Representative shall have received from
Coopers & ▇▇▇▇▇▇▇, LLP, on or prior to the Closing Date, a letter addressed
to the Company and made available to the Representative for the use of the
Underwriters stating that their review of the Company's system of internal
controls, to the extent they deemed necessary in establishing the scope of
their examination of the Company's consolidated financial statements as of
December 31, 1996, or in delivering their Original Letter, did not disclose
any weaknesses in internal controls that they considered to be material
weaknesses.
(g) Prior to the Closing Date, the Stock shall have been approved for
listing on the Nasdaq National Market, subject only to official notice of
issuance and the outstanding shares of the Common Stock of the Company shall
be listed on the Nasdaq National Market.
(h) On or prior to the Closing Date, the Representative shall have
received from all Material Holders executed agreements covering the matters
described in Section 1(a) (xviii) of this Agreement.
(i) The Company shall have furnished to the Representative such further
certificates and documents as the Representative shall request (including
certificates of officers of the Company) as to the accuracy of the
representations and warranties of the Company set forth in this Agreement,
the performance by the Company of its obligations under this Agreement and
such other matters as the Representative may have then requested.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement will be in compliance with the provisions of
this Agreement only if they are satisfactory to the Representative. The
Company will furnish the Representative with such number of conformed copies
of such opinions, certificates, letters and documents as the Representative
shall reasonably request.
If any of the conditions specified in this Section 5 shall not have been
fulfilled in all material respects when and as provided in this Agreement,
time being of the essence, or if any of the opinions and certificates
mentioned above or elsewhere in this Agreement shall not be in all material
respects satisfactory in form and substance to the Representative and its
counsel, this Agreement and all obligations of the Underwriters hereunder may
be canceled by the
-23-
Representative at, or at any time prior to, the Closing Date or, with respect
to the Option Stock, prior to the date which the Option Stock is to be
purchased, as the case may be. Notice of such cancellation shall be given to
the Company and the Selling Shareholders in writing or by telephone,
telecopy, facsimile transmission or telegraph confirmed in writing. Any such
termination shall be without liability of the Company or the Selling
Shareholders to the Underwriters (except as provided in Section 4 or Section
7 of this Agreement) and without liability of the Underwriters to the Company
or the Selling Shareholders (except as provided in Section 7 of this
Agreement).
6. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
SHAREHOLDERS. The obligations of the Company and the Selling Shareholders to
sell and deliver the Stock required to be delivered as and when specified in
this Agreement shall be subject to the condition that, at the Closing Date
or, with respect to the Option Stock, the date and time at which the Option
Stock is to be purchased, no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings therefor shall
be pending or threatened by the Commission.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Selling Shareholders agree to indemnify and
hold harmless each Underwriter and each person (including each partner or
officer thereto) who controls any Underwriter within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages
or liabilities, joint or several, to which such indemnified parties or any of
them may become subject under the Securities Act, the Exchange Act or other
federal or state statute, law or regulation, at common law or otherwise,
specifically including but not limited to losses, claims, damages or
liabilities (or action in respect thereof) related to negligence on the part
of any Underwriter, and the Company and the Selling Shareholders agree to
reimburse each such Underwriter and controlling person for any legal or other
expenses (including, except as otherwise provided below, settlement expenses
and fees and disbursements of counsel) incurred by the respective indemnified
parties in connection with defending against any such losses, claims, damages
or liabilities or in connection with any investigation or inquiry of, or
other proceeding that may be brought against, the respective indemnified
parties, in each case insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon, in whole or
in part, (i) any breach of any representation, warranty, covenant or
agreement of the Company in this Agreement, (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement in the form originally filed or in any amendment thereto (including
the Prospectus as part thereof) or any post-effective amendment thereto, or
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading
or (iii) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any
amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading or (iv) any untrue statement or
alleged untrue statement of a material fact contained in any
-24-
application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify or
register the Stock under the securities or Blue Sky laws thereof or to obtain
an exception from such qualification or registration or filed with the
Commission, any securities association or the Nasdaq National Market, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that (A) the indemnity agreements of the Company and the Selling Shareholders
contained in this Section 7(a) shall not apply to such losses, claims,
damages, liabilities or expenses if such statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the Representative
specifically for use in any Preliminary Prospectus or the Registration
Statement or the Prospectus or any such amendment thereof or supplement
thereto and (B) the indemnity agreement contained 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 such losses, claims, damages,
liabilities or expenses purchased the Stock that is the subject thereof (or
to the benefit of any person controlling such Underwriter) if the Company or
the Selling Shareholders can demonstrate that at or prior to the written
confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) or, for this purpose, if applicable, a
copy of the then most recent Preliminary Prospectus was not sent or delivered
to such person and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus or, if applicable, prior Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented) or, if applicable, the then most recent Preliminary Prospectus,
unless the failure is the result of noncompliance by the Company with Section
3 of this Agreement. The indemnity agreements of the Company and the Selling
Shareholders contained in this Section 7(a) and the representations and
warranties of the Company and the Selling Shareholders contained in Section 1
of this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or behalf of any indemnified party
and shall survive the delivery of and payment for the Stock. This indemnity
agreement shall be in addition to any liabilities which the Company and the
Selling Shareholders may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Selling Shareholders, the Company, each of its officers
who signs the Registration Statement, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties
or any of them may become subject under the Securities Act, the Exchange Act,
or other federal or state statute, law or regulation or at common law or
otherwise and to reimburse each of them for any legal or other expenses
(including, except as otherwise hereinafter provided, settlement expenses and
fees and disbursements of counsel) incurred by the respective indemnified
parties in connection with defending against any such losses, claims, damages
or liabilities or in connection with any investigation or inquiry of, or
other proceeding that may be brought against, the respective indemnified
parties, in each case arising out of or based upon (i) any breach of any
covenant or
-25-
agreement of the indemnifying Underwriter in this Agreement, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof) or any
post-effective amendment thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading or (iii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus
or the Prospectus (as amended or as supplemented if the Company shall have
filed with the Commission any amendment thereof or supplement thereto) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, but in
each case under clauses (i), (ii) and (iii) above, as the case may be, only
if such statement or omission was made in reliance upon and in connection
with information furnished in writing to the Company by or on behalf of such
indemnifying Underwriter through the Representative specifically for use in
any Preliminary Prospectus, the Registration Statement or the Prospectus or
any such amendment thereof or supplement thereto. The Company and the
Selling Shareholders acknowledge and agree that the matters described in
Section 2(g) of this Agreement constitute the only information furnished in
writing by or on behalf of any of the several Underwriters for inclusion in
the Registration Statement or the Prospectus or in any Preliminary
Prospectus. The several indemnity agreement of each Underwriter contained in
this Section 7(b) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery of and payment for the Stock. This indemnity
agreement shall be in addition to any liabilities which each Underwriter may
otherwise have.
(c) Each person or entity indemnified under the provisions of Sections
7(a) and 7(b) above agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in
such Sections, it will, if a claim in respect thereunder is to be made
against the indemnifying party or parties under this Section 7, promptly give
written notice (the "Notice") of such service or notification to the party
or parties from whom indemnification may be sought hereunder. No
indemnification provided for in Sections 7(a) or 7(b) above shall be
available to any person who fails to so give the Notice if the party to whom
such Notice was not given was unaware of the action, suit, investigation,
inquiry or proceeding to which the Notice would have related, but only to the
extent such party was materially prejudiced by the failure to receive the
Notice, and the omission to so notify such indemnifying party or parties
shall not relieve such indemnifying party or parties from any liability which
it or they may have to the indemnified party for contribution or otherwise
than on account of Sections 7(a) and 7(b). Any indemnifying party shall be
entitled at its own expense to participate in the defense of any action, suit
or proceeding against, or investigation or inquiry of, an indemnified party.
Any indemnifying party shall be entitled, if it so elects within a reasonable
time after receipt of the Notice by giving written notice (the "Notice of
Defense") to the indemnified party, to assume (alone or in conjunction with
any other indemnifying party or parties) the entire defense of such action,
suit, investigation, inquiry or proceeding, in which
-26-
event such defense shall be conducted, at the expense of the indemnifying
party or parties, by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties; provided,
however, that (i) if the indemnified party or parties reasonably determine
that there may be a conflict between the positions of the indemnifying party
or parties and of the indemnified party or parties in conducting the defense
of such action, suit, investigation, inquiry or proceeding or that there may
be legal defenses or rights available to such indemnified party or parties
different from or in addition to those available to the indemnifying party or
parties, then separate counsel for and selected by the indemnified party or
parties shall be entitled, at the expense of the indemnifying parties, to
conduct the defense of the indemnified parties to the extent determined by
counsel to the indemnified parties to be necessary to protect the interests
of the indemnified party or parties and (ii) in any event, the indemnified
party or parties shall be entitled to have counsel selected by such
indemnified party or parties participate in, but not conduct, the defense.
If, within a reasonable time after receipt of the Notice, an indemnifying
party gives a Notice of Defense and, unless separate counsel is to be chosen
by the indemnified party or parties as provided above, the counsel chosen by
the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will not be
liable under Sections 7(a) through 7(c) for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with
the defense of the action, suit, investigation, inquiry or proceeding, except
that (A) the indemnifying party or parties shall bear and pay the legal and
other expenses incurred in connection with the conduct of the defense as
referred to in clause (i) of the "provided, however" clause in the preceding
sentence and (B) the indemnifying party or parties shall bear and pay such
other expenses as it or they have authorized to be incurred by the
indemnified party or parties. If, within a reasonable time after receipt of
the Notice, no Notice of Defense has been given, the indemnifying party or
parties shall be responsible for any legal or other expenses incurred by the
indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding.
(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section
7 but is judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right to appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 7 provides
for indemnification in such case, each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in Section 7(a)
or 7(b) above (i) in such proportion as is appropriate to reflect the
relative benefits received by each indemnifying party from the offering of
the Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of each indemnifying party in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, or
actions in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the Selling
Shareholders and the Underwriters shall be deemed to be in the same
respective proportion as the total proceeds from the offering of the Stock,
net of the underwriting discounts, received by the Company and the
-27-
Selling Shareholders and the total underwriting discount retained by the
Underwriters bear to the aggregate public offering price of the Stock.
Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were to be determined by pro rata
allocation which does not take into account the equitable considerations
referred to in the first sentence of the first paragraph of this Section 7(d)
and to the considerations referred to in the third sentence of the first
paragraph of this Section 7(d). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities, or actions in respect
thereof, referred to in the first sentence of the first paragraph of this
Section 7(d) shall be deemed to include any legal or other expenses incurred
by such indemnified party in connection with investigating, preparing to
defend or defending against any action or claim which is the subject of this
Section 7(d). Notwithstanding the provisions of this Section 7(d), no
Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Stock purchased by that Underwriter.
For purposes of this Section 7(d), each person who controls an Underwriter
within the meaning of the Securities Act shall have the same rights to
contribution as such Underwriter, and each person who controls the Company
within the meaning of the Securities Act, each officer of the Company who
signed the Registration Statement, each director of the Company and each
Selling Shareholder shall have the same rights to contribution as the
Company; provided, however, in each case 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. The Underwriters' obligations to contribute in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint.
Each party or other entity entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from
whom contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in Section 7(c) above).
(e) Neither the Company nor any Selling Shareholder shall, without the
prior written consent of each Underwriter, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not such Underwriter or any person who controls such
Underwriter within the meaning of Section 15 of the Securities Act is a party
to such claim, action, suit or proceeding) unless such settlement, compromise
or consent includes an unconditional release of each such Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding.
-28-
(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of Sections 4(a)(ii), 4(b) and 4(c) and this
Section 7 of this Agreement and that they are fully informed regarding all
such provisions. They further acknowledge that the provisions of Sections
4(a)(ii), 4(b) and 4(c) and this Section 7 of this Agreement fairly allocate
the risks in light of the ability of the parties to investigate the Company
and its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Securities Act, the
Rules and Regulations, the Exchange Act and the Exchange Act Rules and
Regulations. The parties are advised that federal or state policy, as
interpreted by the courts in certain jurisdictions, may be contrary to
certain provisions of Sections 4(a)(ii), 4(b) and 4(c) and this Section 7 of
this Agreement and, to the extent permitted by law, the parties hereto hereby
expressly waive and relinquish any right or ability to assert such public
policy as a defense to a claim under Sections 4(a)(ii), 4(b) or 4(c) or this
Section 7 of this Agreement and further agree not to attempt to assert any
such defense.
(g) The liability of each Selling Shareholder under Section 4 and this
Section 7 shall be limited to an amount equal to the initial public offering
price of the Stock sold by such Selling Shareholder to the Underwriters. The
Company and the Selling Shareholders may agree, as among themselves and
without limiting the rights of the Underwriters under this Agreement, as to
the respective amounts of such liability for which they each shall be
responsible.
-29-
8. SUBSTITUTION OF UNDERWRITERS. If for any reason one or more of the
Underwriters fails or refuses (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 5
or Section 9 of this Agreement) to purchase and pay for the number of shares
of Firm Stock agreed to be purchased by such Underwriter or Underwriters, the
Company shall immediately give notice thereof to the Representative and the
non-defaulting Underwriters shall have the right within 24 hours after the
receipt by the Representative of such notice to purchase, or procure one or
more other Underwriters to purchase, in such proportions as may be agreed
upon among the Representative and such purchasing Underwriter or Underwriters
and upon the terms set forth herein, all or any part of the Firm Stock that
such defaulting Underwriter or Underwriters agreed to purchase. If the
non-defaulting Underwriters fail to make such arrangements with respect to
all such Stock, the number of shares of Firm Stock that each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares of
Stock that the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be
obligated to purchase the Stock that the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate amount of such Stock exceeds
10% of the aggregate amount of Firm Stock that all Underwriters agreed to
purchase under this Agreement. If the total number of shares of Firm Stock
that the defaulting Underwriter or Underwriters agreed to purchase shall not
be purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the first
24-hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to the Representative for purchase of
such Stock on the terms set forth in this Agreement. In any such case,
either the Representative or the Company shall have the right to postpone the
Closing Date determined as provided in Section 2(c) of this Agreement for not
more than seven business days after the date originally fixed as the Closing
Date pursuant to Section 2(c) in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made.
If neither the non-defaulting Underwriters nor the Company shall make
arrangements within the time periods set forth above for the purchase of all
the Firm Stock that the defaulting Underwriter or Underwriters agreed to
purchase hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company and the Selling
Shareholders to any non-defaulting Underwriter (except as provided in Section
4 or Section 7 of this Agreement) and without any liability on the part of
any non-defaulting Underwriters to the Company and the Selling Shareholders
(except to the extent provided in Section 7 of this Agreement). Nothing in
this Section 8, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability, if any, to the Company and the Selling
Shareholders or any non-defaulting Underwriter for damages occasioned by its
default under this Agreement. The term "Underwriter" in this Agreement shall
include any persons substituted for an Underwriter under this Section 8.
-30-
9. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
(a) If the Registration Statement has not been declared effective prior
to the date of this Agreement, this Agreement shall become effective at such
time, after notification of the effectiveness of the Registration Statement
has been released by the Commission, as the Representative and the Company
shall agree upon the public offering price and other terms and the purchase
price of the Stock. If the public offering price and other terms and the
purchase price of the Stock shall not have been determined prior to 5:00
p.m., New York time, on the third full business day after the Registration
Statement has become effective, this Agreement shall thereupon terminate
without liability on the part of the Company and the Selling Shareholders to
the Underwriters (except as provided in Section 4 or Section 7 of this
Agreement). By giving notice before the time this Agreement becomes
effective, the Representative, as Representative of the several Underwriters,
may prevent this Agreement from becoming effective without liability of any
party to the other party, except that the Company shall remain obligated to
pay costs and expenses to the extent provided in Section 4 and Section 7 of
this Agreement. If the Registration Statement has been declared effective
prior to the date of this Agreement, this Agreement shall become effective
upon execution and delivery by the Representative, the Company and the
Selling Shareholders.
(b) This Agreement may be terminated by the Representative in its
absolute discretion by giving written notice to the Company and the Selling
Shareholders at any time on or prior to the Closing Date or, with respect to
the purchase of the Option Stock, on or prior to any later date on which the
Option Stock is to be purchased, as the case may be, if prior to such time
any of the following has occurred or, in the Representative's opinion, is
likely to occur: (i) after the respective dates as of which information is
given in the Registration Statement and the Prospectus, any material change
or development involving a prospective adverse change in or affecting the
business, properties, condition (financial or otherwise), results of
operations or prospects of the Company and its subsidiaries taken as a whole,
which would, in the Representative's sole judgment, make the offering or the
delivery of the Stock impracticable or inadvisable; or (ii) if trading in
securities of the Company has been suspended by the Commission or if trading
generally on the New York Stock Exchange, American Stock Exchange or
over-the-counter market has been suspended or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have
been required, by either of such exchanges, by the NASD or by the Commission;
or (iii) if there shall have been the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of,
or commencement of any proceeding or investigation by, court, legislative
body, agency or other governmental authority which in the Representative's
sole judgment materially affects or may materially affect the business,
properties, condition (financial or otherwise), results of operations or
prospects of the Company and its subsidiaries taken as a whole; (iv) if there
shall have been the declaration of a banking moratorium by federal, New York,
California or Washington authorities; (v) existing international monetary
conditions shall have undergone a material change which, in the
Representative's sole judgment, makes the offering or delivery of the Stock
impracticable or inadvisable; or (vi) if there has occurred any material
change in the
-31-
financial markets in the United States or internationally or any outbreak of
hostilities or escalation of existing hostilities or other crisis, the effect
of which in the Representative's sole judgment make the offering or delivery
of the Stock impracticable or inadvisable. If this Agreement shall be
terminated pursuant to this Section 9, there shall be no liability of the
Company or the Selling Shareholders to the Underwriters (except pursuant to
Section 4 and Section 7 of this Agreement) and no liability of the
Underwriters to the Company or the Selling Shareholders (except pursuant to
Section 7 of this Agreement).
10. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing sent by U.S. first class mail, by a nationally
recognized overnight courier service, by hand delivery, or by telephonically
confirmed facsimile transmission or electronic mail (i) to the Underwriters
at ▇▇▇ ▇▇▇▇▇▇ & Company, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (facsimile: (310)
820-5032, email: [*____*] ); and (ii) to the Company at ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇; (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, email: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇) and
(iii) to the Selling Shareholders at [*_________*] . All notices given by
facsimile or electronic mail shall be promptly confirmed by letter.
11. PERSONS ENTITLED TO THE BENEFIT OF THIS AGREEMENT. This Agreement
shall inure to the benefit of the Company, the Selling Shareholders and the
several Underwriters and, with respect to the provisions of Section 4 and
Section 7 of this Agreement, the several parties (in addition to the Company,
the Selling Shareholders and the several Underwriters) indemnified under the
provisions of Section 4 and Section 7 and, in addition as to Section 13, the
Representative, and their respect personal representatives, successors and
assigns (whether such succession or assignment is by sale, assignment,
merger, reverse merger, consolidation, operation of law or, without
limitation, otherwise). Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any
provision contained herein. The term "successors and assigns" as herein used
shall not include any purchaser, as such, of any of the Stock from the
several Underwriters.
12. GENERAL. Notwithstanding any provision of this Agreement to the
contrary, the reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties, covenants
and agreements in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation
made by or on behalf of the Selling Shareholders, any Underwriter or
controlling person thereof or by or on behalf of the Company or their
respective directors or officers and (c) delivery and payment for the Stock
under this Agreement; provided, however, that if this Agreement is terminated
prior to the Closing Date, paragraphs (vi) through (xiii) of Section 3(a) of
this Agreement shall be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which together shall constitute one
and the same instrument.
-32-
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS, AND NOT THE LAWS PERTAINING TO CHOICE OR CONFLICT OF LAWS, OF
THE STATE OF CALIFORNIA.
13. AUTHORITY OF THE REPRESENTATIVE. In connection with this
Agreement, the Representative will act for and on behalf of the several
Underwriters, and any action taken under this Agreement by the
Representative, as representative of the several Underwriters, will be
binding on all of the Underwriters.
If the foregoing correctly sets forth your understanding, please so
indicate by signing in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement among the Company, the
Selling Shareholders and the several Underwriters.
Very truly yours,
THRUSTMASTER, INC.
__________________________________________
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President and Chief Executive Officer
SELLING SHAREHOLDERS:
[LIST NAMES]
By: [Name]
Attorney-in-Fact
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
▇▇▇ ▇▇▇▇▇▇ & COMPANY
By: __________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
On its behalf and on behalf of
each of the several Underwriters
named in Schedule I hereto
-33-
SCHEDULE I
UNDERWRITERS
Shares of Firm Stock
Underwriters to be Purchased
--------------------------------- ----------------------------------
▇▇▇ ▇▇▇▇▇▇ & Company
_________
Total
-------
-------
-34-
ANNEX A
Matters to be Covered in the Opinion of
▇▇▇▇▇▇▇ Coie
(i) Each of the Company and each of its subsidiaries has been duly
organized and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation;
(ii) Each of the Company and each of its subsidiaries has the
corporate power to own, lease and operate its properties and to conduct its
business as described in the Prospectus;
(iii) Each of the Company and each of its subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing in
all jurisdictions in which the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the failure
so to qualify would not have a material adverse effect on the business,
properties, condition (financial or otherwise), results of operations or
prospects of the Company and its subsidiaries taken as a whole;
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption "Capitalization"
as of the dates stated therein; the issued and outstanding shares of capital
stock of the Company and its subsidiaries have been duly and validly
authorized and issued, are fully paid and nonassessable and have not been
issued in violation of any preemptive right or other rights to subscribe for
or purchase securities or, except to the extent any such violations would not
be material to the Company and its subsidiaries taken as a whole (whether
because of the magnitude of the violation, because any claims thereof would
be barred by the statute of limitations or otherwise), in violation of any
applicable federal or state securities laws, provided that in rendering their
opinion as to non-violation of federal and state securities laws, such
counsel may assume, unless counsel has knowledge of facts that may render
such assumption unreasonable; that any purchasers had, to the extent relevant
and represented by such purchasers in writing, any required investment intent
and the Company directly or indirectly owns all of the issued and outstanding
equity securities of each of its subsidiaries and there are no outstanding
options, warrants or other rights to acquire any equity securities of any
such subsidiary;
(v) The Company has corporate power and authority to enter into the
Agreement and to issue, sell and deliver the Stock to the Underwriters;
(vi) The execution, delivery and performance of this Agreement and
the issuance and sale of the Stock do not (A) conflict with, violate, result
in a breach of or constitute a default (or an event that with notice or lapse
of time, or both, would constitute a default) under the Articles of
Incorporation or By-laws of the Company or any agreement (including, without
limitation, an
-35-
agreement with respect to registration rights) to which the Company is a
party or by which it or any of its properties or assets is bound and which is
known to such counsel or (B) result in violation of any material federal or
Oregon law, rule or regulation or, to the best knowledge of such counsel, any
writ, judgment, order, injunction or decree of any government, governmental
body, agency or court or any arbitration tribunal having jurisdiction over
the Company or any of its properties;
(vii) The Stock to be sold by the Company is duly authorized and,
when issued and delivered against payment in full therefor, will be validly
issued, fully paid, non-assessable, and free of preemptive rights;
(viii) The Underwriting Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery of the Underwriting Agreement by the Representative
and the Selling Shareholders, is the valid and binding agreement of the
Company, except insofar as the indemnification and contribution provisions of
the Underwriting Agreement may be limited by public policy concerns and
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally or by general equitable principles;
(ix) Except for the order of the Commission making the Registration
Statement effective and similar authorizations required under the securities
or "Blue Sky" laws of certain jurisdictions (as to which such counsel need
express no opinion), no consent, approval, authorization or other order of
any federal or Washington governmental body or, to the knowledge of such
counsel, other person is required in connection with the authorization,
issuance, sale and delivery of the Stock and the execution, delivery and
performance by the Company of the Underwriting Agreement;
(x) The Registration Statement has become effective under the
Securities Act and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or
threatened under the Securities Act;
(xi) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements,
financial data and supporting schedules included therein, as to which such
counsel need express no opinion), as of the effective date of the
Registration Statement, complied as to form in all material respects with the
requirements of the Securities Act and the applicable Rules and Regulations;
(xii) We have reviewed the statements set forth under the heading
"Description of Capital Stock" in the Prospectus, insofar as such statements
purport to summarize certain provisions of the capital stock of the Company,
provide a fair summary of such provisions; and the statements set forth under
the headings "Shares Eligible for Future Sale" and "Legal Proceedings" in the
Prospectus, insofar as such statements constitute a summary of the legal
-36-
matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings in all material respects as required by the Securities Act and
the applicable Rules and Regulations;
(xiii) The Company is not an "investment company" and, after giving
effect to the Offering and the application of the proceeds therefrom, will
not be an "investment company", as such term is defined in the Investment
Company Act of 1940, as amended;
(xiv) The description in the Registration Statement and the
Prospectus of the charter and bylaws of the Company and of statutes and
contracts are accurate in all material respects and fairly present in an
material respects the information required to be presented by the Securities
Act and the Rules and Regulations;
(xv) To the best knowledge of such counsel, there are no agreements,
contracts, licenses, leases or documents of a character required to be
described or referred to in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement that are not described or
referred to therein and filed as required;
(xvi) To the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which the property of the Company or any of
its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not described therein or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described therein or
filed as required;
(xvii) To the best knowledge of such counsel, neither the Company nor
any of its subsidiaries is presently in breach of, or in default under, any
bond, debenture, note or other evidence of indebtedness or any contract,
indenture, mortgage, deed of trust, loan agreement, lease, license or,
without limitation, other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which any of their properties are bound
that, individually or in the aggregate, is material to the business,
properties, condition (financial or otherwise), prospects or results of
operations or prospects of the Company and its subsidiaries taken as a whole;
(xviii) To the best knowledge of such counsel, except as set forth in
the Registration Statement and Prospectus, no holders of Common Stock or
other securities of the Company have registration rights with respect to any
securities of the Company; and
(xix) With respect to each Selling Shareholder:
-37-
(A) each Selling Shareholder has the full right, power and
authority to enter into the Underwriting Agreement and the Custody Agreement
and to carry out all the terms and provisions thereof;
(B) the Underwriting Agreement, the Custody Agreement and the
Power-of-Attorney have been duly authorized, executed and delivered by each
Selling Shareholder and, assuming due authorization, execution and delivery
by the Representative, the Company and/or Custodian, as applicable, the
Underwriting Agreement, the Custody Agreement and the Power-of-Attorney are
the legal, valid, binding and enforceable agreements or instruments of such
Selling Shareholder, except insofar as the indemnification and contribution
provisions of the Underwriting Agreement may be limited by public policy
concerns and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general equitable principles;
(C) assuming that (I) the Underwriters have no notice of any
adverse claims with respect to the Stock being sold hereunder by such Selling
Shareholder, and (II) the certificates representing the Stock being sold by
such Selling Shareholder are delivered to the Underwriters duly endorsed or
accompanied by a duly executed assignment separate from certificate in the
State of California, the delivery by such Selling Shareholder to the several
Underwriters of certificates for the Stock being sold hereunder by such
Selling Shareholder against payment therefor as provided herein, will convey
good and marketable title to such Stock to the several Underwriters, free and
clear of all "adverse claims" (as that term is defined in Section 8302 of the
Commercial Code of the State of California); and
(D) the sale of the Stock to the Underwriters by such Selling
Shareholder pursuant to the Underwriting Agreement, the compliance by such
Selling Shareholder with the other provisions of the Underwriting Agreement
and the Custody Agreement, and the consummation of the other transactions
therein contemplated do not (I) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except
such as have been obtained and such as may be required under state securities
or blue sky laws, or (II) conflict with or result in a breach or violation of
any of the terms and provisions of, or constitute a default under, any
statute or, to the knowledge of such counsel, any indenture, mortgage, deed
of trust, lease or other agreement or instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder or any of such
Selling Shareholder's properties are bound or any judgment, decree, order,
rule or regulation of any court or other governmental authority or any
arbitrator applicable to such Selling Shareholder.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, the independent public accountants of the Company, the
Representative and counsel to the Underwriters, at which conferences the
contents of the Registration Statement and the Prospectus and related matters
were discussed and, although they have not independently verified the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, nothing has come to the attention
of such counsel that caused them to believe that, at the time the
-38-
Registration Statement became effective, the Registration Statement (except
as to financial statement, financial data and supporting schedules contained
therein, as to which such counsel need express no opinion) contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or at the Closing Date or any later date on which the Option
Stock is to be purchased, as the case may be, the Prospectus contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
-39-