EXHIBIT 1.1
3,500,000 Shares
Apex PC Solutions, Inc.
Common Stock
UNDERWRITING AGREEMENT
________, 1997
▇▇▇▇▇▇▇▇▇▇ SECURITIES
▇▇▇▇ ▇▇▇▇▇▇▇▇ INCORPORATED
c/▇ ▇▇▇▇▇▇▇▇▇▇ SECURITIES
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies & Gentlemen:
SECTION 1
INTRODUCTORY
Apex PC Solutions, Inc., a Washington corporation (the "Company"),
proposes to issue and sell 3,500,000 shares of its authorized but unissued
Common Stock (the "Common Stock") to the several underwriters named in
SCHEDULE A annexed hereto (the "Underwriters"). Said 3,500,000 shares are
herein called the "Firm Common Shares." In addition, certain shareholders of
the Company named in SCHEDULE B annexed hereto (the "Selling Shareholders")
propose to grant to the Underwriters an option to purchase up to 525,000
additional shares of Common Stock (the "Optional Common Shares"), as provided in
Section 5 hereof. The Firm Common Shares and, to the extent such option is
exercised, the Optional Common Shares are hereinafter collectively referred to
as the "Common Shares."
You have advised the Company and the Selling Shareholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is advisable.
The Company and each of the Selling Shareholders hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the several Underwriters that:
(a) A registration statement on Form SB-2 (File No.
333-___________) with respect to the Common Shares has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "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. The Company has prepared and has filed or
proposes to file prior to the effective date of such registration statement an
amendment or amendments to such registration statement,
which amendments have been similarly prepared. There have been delivered to you
two signed copies of such registration statement and amendments, together with
two copies of each exhibit filed therewith. Conformed copies of such
registration statement and amendments (but without exhibits) and of the related
preliminary prospectus have been delivered to you in such reasonable quantities
as you have requested for each of the Underwriters. The Company will next file
with the Commission one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of final
prospectus, or (ii) a final prospectus in accordance with Rules 430A and 424(b)
of the Rules and Regulations. As filed, such amendment and form of final
prospectus, or such final prospectus, shall include all Rule 430A Information
and, except to the extent that you shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to the
date and time that this Agreement was executed and delivered by the parties
hereto, or, to the extent not completed at such date and time, shall contain
only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company shall have
previously advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended; provided, however, that such
term shall also include (i) all Rule 430A Information deemed to be included in
such registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations and (ii) a
registration statement, if any, filed pursuant to Rule 462(b) of the Rules and
Regulations relating to the Common Shares. The term "Preliminary Prospectus"
shall mean any preliminary prospectus referred to in the preceding paragraph and
any preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean the prospectus relating to the Common Shares
in the form in which it is first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations or, if no filing pursuant to
Rule 424(b) of the Rules and Regulations is required, shall mean the form of
final prospectus included in the Registration Statement at the time such
registration statement becomes effective. The term "Rule 430A Information"
means information with respect to the Common Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects to the requirements of the Act
and the Rules and Regulations and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including each Closing
Date hereinafter mentioned, the Registration Statement and the Prospectus, and
any amendments or supplements thereto, will contain all material statements and
information required to be included therein by the Act and the Rules and
Regulations and will in all material respects conform to the requirements of the
Act and the Rules and Regulations, and neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, will include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, no representation or warranty contained in this
subsection 2(b) shall be applicable to information contained in or omitted from
any Preliminary Prospectus, the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
specifically for use in the preparation thereof.
(c) The Company does not own or control, directly or indirectly,
any corporation, association or other entity other than the subsidiaries listed
in Exhibit 21 of the Registration Statement. The Company and each of its
subsidiaries have been duly incorporated and is validly existing as a
corporation in good standing (where applicable) under the laws of their
respective jurisdictions of incorporation, with full power and authority
(corporate and other) to own and lease their properties and conduct their
respective businesses as described in the Prospectus; the Company and each of
its subsidiaries are in possession of and operating in compliance with all
authorizations, licenses, permits, consents, certificates and orders material to
the conduct of their respective businesses, all of which are valid and in full
force and effect; the Company and each of its subsidiaries are duly qualified to
do business and in good standing as foreign corporations in each jurisdiction in
which the ownership or leasing of properties or the conduct of their respective
businesses requires such qualification, except for jurisdictions in which the
failure to so qualify would not have a material adverse effect upon the Company;
and no
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proceeding has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.
(d) The Company has an authorized and outstanding capital stock as
set forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase securities,
and conform to the description thereof contained in the Prospectus. Except as
disclosed in or specifically contemplated by the Prospectus, the Company has no
outstanding options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised thereunder,
set forth in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set forth in
this Agreement, will be validly issued, fully paid and nonassessable, and will
conform to the description thereof contained in the Prospectus. No preemptive
rights or other rights to subscribe for or purchase exist with respect to the
issuance and sale of the Common Shares by the Company pursuant to this
Agreement. No shareholder of the Company has any right which has not been
waived to require the Company to register the sale of any shares owned by such
shareholder under the Act in the public offering contemplated by this Agreement.
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 Common Shares
to be sold by the Selling Shareholders or the issuance and sale of the Common
Shares to be sold by the Company as contemplated herein.
(f) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company in accordance with its
terms. The making and performance of this Agreement by the Company and the
consummation of the transactions herein contemplated will not violate any
provisions of the articles or certificate of incorporation or bylaws, or other
organizational documents, of the Company or its subsidiaries, as amended to
date, and will not conflict with, result in the breach or violation of, or
constitute, either by itself or upon notice or the passage of time or both, a
default under any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries any
of their respective properties may be bound or affected, any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any
regulatory body, administrative agency or other governmental body applicable to
the Company or any of its properties. No consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of this Agreement
or the consummation of the transactions contemplated by this Agreement, except
for compliance with the Act, the Blue Sky laws applicable to the public offering
of the Common Shares by the several Underwriters and the clearance of such
offering with the National Association of Securities Dealers, Inc. (the "NASD").
(g) Coopers & ▇▇▇▇▇▇▇ L.L.P., who have expressed their opinion with
respect to the financial statements and schedules filed with the Commission as a
part of the Registration Statement and included in the Prospectus and in the
Registration Statement, are independent accountants as required by the Act and
the Rules and Regulations.
(h) The financial statements and schedules of the Company, and the
related notes thereto, included in the Registration Statement and the Prospectus
present fairly the financial position of the Company as of the respective dates
of such financial statements and schedules, and the results of operations and
changes in financial position of the Company for the respective periods covered
thereby. Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis as certified by the independent accountants named in subsection 2(g). No
other financial statements or schedules are required to be included in the
Registration Statement. The selected financial data set forth in the Prospectus
under the captions "Capitalization" and "Selected Financial Data" fairly present
the information set forth therein on the basis stated in the Registration
Statement.
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(i) The Company maintains a system of internal accounting control
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(j) The Company is not in violation or default of any provision of
its articles of incorporation or bylaws, or other organizational documents, and
is not in breach of or default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which it is a party or by which it or
any of its properties are bound except as would not be material to the Company's
business, results of operations or financial condition; and there does not exist
any state of facts which constitutes an event of default on the part of the
Company as defined in such documents or which, with notice or lapse of time or
both, would constitute such an event of default except as would not be material
to the Company's business, results of operations or financial condition.
(k) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement or by the Rules and Regulations which have not been
accurately and completely described or filed as required. The contracts so
described in the Prospectus are in full force and effect on the date hereof; and
neither the Company nor, to the best of the Company's knowledge, any other party
is in breach of or default under any of such contracts except as would not be
material to the Company's business, results of operations or financial
condition.
(l) There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge, threatened to
which the Company or any of its subsidiaries is or may be a party or of which
property owned or leased by the Company or any of its subsidiaries is or may be
the subject, or related to environmental or discrimination matters, which
actions, suits or proceedings might, individually or in the aggregate, prevent
or adversely affect the transactions contemplated by this Agreement or result in
a material adverse change in the condition (financial or otherwise), properties,
business, results of operations or prospects of the Company; and no labor
disturbance by the employees of the Company exists or is imminent which might be
expected to affect adversely such condition, properties, business, results of
operations or prospects. The Company is not a party or subject to the
provisions of any material injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other governmental body.
(m) The Company has good and marketable title to all the properties
and assets reflected as owned in the financial statements hereinabove described
(or elsewhere in the Prospectus), subject to no lien, mortgage, pledge, charge
or encumbrance of any kind except (i) those, if any, reflected in such financial
statements (or elsewhere in the Prospectus), or (ii) those which are not
material in amount and do not adversely affect the use made and proposed to be
made of such property by the Company. The Company holds its leased properties
under valid and binding leases, with such exceptions as are not materially
significant in relation to the business of the Company. Except as disclosed in
the Prospectus, the Company owns or leases all such properties as are necessary
to its operations as now conducted or as proposed to be conducted.
(n) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, except as specifically disclosed or
contemplated therein: (i) the Company has not incurred any material liabilities
or obligations, indirect, direct or contingent, or entered into any material
verbal or written agreement or other transaction which is not in the ordinary
course of business; (ii) the Company has not sustained any material loss or
interference with its business or properties from fire, flood, windstorm,
accident or other calamity, whether or not covered by insurance; (iii) the
Company has not paid or declared any dividends or other distributions with
respect to its capital stock and the Company is not in default in the payment of
principal or interest on any outstanding debt obligations; (iv) there has not
been any change in the capital stock (other than upon the sale of the Common
Shares hereunder and upon the exercise of options or warrants described in the
Registration Statement) or indebtedness material to the Company (other than in
the ordinary course of business); and (v) there has not been any material
adverse change in the condition (financial or otherwise), business, properties,
results of operations or prospects of the Company.
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(o) Except as disclosed in or specifically contemplated by the
Prospectus, the Company has sufficient trademarks, trade names, patent rights,
mask works, copyrights, licenses, approvals and governmental authorizations to
conduct its business as now conducted and as proposed to be conducted; and the
Company has no knowledge of any material infringement by it of trademark, trade
name rights, patent rights, mask works, copyrights, licenses, trade secret or
other similar rights of others, and there is no claim being made against the
Company regarding trademark, trade name, patent, mask work, copyright, license,
trade secret or other infringement which could have a material adverse effect on
the condition (financial or otherwise), business, results of operations or
prospects of the Company.
(p) The Company is conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations; except where failure to be so in
compliance would not materially adversely affect the condition (financial or
otherwise), business, results of operations or prospects of the Company.
(q) The Company has filed all necessary federal, state and foreign
income and franchise tax returns, and all such tax returns are complete and
correct in all material respects, and the Company has paid all taxes shown as
due thereon. The Company has no knowledge of any tax deficiency which has been
or might be asserted or threatened against the Company which could materially
and adversely affect the business, operations or properties of the Company.
(r) The Company is not, and upon the closing of the offering
contemplated hereby will not be, an "investment company" or a company
"controlled by" an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(s) The Company has not distributed and will not distribute prior
to the First Closing Date any offering material in connection with the offering
and sale of the Common Shares other than the Prospectus, the Registration
Statement and the other materials permitted by the Act.
(t) The Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
The Company has not been refused any insurance coverage sought or applied for;
and the Company has no 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), properties, business or results of operations of the
Company.
(u) Neither the Company nor, to the best of the Company's
knowledge, any of its employees or agents has at any time during the last five
years (i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States of any jurisdiction
thereof.
(v) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Common Shares.
(w) The Company has caused (i) each of its executive officers and
directors and (ii) each other holder of Common Stock (including shares issuable
upon the exercise or conversion of any option, warrant or other security which
is or, at any time within 180 days of the Prospectus, will become exercisable)
to furnish to the Representatives an agreement in the form provided by the
Representatives, pursuant to which each such party has agreed that during the
period of 180 days after the date of the Prospectus, without the prior written
consent of ▇▇▇▇▇▇▇▇▇▇ Securities, such party will not directly or indirectly,
sell, offer, contract or grant any option to sell or purchase, make any short
sale (including without limitation any "short vs. the box"), pledge, transfer,
establish an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934, as amended, or otherwise dispose of
any shares of Common Stock, options or warrants
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to acquire shares of Common Stock, or securities exchangeable or exercisable for
or convertible into shares of Common Stock currently or hereafter owned either
of record or beneficially (as defined in Rule 13d-3 under Securities Exchange
Act of 1934, as amended) by such party, or publicly announce such party's
intention to do any of the foregoing; provided, however, that such party may
sell or otherwise transfer shares of Common Stock (i) pursuant to the
Underwriting Agreement, (ii) as a BONA FIDE gift or gifts, provided that such
party provides prior written notice of such gift or gifts to ▇▇▇▇▇▇▇▇▇▇
Securities and the donee or donees thereof agree to be bound by the restrictions
set forth in such agreement or (iii) with the prior written consent of
▇▇▇▇▇▇▇▇▇▇ Securities.
(x) The Company has satisfied the conditions for use of Form SB-2,
as set forth in the General Instructions thereto, with respect to the
Registration Statement.
SECTION 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLING SHAREHOLDERS
(a) Each Selling Shareholder represents and warrants, severally and
not jointly, to, and agrees with, the several Underwriters that:
(i) Such Selling Shareholder has, and on the Second
Closing Date hereinafter mentioned will have, good and marketable title to the
Common Shares proposed to be sold by such Selling Shareholder hereunder on such
Second Closing Date and full right, power and authority to enter into this
Agreement and to sell, assign, transfer and deliver such Common Shares
hereunder, free and clear of all voting trust arrangements, liens, encumbrances,
equities, security interests, restrictions and claims whatsoever; and upon
delivery of and payment for such Common Shares hereunder, the Underwriters will
acquire good and marketable title thereto, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests, voting trusts
or other defects of title whatsoever.
(ii) Such Selling Shareholder has executed and delivered a
Power of Attorney and caused to be executed and delivered on his, or her or its
behalf a Custody Agreement (hereinafter collectively referred to as the
"Shareholders Agreement") and in connection herewith such Selling Shareholder
further represents, warrants and agrees that such Selling Shareholder has
deposited in custody, under the Shareholders Agreement, with the agent named
therein (the "Agent") as custodian, certificates in negotiable form for the
Common Shares to be sold hereunder by such Selling Shareholder, for the purpose
of further delivery pursuant to this Agreement. Such Selling Shareholder agrees
that the Common Shares to be sold by such Selling Shareholder on deposit with
the Agent are subject to the interests of the Company and the Underwriters, that
the arrangements made for such custody are to that extent irrevocable, and that
the obligations of such Selling Shareholder hereunder shall not be terminated,
except as provided in this Agreement or in the Shareholders Agreement, by any
act of such Selling Shareholder, by operation of law, by the death or incapacity
of such Selling Shareholder or by the occurrence of any other event. If the
Selling Shareholder should die or become incapacitated, or if any other event
should occur, before the delivery of the Common Shares hereunder, the documents
evidencing Common Shares then on deposit with the Agent shall be delivered by
the Agent in accordance with the terms and conditions of this Agreement as if
such death, incapacity or other event had not occurred, regardless of whether or
not the Agent shall have received notice thereof. This Agreement and the
Shareholders Agreement have been duly executed and delivered by or on behalf of
such Selling Shareholder and the form of such Shareholders Agreement has been
delivered to you.
(iii) The performance of this Agreement and the Shareholders
Agreement and the consummation of the transactions contemplated hereby and by
the Shareholders Agreement will not result in a breach or violation by such
Selling Shareholder of any of the terms or provisions of, or constitute a
default by such Selling Shareholder under, any indenture, mortgage, deed of
trust, trust (constructive or other), loan agreement, lease, franchise, license
or other agreement or instrument to which such Selling Shareholder is a party or
by which such Selling Shareholder or any of its properties is bound, any
statute, or any judgment, decree, order, rule or regulation of any court or
governmental agency or body applicable to such Selling Shareholder or any of
his, her or its properties.
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(iv) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Shares.
(v) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity with
written information furnished to the Company by such Selling Shareholder
expressly for use therein, such Preliminary Prospectus and the Registration
Statement did, and the Prospectus and any further amendments or supplements to
the Registration Statement and the Prospectus will, when they are filed with the
Commission or became effective, as the case may be, conform in all material
respects to the requirements of the Act and the rules and regulations of the
Commission thereunder and not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statement therein not misleading.
(vi) The Selling Shareholder has carefully reviewed the
representations and warranties of the Company contained in this Agreement and
the information contained in the Registration Statement. Based on the foregoing,
(1) the Selling Shareholder has no reason to believe and does not believe that
such representations and warranties of the Company contained in this Agreement
are not true and correct in all material respects; (2) the Selling Shareholder
has no knowledge of any fact, condition or information not disclosed in the
Registration Statement which has materially adversely affected or may materially
adversely affect the business of the Company; and (3) the sale of the Common
Shares by the Selling Shareholder pursuant hereto is not prompted by any adverse
information concerning the Company which is not set forth in the Registration
Statement.
(b) Each of the Selling Shareholders agrees with the Company and
the Underwriters not to offer to sell, sell or contract to sell or otherwise
dispose of any shares of Common Stock or securities convertible into or
exchangeable for any shares of Common Stock, for a period of 180 days after the
date of the Prospectus, without the prior written consent of ▇▇▇▇▇▇▇▇▇▇
Securities, which consent may be withheld at the sole discretion of ▇▇▇▇▇▇▇▇▇▇
Securities.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS
The Representatives, on behalf of several Underwriters, represent and
warrant to the Company and to the Selling Shareholders that the information set
forth (i) on the cover page of the Prospectus with respect to price,
underwriting discounts and commissions and terms of offering and (ii) under
"Underwriting" in the Prospectus was furnished to the Company by and on behalf
of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus and is true and correct in all
material respects. The Representatives represent and warrant that, except as
expressly provided herein, they have been authorized by each of the other
Underwriters as the Representatives to enter into this Agreement on its behalf
and to act for it in the manner herein provided.
SECTION 5
PURCHASE, SALE AND DELIVERY OF COMMON SHARES
On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the Underwriters the Firm Common Shares. Each
Underwriter agrees, severally and not jointly, to purchase from the Company the
number of Firm Common Shares set forth opposite the name of such Underwriter in
SCHEDULE A hereto. The purchase price per share to be paid by the several
Underwriters to the Company shall be $_____ per share.
Delivery of certificates for the Firm Common Shares to be purchased by
the Underwriters and payment therefor shall be made at the offices of ▇▇▇▇▇▇▇▇▇▇
Securities, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (or such other
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place as may be agreed upon by the Company and the Underwriters) at such time
and date, not later than the third (or, if the Firm Common Shares are priced as
contemplated by Rule 15c6-1(c) of the Exchange Act after 4:30 p.m. Washington,
D.C. time, the fourth) full business day following the first date that any of
the Common Shares are released by you for sale to the public, as you shall
designate by at least 48 hours' prior notice to the Company (or at such other
time and date, not later than one week after such third or fourth, as the case
may be, full business day as may be agreed upon by the Company and the
Representatives) (the "First Closing Date"); provided, however, that if the
Prospectus is at any time prior to the First Closing Date recirculated to the
public, the First Closing Date shall occur upon the later of the third or
fourth, as the case may be, full business day following the first date that any
of the Common Shares are released by you for sale to the public or the date that
is 48 hours after the date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by
or on behalf of the Company to you, for the respective accounts of the
Underwriters against payment by you, for the accounts of the several
Underwriters, of the purchase price therefor by wire transfer of federal funds
to an account designated in writing by the Company. The certificates for the
Firm Common Shares shall be registered in such names and denominations as you
shall have requested at least two full business days prior to the First Closing
Date, and shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in New York, New York, as may be
designated by you. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the obligations of
the Underwriters.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Selling Shareholders, severally and not jointly, hereby grant
options to the several Underwriters to purchase, severally and not jointly, up
to an aggregate of 525,000 Optional Common Shares in the respective amounts set
forth opposite the name of each such Selling Shareholder in SCHEDULE B hereto;
in each case at the purchase price per share to be paid for the Firm Common
Shares, for use solely in covering any over-allotments made by you for the
account of the Underwriters in the sale and distribution of the Firm Common
Shares. In the event that the Underwriters elect to purchase less than all of
the Optional Common Shares, the number of Optional Common Shares to be purchased
from each Selling Shareholder shall be determined by multiplying the aggregate
number of Optional Common Shares to be purchased by a fraction, the numerator of
which is the total number of Optional Common Shares set forth opposite the name
of such Selling Shareholder in SCHEDULE B hereto and the denominator of which is
577,500. The option granted hereunder may be exercised at any time (but not
more than once) within 30 days after the first date that any of the Common
Shares are released by you for sale to the public, upon notice by you to the
Company and said Selling Shareholders setting forth the aggregate number of
Optional Common Shares as to which the Underwriters are exercising the option,
the names and denominations in which the certificates for such shares are to be
registered and the time and place at which such certificates will be delivered.
Such time of delivery (which may not be earlier than the First Closing Date),
being herein referred to as the "Second Closing Date," shall be determined by
you, but if at any time other than the First Closing Date shall not be earlier
than three full business days after delivery of such notice of exercise. The
number of Optional Common Shares to be purchased by each Underwriter shall be
determined by multiplying the number of Optional Common Shares to be sold by the
Selling Shareholders pursuant to such notice of exercise by a fraction, the
numerator of which is the number of Firm Common Shares to be purchased by such
Underwriter as set forth opposite its name in SCHEDULE A and the denominator of
which is 3,500,000 (subject to such adjustments to eliminate any fractional
share purchases as you in your discretion may make). Certificates for the
Optional Common Shares will be made available for checking and packaging on the
business day preceding the Second Closing Date at a location in New York, New
York, as may be designated by you. The manner of payment and delivery of the
Optional Common Shares shall be the same as for the Firm Common Shares purchased
from the Company as specified in the two preceding paragraphs, except that
payment by you of the purchase price for the Optional Common Shares, for the
accounts of the several Underwriters, shall be by wire transfer of federal funds
to an account designated by the Agent. At any time before lapse of the option,
you may cancel such option by giving written notice of such cancellation to the
Company and said Selling Shareholders. If the option is cancelled or expires
unexercised in whole or in part, the Company will deregister under the Act the
number of Optional Common Shares as to which the option has not been exercised.
You have advised the Company and the Selling Shareholders that each
Underwriter has authorized you to accept delivery of its Common Shares, to make
payment and to give receipt therefor. You may (but shall not be obligated to)
make payment for any Common Shares to be purchased by any Underwriter whose
funds shall not have been received by you by
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the First Closing Date or the Second Closing Date, as the case may be, for the
account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose
to make a public offering of their respective portions of the Common Shares as
soon after the effective date of the Registration Statement as in the judgment
of the Underwriters is advisable and at the public offering price set forth on
the cover page of and on the terms set forth in the Prospectus.
SECTION 6
COVENANTS OF THE COMPANY
The Company covenants and agrees that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A of the Rules and Regulations, or the filing of the
Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations,
the Company will file the Prospectus, properly completed, pursuant to the
applicable paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of such timely
filing. The Company will promptly advise you in writing (i) of the receipt of
any comments of the Commission, (ii) of any request of the Commission for
amendment of or supplement to the Registration Statement (either before or after
it becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have become
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose. If the Commission shall enter any such
stop order at any time, the Company will use its best efforts to obtain the
lifting of such order at the earliest possible moment. The Company will not
file any amendment or supplement to the Registration Statement (either before or
after it becomes effective), any Preliminary Prospectus or the Prospectus of
which you have not been furnished with a copy a reasonable time prior to such
filing or to which you reasonably object or which is not in compliance with the
Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon your request, a registration statement pursuant to Rule 462(b) of the Rules
and Regulations related to the Common Shares and any amendments or supplements
to the Registration Statement or the Prospectus which in your judgment may be
necessary or advisable to enable the several Underwriters to continue the
distribution of the Common Shares and will use its best efforts to cause the
same to become effective as promptly as possible. The Company will fully and
completely comply with the provisions of Rule 430A of the Rules and Regulations
with respect to information omitted from the Registration Statement in reliance
upon such Rule.
(c) The Company will immediately notify you in writing if, at any
time prior to the earliest of (i) the Second Closing Date on which all remaining
Optional Common Shares are purchased, (ii) the cancellation of the options to
purchase the Optional Common Shares as provided herein, and (iii) of the
expiration of the options to purchase the Optional Common Shares as provided
herein, any representation or warranty of the Company set forth herein shall not
be true and accurate in all material respects or, without limiting the
foregoing, if there shall have been any material adverse change, or a
development involving a material adverse change, in the condition (financial or
otherwise), properties, business, results of operations or prospects of the
Company.
(d) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the Common
Shares is required to be delivered under the Act any event occurs, as a result
of which the Prospectus, including any amendments or supplements, would include
an untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or if it is necessary at any time to amend the Prospectus, including
any amendments or supplements, to comply with the Act or the Rules and
Regulations, the Company will promptly advise you thereof and will promptly
prepare and file with the Commission, at its
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own expense, an amendment or supplement which will correct such statement or
omission or an amendment or supplement which will effect such compliance and
will use its best efforts to cause the same to become effective as soon as
possible; and, in case any Underwriter is required to deliver a prospectus after
such nine-month period, the Company upon request, but at the expense of such
Underwriter, will promptly prepare such amendment or amendments to the
Registration Statement and such Prospectus or Prospectuses as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the Act.
(e) As soon as practicable, but not later than 45 days after the
end of the first quarter ending after one year following the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security holders
an earnings statement (which need not be audited) covering a period of 12
consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of
Section 11(a) of the Act.
(f) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company, at
its expense, but only for the nine-month period referred to in Section 10(a) (3)
of the Act, will furnish to you and the Selling Shareholders or mail to your
order copies of the Registration Statement, the Prospectus, the Preliminary
Prospectus and all amendments and supplements to any such documents in each case
as soon as available and in such quantities as you and the Selling Shareholders
may request, for the purposes contemplated by the Act.
(g) The Company shall cooperate with you and your counsel in order
to qualify or register the Common Shares for sale under (or obtain exemptions
from the application of) the Blue Sky laws of such jurisdictions as you
designate, will comply with such laws and will continue such qualifications,
registrations and exemptions in effect so long as reasonably required for the
distribution of the Common Shares. The Company shall not be required to qualify
as a foreign corporation or to file a general consent to service of process in
any such jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise you
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Common Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company, with your cooperation, will use its best
efforts to obtain the withdrawal thereof.
(h) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon the request of the Representatives, to
each of the other Underwriters: (i) as soon as practicable after the end of
each fiscal year, copies of the Annual Report of the Company containing the
balance sheet of the Company as of the close of such fiscal year and statements
of operations, shareholders' equity and cash flows for the year then ended and
the opinion thereon of the Company's independent public accountants; (ii) as
soon as practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K or Form 10-KSB, Quarterly Report on Form 10-Q or Form
10-QSB, Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of its Common Stock.
(i) During the period of 180 days after the first date that any of
the Common Shares are released by you for sale to the public, without the prior
written consent of ▇▇▇▇▇▇▇▇▇▇ Securities (which consent may be withheld at the
sole discretion of ▇▇▇▇▇▇▇▇▇▇ Securities), the Company will not, other than
pursuant to the Company's stock option or stock purchase plans disclosed in the
Prospectus, issue, offer, sell, grant options to purchase or otherwise dispose
of any of the Company's equity securities or any other securities convertible
into or exchangeable with its Common Stock or other equity security.
(j) The Company will apply the net proceeds of the sale of the
Common Shares sold by it substantially in accordance with its statements under
the caption "Use of Proceeds" in the Prospectus.
(k) The Company will use its best efforts to designate the Common
Stock for listing on the Nasdaq National Market.
(l) The Company will maintain a transfer agent and registrar for
its Common Stock.
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You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance.
SECTION 7
PAYMENT OF EXPENSES
Whether or not the transactions contemplated hereunder are consummated
or this Agreement becomes effective or is terminated, the Company and, unless
otherwise paid by the Company, the Selling Shareholders agree to pay in such
proportions as they may agree upon among themselves all costs, fees and expenses
incurred in connection with the performance of their obligations hereunder and
in connection with the transactions contemplated hereby, including without
limiting the generality of the foregoing, (i) all expenses incident to the
issuance and delivery of the Common Shares (including all printing and engraving
costs), (ii) all fees and expenses of the registrar and transfer agent of the
Common Stock, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Common Shares to the Underwriters,
(iv) all fees and expenses of the Company's counsel and the Company's
independent accountants, (v) all costs and expenses incurred in connection with
the printing, filing, shipping and distribution of the Registration Statement,
each Preliminary Prospectus and the Prospectus (including all exhibits and
financial statements) and all amendments and supplements provided for herein,
any registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations related to the Common Shares, this Agreement, the Agreement Among
Underwriters, the Selected Dealers Agreement, the Underwriters' Questionnaire,
the Underwriters' Power of Attorney and the Blue Sky memorandum, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the state or Canadian Blue Sky laws and in obtaining the
clearance of the underwriting arrangements with the National Association of
Securities Dealers, Inc. and (vii) all other fees, costs and expenses referred
to in Item 25 of the Registration Statement. The Underwriters may deem the
Company to be the primary obligor with respect to all costs, fees and expenses
to be paid by the Company and by the Selling Shareholders. Except as provided
in this Section 7, Section 9 and Section 11 hereof, the Underwriters shall pay
all of their own expenses, including the fees and disbursements of their counsel
(excluding those relating to qualification, registration or exemption under the
Blue Sky laws and the Blue Sky memorandum referred to above). This Section 7
shall not affect any agreements relating to the payment of expenses between the
Company and the Selling Shareholders to the extent that such agreements do not
impair the obligation of the Company and the Selling Shareholders hereunder to
the several Underwriters.
The Selling Shareholders will pay (directly or by reimbursement) all
fees and expenses incident to the performance of their obligations under this
Agreement which are not otherwise specifically provided for herein, including
but not limited to (i) any fees and expenses of counsel for such Selling
Shareholders; (ii) any fees and expenses of the Agent; and (iii) all expenses
and taxes incident to the sale and delivery of the Common Shares to be sold by
such Selling Shareholders to the Underwriters hereunder.
SECTION 8
CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS
The obligations of the several Underwriters to purchase and pay for
the Firm Common Shares on the First Closing Date and the Optional Common Shares
on the Second Closing Date shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholders herein set forth as of the date hereof and as of the First Closing
Date or the Second Closing Date, as the case may be, to the accuracy of the
statements of Company officers and the Selling Shareholders made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Shareholders of their respective obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m.(or, in the case of a registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations relating to the Common Shares, not
later
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than 10:00 p.m.), Washington, D.C. time, on the date of this Agreement, or at
such later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and Regulations;
and prior to such Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company, the Selling Shareholders or you, shall be contemplated by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement, or otherwise, shall have been
complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of
which information is given in the Registration Statement and Prospectus,
(i) there shall not have been any change in the capital stock other than
pursuant to the exercise of outstanding options and warrants disclosed in the
Prospectus of the Company or any material change in the indebtedness of the
Company, (ii) except as set forth or contemplated by the Registration Statement
or the Prospectus, no material verbal or written agreement or other transaction
shall have been entered into by the Company, which is not in the ordinary course
of business, (iii) no loss or damage (whether or not insured) to the property of
the Company shall have been sustained which materially and adversely affects the
condition (financial or otherwise), business, results of operations or prospects
of the Company, (iv) no legal or governmental action, suit or proceeding
affecting the Company which is material to the Company or which affects or may
affect the transactions contemplated by this Agreement shall have been
instituted or threatened and (v) there shall not have been any material change
in the condition (financial or otherwise), business, management, results of
operations or prospects of the Company which makes it impractical or inadvisable
in the judgment of the Representatives to proceed with the public offering or
purchase the Common Shares as contemplated hereby.
(c) There shall have been furnished to you on each Closing Date, in
form and substance satisfactory to you, except as otherwise expressly provided
below:
(i) An opinion of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel for
the Company, addressed to the Underwriters and dated the First Closing Date, or
the Second Closing Date, as the case may be, to the effect that:
(1) The Company has been duly incorporated and is
validly existing as a corporation under the laws of the State
of Washington to such counsel's knowledge, is duly qualified to
do business as a foreign corporation and is in good standing in
all other jurisdictions where the ownership or leasing of
properties or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to
so qualify would not have a material adverse effect on the
Company, has full corporate power and authority to own its
properties and conduct its business as described in the
Registration Statement and to such counsel's knowledge has no
subsidiaries other than as listed in Exhibit 21 to the
Registration Statement;
(2) The authorized, issued and outstanding capital
stock of the Company is as set forth under the caption
"Capitalization" in the Prospectus; all necessary and proper
corporate proceedings have been taken in order to validly
authorize the authorized Common Stock; all outstanding shares
of Common Stock (including the Optional Common Shares) have
been duly and validly issued, are fully paid and nonassessable,
have been issued in compliance with the registration and
qualification provisions of federal and state securities laws,
to such counsel's knowledge were not issued in violation of or
subject to any preemptive rights or other rights to subscribe
for or purchase any securities and conform to the description
thereof in the Prospectus; without limiting the foregoing, to
such counsel's knowledge there are no preemptive or other
rights to subscribe for or purchase any of the Common Shares to
be sold by the Company or the Selling Shareholders hereunder;
(3) The certificates evidencing the Common Shares to
be delivered hereunder are in due and proper form under
Washington law, and when duly countersigned by the Company's
transfer agent and registrar, and delivered to you or upon your
order against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement, the Firm
Common Shares represented thereby will be duly authorized and
validly issued, fully paid and nonassessable, will not have
been issued in violation
-12-
of or subject to any preemptive rights or other rights to
subscribe for or purchase securities and will conform in all
respects to the description thereof contained in the
Prospectus;
(4) Except as disclosed in or specifically
contemplated by the Prospectus, to the best of such counsel's
knowledge, there are no outstanding options, warrants or other
rights calling for the issuance of, and no commitments, plans
or arrangements to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable for
capital stock of the Company;
(5) (a) The Registration Statement has become
effective under the Act, and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement or preventing the use of the Prospectus has been
issued and, to such counsel's knowledge, no proceedings for
that purpose have been instituted or are pending or
contemplated by the Commission; any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b)
of the Rules and Regulations has been made in the manner and
within the time period required by such Rule 424(b);
(b) The Registration Statement, the
Prospectus and each amendment or supplement thereto (except for
the financial statements and schedules included therein as to
which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Act and
the Rules and Regulations.
(c) To such counsel's knowledge, there are
no franchises, leases, contracts, agreements or documents of a
character required to be disclosed in the Registration
Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not disclosed or filed, as
required; and
(d) To such counsel's knowledge, there are
no legal or governmental actions, suits or proceedings pending
or threatened against the Company which are required to be
described in the Prospectus which are not described as
required.
(6) The Company has the corporate power and
authority to enter into this Agreement and to sell and deliver
the Common Shares to be sold by it to the several Underwriters;
this Agreement has been duly and validly authorized by all
necessary corporate action by the Company, has been duly and
validly executed and delivered by and on behalf of the Company,
and is a valid and binding agreement of the Company in
accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and except as to those provisions
relating to indemnity or contribution for liabilities arising
under the Act as to which no opinion need be expressed; and no
approval, authorization, order, consent, registration, filing,
qualification, license or permit of or with any court,
regulatory, administrative or other governmental body is
required for the execution and delivery of this Agreement by
the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except such as
have been obtained and are in full force and effect under the
Act and such as may be required under applicable Blue Sky laws
in connection with the purchase and distribution of the Common
Shares by the Underwriters and the clearance of such offering
with the NASD;
(7) The execution and delivery of this Agreement by
the Company and the performance by the Company of its
obligations set forth herein will not conflict with, result in
the breach of, or constitute, either by itself or upon notice
or the passage of time or both, a default under, any agreement,
mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument known to such counsel to which the
Company is a party or by which the Company or any of its
property or assets may be bound or affected which is material
to the Company or its property or assets (each, a "Material
Contract"), or violate any of the provisions of the articles of
incorporation or bylaws, or other organizational documents, of
the Company or, to such counsel's knowledge, violate any
statute, judgment, decree, order, rule or regulation of any
court or governmental body having jurisdiction over the Company
or any of its property;
-13-
(8) The Company is not in violation of its articles
of incorporation or bylaws, or other organizational documents,
or to such counsel's knowledge, in breach of or default with
respect to any provision of any Material Contract, except where
such default would not materially adversely affect the Company;
(9) To such counsel's knowledge, no holders of
securities of the Company have rights which have not been
waived to the registration of shares of Common Stock or other
securities, because of the filing of the Registration Statement
by the Company or the offering contemplated hereby;
(10) The statements in the Registration Statement and
Prospectus under the headings "Management," "Certain
Transactions," "Description of Capital Stock" and "Shares
Eligible for Future Sale" and in the Registration Statement in
Items 24 and 26, insofar as they are descriptions of contracts,
agreements or other legal documents or refer to statements of
law or legal conclusions, are accurate and complete in all
material respects and fairly present the information contained
therein.
(11) The Company has satisfied the conditions for use
of Form SB-2, as set forth in the General Instructions thereto,
with respect to the Registration Statement.
(12) No transfer taxes are required to be paid in
connection with the sale and delivery of the Common Shares to
the Underwriters hereunder.
In rendering such opinion, such counsel may rely as to matters
of fact, on certificates of officers of the Company and of governmental
officials, in which case their opinion is to state that they are so doing and
that the Underwriters are justified in relying on such opinions or certificates
and copies of said opinions or certificates are to be attached to the opinion.
Such counsel shall also include a statement to the effect that nothing has come
to such counsel's attention that would lead such counsel to believe that either
at the effective date of the Registration Statement or at the applicable Closing
Date the Registration Statement or the Prospectus, or any such amendment or
supplement, contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading;
(ii) An opinion of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel for
▇▇▇▇▇ ▇. ▇▇▇▇▇, addressed to the underwriters and dated the Second Closing Date
to the effect that:
(1) To such counsel's knowledge, this Agreement and
the Shareholders Agreement have been duly executed and
delivered by or on behalf of ▇▇▇▇▇ ▇. ▇▇▇▇▇; the Agent has been
duly and validly authorized to act as the custodian of the
Common Shares to be sold by ▇▇▇▇▇ ▇. ▇▇▇▇▇; and the performance
of this Agreement and the Shareholders Agreement and the
consummation of the transactions herein contemplated by ▇▇▇▇▇
▇. ▇▇▇▇▇ will not result in a breach of, or constitute a
default under, any material indenture, mortgage, deed of trust,
trust (constructive or other), loan agreement, lease,
franchise, license or other agreement or instrument, known to
such counsel to which ▇▇▇▇▇ ▇. ▇▇▇▇▇ is a party or by which
▇▇▇▇▇ ▇. ▇▇▇▇▇ or any of his properties may be bound, or
violate any statute, judgment, decree, order, rule or
regulation known to such counsel of any court or governmental
body having jurisdiction over ▇▇▇▇▇ ▇. ▇▇▇▇▇ or any of his
properties; and to such counsel's knowledge, no approval,
authorization, order or consent of any court, regulatory body,
administrative agency or other governmental body is required
for the execution and delivery of this Agreement or the
Shareholders Agreement by ▇▇▇▇▇ ▇. ▇▇▇▇▇ or the consummation by
▇▇▇▇▇ ▇. ▇▇▇▇▇ of the transactions contemplated by this
Agreement, except such as have been obtained and are in full
force and effect under the Act and such as may be required
under the rules of the NASD and applicable Blue Sky laws;
(2) To such counsel's knowledge, ▇▇▇▇▇ ▇. ▇▇▇▇▇ has
full right, power and authority to enter into this Agreement
and the Shareholders Agreement and to sell, transfer and
deliver the Optional Common Shares to be sold on the Second
Closing Date by ▇▇▇▇▇ ▇. ▇▇▇▇▇ hereunder, and good and
marketable title to such Optional Common Shares so sold, free
and clear of all liens, encumbrances, equities, claims,
restrictions,
-14-
security interests, voting trusts, or other defects of title
whatsoever, has been transferred to the Underwriters (whom
counsel may assume to be bona fide purchasers) who have
purchased such Optional Common Shares hereunder; and
(3) To such counsel's knowledge, this Agreement and
the Shareholders Agreement are valid and binding agreements of
▇▇▇▇▇ ▇. ▇▇▇▇▇ in accordance with their terms except as
enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights generally and except with
respect to those provisions relating to indemnities or
contributions for liabilities under the Act, as to which no
opinion need be expressed.
In rendering such opinion, such counsel may rely as to matters
of fact, on certificates of ▇▇▇▇▇ ▇. ▇▇▇▇▇ and of governmental
officials, in which case their opinion is to state that they are so
doing and that the Underwriters are justified in relying on such
certificates and copies of said certificates are to be attached to the
opinion.
(iii) An opinion of ▇▇▇▇▇▇▇▇▇▇▇ O'▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Kindness
PLLC addressed to the Underwriters and dated the First Closing Date or
the Second Closing Date, as the case may be, with respect to certain
intellectual property matters, such opinion to be in form and
substance satisfactory to counsel for the Underwriters, and to the
effect that:
(1) To the best of such counsel's knowledge, the
Company owns all patents, trademarks, trademark registrations,
service marks, service ▇▇▇▇ registrations, trade names,
copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by it or necessary
for the conduct of its business, and such counsel is not aware
of any claim to the contrary or any challenge by any other
person to the rights of the Company with respect to the
foregoing;
(2) Such counsel is not aware of any legal actions,
claims or proceedings pending or threatened against the Company
alleging that the Company is infringing or otherwise violating
any patents or trade secrets owned by others;
(3) Such counsel has reviewed the descriptions
patent applications under the captions "Risk
Factors--Limited Protection of Proprietary Rights; Risk of
Third Party Infringements" and "Business--Proprietary
Technology" in the Registration Statement and Prospectus,
and, to the extent they constitute matters of law or legal
conclusions, these descriptions are accurate in all material
respects and fairly and completely present the patent
situation of the Company;
(4) To the best of such counsel's knowledge, for
each patent or patent application filed by the Company or
described in the Prospectus as being owned by it or necessary
for the conduct of its business, the Company has obtained a
written assignment of all rights and title therein to the
Company from all inventors and owners of such patent or patent
application and has properly recorded such written assignment
with the appropriate patent office or governmental agency;
(5) To the best of such counsel's knowledge, for
each copyrightable product described in the Prospectus, the
Company either (i) has registered all copyrights for such
product and has obtained and properly recorded written
assignments of all rights and title therein to the Company from
all authors and owners of such copyrights other than the
Company, including without limitation any and all independent
contractors; or (ii) was vested with original title to all
copyrights for such product and no written assignments for such
copyrights are required to perfect Company's rights and title
thereto; and
(6) To the best of such counsel's knowledge after
review of the file history and patent attorney's file for each
patent or patent application described in the Prospectus as
being owned by the Company or necessary for the conduct of its
business, such counsel is aware of nothing that causes such
counsel to believe that, as of the date of the Registration
Statement became effective and as of the date of such opinion,
the description of patents and patent applications under the
captions "Risk Factors--Limited Protection of Proprietary
Rights; Risk of Third Party Infringements" and
"Business--Proprietary Technology" in the
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Registration Statement and Prospectus contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading,
including without limitation, any undisclosed material issue
with respect to the subsequent validity or enforceability of
such patent or patent application.
(iv) An opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel for
Selling Stockholders [Advent VII, L.P., Advent Atlantic & Pacific II L.P.,
Advent New York L.P. and TA Venture Investors Limited Partnership] (the "TA
Selling Shareholders"), addressed to the Underwriters and dated the Second
Closing Date, to the effect that:
(1) To the best of such counsel's knowledge, this
Agreement and the Shareholders Agreement have been duly
authorized, executed and delivered by or on behalf of each of
the TA Selling Shareholders; the Agent has been duly and
validly authorized to act as the custodian of the Common Shares
to be sold by each such TA Selling Shareholder; and the
performance of this Agreement and the Shareholders Agreement
and the consummation of the transactions herein contemplated by
the TA Selling Shareholders will not result in a breach of, or
constitute a default under, any indenture, mortgage, deed of
trust, trust (constructive or other), loan agreement, lease,
franchise, license or other agreement or instrument to which
any of the TA Selling Shareholders is a party or by which any
of the TA Selling Shareholders or any of their properties may
be bound, or violate any statute, judgment, decree, order, rule
or regulation known to such counsel of any court or
governmental body having jurisdiction over any of the TA
Selling Shareholders or any of their properties; and to the
best of such counsel's knowledge, no approval, authorization,
order or consent of any court, regulatory body, administrative
agency or other governmental body is required for the execution
and delivery of this Agreement or the Shareholders Agreement or
the consummation by the TA Selling Shareholders of the
transactions contemplated by this Agreement, except such as
have been obtained and are in full force and effect under the
Act and such as may be required under the rules of the NASD and
applicable Blue Sky laws;
(2) To the best of such counsel's knowledge, the TA
Selling Shareholders have full right, power and authority to
enter into this Agreement and the Shareholders Agreement and to
sell, transfer and deliver the Common Shares to be sold on the
Second Closing Date by such TA Selling Shareholders hereunder
and good and marketable title to such Common Shares so sold,
free and clear of all liens, encumbrances, equities, claims,
restrictions, security interests, voting trusts, or other
defects of title whatsoever, has been transferred to the
Underwriters (whom counsel may assume to be bona fide
purchasers) who have purchased such Common Shares hereunder;
(3) To the best of such counsel's knowledge, this
Agreement and the Shareholders Agreement are valid and binding
agreements of each of the TA Selling Shareholders in accordance
with their terms except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights generally and except with respect to those provisions
relating to indemnities or contributions for liabilities under
the Act, as to which no opinion need be expressed;
In rendering such opinion, such counsel may rely as to matters of
fact, on certificates of officers of the TA Selling Shareholders and of
governmental officials, in which case their opinion is to state that they are so
doing and that the Underwriters are justified in relying on such certificates
and copies of said certificates are to be attached to the opinion.
(v) An opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇ L.L.P., counsel for
Selling Shareholder Britannia Holdings Limited ("Britannia"), addressed to the
Underwriters and dated the Second Closing Date, to the effect that:
(1) To the best of such counsel's knowledge, this
Agreement and the Shareholders Agreement have been duly
authorized, executed and delivered by or on behalf of
Britannia; the Agent has been duly and validly authorized to
act as the custodian of the Common Shares to be sold by
Britannia; and the performance of this Agreement and the
Shareholders Agreement and the consummation of the transactions
herein contemplated by Britannia will not result in a breach
of, or constitute a default under, any indenture, mortgage,
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deed of trust, trust (constructive or other), loan agreement,
lease, franchise, license or other agreement or instrument to
which Britannia is a party or by which Britannia or any of its
properties may be bound, or violate any statute, judgment,
decree, order, rule or regulation known to such counsel of any
court or governmental body having jurisdiction over Britannia
or any of its properties; and to the best of such counsel's
knowledge, no approval, authorization, order or consent of any
court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of
this Agreement or the Shareholders Agreement or the
consummation by Britannia of the transactions contemplated by
this Agreement, except such as have been obtained and are in
full force and effect under the Act and such as may be required
under the rules of the NASD and applicable Blue Sky laws;
(2) To the best of such counsel's knowledge,
Britannia has full right, power and authority to enter into
this Agreement and the Shareholders Agreement and to sell,
transfer and deliver the Common Shares to be sold on the Second
Closing Date by Britannia hereunder and good and marketable
title to such Common Shares so sold, free and clear of all
liens, encumbrances, equities, claims, restrictions, security
interests, voting trusts, or other defects of title whatsoever,
has been transferred to the Underwriters (whom counsel may
assume to be bona fide purchasers) who have purchased such
Common Shares hereunder;
(3) To the best of such counsel's knowledge, this
Agreement and the Shareholders Agreement are valid and binding
agreements of Britannia in accordance with their terms except
as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and except
with respect to those provisions relating to indemnities or
contributions for liabilities under the Act, as to which no
opinion need be expressed;
In rendering such opinion, such counsel may rely as to matters of
fact, on certificates of officers of Britannia and of governmental officials, in
which case their opinion is to state that they are so doing and that the
Underwriters are justified in relying on such certificates and copies of said
certificates are to be attached to the opinion.
(vi) Such opinion or opinions of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, P.C., counsel for the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the incorporation of
the Company, the sufficiency of all corporate proceedings and other legal
matters relating to this Agreement, the validity of the Common Shares, the
Registration Statement and the Prospectus and other related matters as you may
reasonably require, and the Company and the Selling Shareholders shall have
furnished to such counsel such documents and shall have exhibited to them such
papers and records as they may reasonably request for the purpose of enabling
them to pass upon such matters. In connection with such opinions, such counsel
may rely on representations or certificates of officers of the Company and
governmental officials and the opinions of counsel to the Company and the
Selling Shareholders.
(vii) A certificate of the Company executed by both the
President and Chief Executive Officer and the Chief Financial Officer of the
Company, dated the First Closing Date or the Second Closing Date, as the case
may be, to the effect that:
(1) The representations and warranties of the
Company set forth in Section 2 of this Agreement are true and
correct as of the date of this Agreement and as of the First
Closing Date or the Second Closing Date, as the case may be,
and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied on or prior to such Closing Date;
(2) The Commission has not issued any order
preventing or suspending the use of the Prospectus or any
Preliminary Prospectus filed as a part of the Registration
Statement or any amendment
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thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the best of the
knowledge of the respective signers, no proceedings for that
purpose have been instituted or are pending or contemplated
under the Act;
(3) Each of the respective signers of the
certificate has carefully examined the Registration Statement
and the Prospectus; in his opinion and to the best of his
knowledge, the Registration Statement and the Prospectus and
any amendments or supplements thereto contain all statements
required to be stated therein regarding the Company; and
neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto includes any untrue statement
of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction
or event has occurred which in his opinion, after consultation
with counsel, should have been set forth in an amendment to the
Registration Statement or in a supplement to or amendment of
any prospectus which has not been disclosed in such a
supplement or amendment;
(5) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, there has not been any material adverse change or a
development involving a material adverse change in the
condition (financial or otherwise), business, properties,
results of operations, management or prospects of the Company;
and no legal or governmental action, suit or proceeding is
pending or threatened against the Company which is material to
the Company, whether or not arising from transactions in the
ordinary course of business, or which may adversely affect the
transactions contemplated by this Agreement; since such dates
the Company has not entered into any verbal or written
agreement or other transaction which is not in the ordinary
course of business or incurred any material liability or
obligation, direct, contingent or indirect, made any change in
its capital stock, made any material change in its short-term
debt or funded debt or repurchased or otherwise acquired any of
the Company's capital stock; and the Company has not declared
or paid any dividend, or made any other distribution, upon its
outstanding capital stock payable to shareholders of record on
a date prior to the First Closing Date or Second Closing Date;
and
(6) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, the Company has not sustained a material loss or
damage by strike, fire, flood, windstorm, accident or other
calamity (whether or not insured).
(viii) On the Second Closing Date, a certificate, dated
the second Closing Date and addressed to you, signed by or on behalf
of each of the Selling Shareholders to the effect that the
representations and warranties of such Selling Shareholder in this
Agreement are true and correct, as if made at and as of the Second
Closing Date, and such Selling Shareholder has complied with all the
agreements and satisfied all the conditions on his part to be
performed or satisfied prior to the Second Closing Date.
(ix) On the date before this Agreement is executed and also
on the First Closing Date and the Second Closing Date, a letter
addressed to you from Coopers & ▇▇▇▇▇▇▇ L.L.P., independent
accountants, the first one to be dated the day before the date of this
Agreement, the second one to be dated the First Closing Date and the
third one (in the event of a Second Closing) to be dated the Second
Closing Date, in form and substance satisfactory to you.
(x) On or before the First Closing Date, letters from each
of the Selling Shareholders, each holder of the Company's Common Stock
and each director and executive officer of the Company, in form and
substance satisfactory to you, confirming that for a period of 180
days after the date of the Prospectus, such person or entity will not
directly or indirectly sell or offer to sell or otherwise dispose of
any shares of Common Stock or any right to acquire any such shares
without the prior written consent of ▇▇▇▇▇▇▇▇▇▇ Securities, which
consent may be withheld at the sole discretion of ▇▇▇▇▇▇▇▇▇▇
Securities, except in accordance with the terms of the lock-up
agreement.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel for the Underwriters. The
Company shall furnish
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you with such manually signed or conformed copies of such opinions,
certificates, letters and documents as you request. Any certificate signed by
any officer of the Company and delivered to the Underwriters or to counsel for
the Underwriters shall be deemed to be a representation and warranty by the
Company to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you to the
Company without liability on the part of any Underwriter or the Company or the
Selling Shareholders except for the expenses to be paid or reimbursed by the
Company and by the Selling Shareholders pursuant to Sections 7 and 9 hereof and
except to the extent provided in Section 11 hereof.
SECTION 9
REIMBURSEMENT OF UNDERWRITERS' EXPENSES
Notwithstanding any other provisions hereof, if this Agreement shall
be terminated by you pursuant to Section 8, or if the sale to the Underwriters
of the Common Shares at the First Closing is not consummated because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse you and the other Underwriters upon demand for all out-of-pocket
expenses that shall have been reasonably incurred by you and them in connection
with the proposed purchase and the sale of the Common Shares, including but not
limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, telegraph charges and telephone charges relating directly to
the offering contemplated by the Prospectus. Any such termination shall be
without liability of any party to any other party except that the provisions of
this Section, Section 7 and Section 11 shall at all times be effective and shall
apply.
SECTION 10
EFFECTIVENESS OF REGISTRATION STATEMENT
You, the Company and the Selling Shareholders will use your, its and
their best efforts to cause the Registration Statement to become effective, to
prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement and, if such stop order be issued, to obtain as soon as
possible the lifting thereof.
SECTION 11
INDEMNIFICATION
(a) The Company and each Selling Shareholder, severally and not
jointly, agree to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of the Act against any
losses, claims, damages, liabilities or expenses, joint or several, to which
such Underwriter or such controlling person may become subject, under the Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state in any of them a
material fact required to be stated therein or necessary to make the statements
in any of them not misleading, or arise out of or are based in whole or in part,
in the case of the Company, on any inaccuracy in any representation or warranty
of the Company or any failure of the Company to perform its obligations
hereunder or under law, or in the case of any Selling Shareholder, on any
inaccuracy in any representation or warranty of such Selling Shareholder
contained herein or any failure of such Selling Shareholder to perform its
obligations hereunder or under law; and will reimburse each Underwriter and each
such controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Underwriter or such controlling person in connection
with investigating,
-19-
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that neither the Company nor
the Selling Shareholders will be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with the information furnished to the Company pursuant to Section
4 hereof; provided further that the indemnity agreement provided in this
Section 11(a) with respect to any Preliminary Prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting any loss,
claim, charge, liability or litigation based upon any untrue statement or
alleged untrue statement of material fact or omission or alleged omission to
state therein a material fact purchased Common Shares, if a copy of the
Prospectus in which such untrue statement or alleged untrue statement or
omission or alleged omission was corrected has not been sent or given to such
person within the time required by the Act and the Rules and Regulations
thereunder unless such failure is the result of noncompliance by the Company
with Section 6(e) hereof; and provided further that, under this paragraph
11(a), the liability (i) of each of Selling Shareholders ▇▇▇▇▇ ▇. ▇▇▇▇▇ and
Britannia shall not exceed the net proceeds received by such Selling
Shareholder upon the sale of the Optional Common Shares by such Management
Selling Shareholder to the Underwriters, and (ii) of each TA Selling
Shareholder shall not exceed the lesser of (A) the aggregate proceeds
received by such TA Selling Shareholder upon the sale of the Optional Common
Shares by such TA Selling Shareholder to the Underwriters and (B) that
proportion of aggregate losses, claims, damages, liabilities or expenses
indemnified against as is equal to the proportion of the total number of
Optional Shares hereunder being sold by such TA Selling Shareholder to the
total number of Common Shares being sold by the Company and all Selling
Shareholders. No TA Selling Shareholder shall be required to provide
indemnification hereunder until the Underwriter or controlling person seeking
indemnification shall have first made a written demand for payment on the
Company with respect to any such loss, claim, damage, liability or expense
and the Company shall have either rejected such demand or failed to make such
requested payment within sixty (60) days after receipt thereof. In the event
that the Company rejects any such demand or fails to make any such requested
payment, the Underwriter or controlling person seeking indemnification agrees
to concurrently make demand for indemnification against all Selling
Shareholders; provided that such Underwriter or controlling person shall have
sole discretion as to whether to take any further action against any Selling
Shareholder and no failure by an Underwriter or controlling person to take
further action against a Selling Shareholder shall prejudice such
Underwriter's or controlling person's rights with respect to other Selling
Shareholders. The Company and the Selling Shareholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to their respective amounts of such liability for which they
shall each be responsible. In addition to their other obligations under this
Section 11(a), the Company and the Selling Shareholders 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 statement or
omission, or any alleged statement or omission, or any inaccuracy in the
representations and warranties of the Company or the Selling Shareholders
herein or failure to perform its obligations hereunder, all as described in
this Section 11(a), they will reimburse in the manner set forth above each
Underwriter and each such controlling person on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the obligation of the Company or the Selling
Shareholders to reimburse each Underwriter and each such controlling person
for such expenses and the possibility that such payments might later be held
to have been improper by a court of competent jurisdiction. To the extent
that any such interim reimbursement payment is so held to have been improper,
each Underwriter and each such controlling person shall promptly return it to
the Company or the Selling Shareholders, as appropriate, together with
interest, compounded daily, determined on the basis of the prime rate (or
other commercial lending rate for borrowers of the highest credit standing)
announced from time to time by Bank of America NT&SA, San Francisco,
California (the "Prime Rate"). Any such interim reimbursement payments which
are not made to an Underwriter or a controlling person within thirty (30)
days of a request for reimbursement shall bear interest at the Prime Rate
from the date of such request. This indemnity agreement will be in addition
to any liability which the Company and the Selling Shareholders may otherwise
have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, the Selling Shareholders and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of the Act, against any
losses, claims, damages, liabilities or expenses to which the Company, or any
such director, officer, Selling Shareholder or controlling person may become
subject, under the Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
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amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 4 hereof; and will reimburse the
Company, or any such director, officer, Selling Shareholder or controlling
person for any legal and other expense reasonably incurred by the Company, or
any such director, officer, Selling Shareholder or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action. In addition to its other
obligations under this Section 11(b), each Underwriter 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 statement or
omission, or any alleged statement or omission, described in this Section 11(b)
which relates to information furnished to the Company pursuant to Section 4
hereof, it will reimburse the Company (and, to the extent applicable, each
officer, director, controlling person or Selling Shareholders) on a quarterly
basis for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Underwriters' obligation to reimburse
the Company (and, to the extent applicable, each officer, director, controlling
person or Selling Shareholders) for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, the Company (and, to the extent applicable, each
officer, director, controlling person or Selling Shareholder) shall promptly
return it to the Underwriters together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim reimbursement
payments which are not made to the Company (and, to the extent applicable, any
officer, director, controlling person or Selling Shareholder), within thirty
(30) days of a request for reimbursement, shall bear interest at the Prime Rate
from the date of such request. This indemnity agreement will be in addition to
any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained in this
Section or to the extent it is not prejudiced as a proximate result of such
failure. In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence or (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 11 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Shareholders, on the one hand, and the
Underwriters, on the other hand, from the offering of the Common Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
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the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Selling Shareholders, on the one hand, and the
Underwriters, on the other hand, in connection with the statements or omissions
or inaccuracies in the representations and warranties herein which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The respective relative benefits received by
the Company and the Selling Shareholders, on the one hand, and the Underwriters,
on the other hand, shall be deemed to be in the same proportion, in the case of
the Company and the Selling Shareholders, as the total price paid to the Company
and the Selling Shareholders for the Common Shares sold by them to the
Underwriters (net of underwriting commissions but before deducting expenses),
and in the case of the Underwriters as the underwriting commissions received by
them bears to the total of such amounts paid to the Company and the Selling
Shareholders and received by the Underwriters as underwriting commissions. The
relative fault of the Company and the Selling Shareholders, on the one hand, and
the Underwriters, on the other hand, 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 or the inaccurate
or the alleged inaccurate representation and/or warranty relates to information
supplied by the Company, the Selling Shareholders or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in subparagraph (c) of this Section 11, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in subparagraph (c) of
this Section 11 with respect to notice of commencement of any action shall apply
if a claim for contribution is to be made under this subparagraph (d); provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under subparagraph (c) for purposes of
indemnification. The Company, the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
subparagraph 11(d) were determined solely by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. Notwithstanding the
provisions of this Section 11, no Underwriter shall be required to contribute
any amount in excess of the amount of the total underwriting commissions
received by such Underwriter in connection with the Common Shares underwritten
by it and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 11 are several in proportion to their respective underwriting
commitments and not joint. The Selling Shareholders' obligations to contribute
pursuant to this Section 11 are several in proportion to the number of Optional
Common Shares sold and not joint.
(e) It is agreed that any controversy arising out of the operation
of the interim reimbursement arrangements set forth in Sections 11(a) and 11(b)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Constitution and Rules of the Board of Governors of
the New York Stock Exchange, Inc. or pursuant to the Code of Arbitration
Procedure of the NASD. Any such arbitration must be commenced by service of a
written demand for arbitration or written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event that the party demanding
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 11(a) and 11(b)
hereof and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
Sections 11(a) and 11(b) hereof.
SECTION 12
DEFAULT OF UNDERWRITERS
It shall be a condition to this Agreement and the obligation of the
Company and the Selling Shareholders to sell and deliver the Common Shares
hereunder, and of each Underwriter to purchase the Common Shares in the manner
as described herein, that, except as hereinafter in this paragraph provided,
each of the Underwriters shall purchase and pay for all the Common Shares agreed
to be purchased by such Underwriter hereunder upon tender to the Underwriters of
all such shares in accordance with the terms hereof. If any Underwriter or
Underwriters default in their obligations to purchase Common Shares hereunder on
either the First or Second Closing Date and the aggregate number of Common
Shares which such defaulting Underwriter or
-22-
Underwriters agreed but failed to purchase on such Closing Date does not exceed
10% of the total number of Common Shares which the Underwriters are obligated to
purchase on such Closing Date, the non-defaulting Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the Common Shares which such defaulting Underwriters agreed but failed
to purchase on such Closing Date. If any Underwriter or Underwriters so default
and the aggregate number of Common Shares with respect to which such default
occurs is more than the above percentage and arrangements satisfactory to the
Underwriters and the Company for the purchase of such Common Shares by other
persons ore not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company or the Selling Shareholders except for the expenses to be paid by the
Company and the Selling Shareholders pursuant to Section 7 hereof and except to
the extent provided in Section 11 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Underwriters or the Company shall have the right to postpone the First or Second
Closing Date, as the case may be, for not more than five business days in order
that the necessary changes in the Registration Statement, Prospectus and any
other documents, as well as any other arrangements, may be effected. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13
EFFECTIVE DATE
This Agreement shall become effective immediately as to Sections 7, 9,
11, 14 and 16 and, as to all other provisions, (i) if at the time of execution
of this Agreement the Registration Statement has not become effective, at 2:00
P.M., California time, on the first full business day following the
effectiveness of the Registration Statement, or (ii) if at the time of execution
of this Agreement the Registration Statement has been declared effective, at
2:00 P.M., California time, on the first full business day following the date of
execution of this Agreement; but this Agreement shall nevertheless become
effective at such earlier time after the Registration Statement becomes
effective as you may determine on and by notice to the Company or by release of
any of the Common Shares for sale to the public. For the purposes of this
Section 13, the Common Shares shall be deemed to have been so released upon the
release for publication of any newspaper advertisement relating to the Common
Shares or upon the release by you of telegrams (i) advising Underwriters that
the Common Shares are released for public offering, or (ii) offering the Common
Shares for sale to securities dealers, whichever may occur first.
SECTION 14
TERMINATION
Without limiting the right to terminate this Agreement pursuant to any
other provision hereof:
(a) This Agreement may be terminated by the Company by notice to
you and the Selling Shareholders or by you by notice to the Company and the
Selling Shareholders at any time prior to the time this Agreement shall become
effective as to all its provisions, and any such termination shall be without
liability on the part of the Company or the Selling Shareholders to any
Underwriter (except for the expenses to be paid or reimbursed by the Company and
the Selling Shareholders pursuant to Sections 7 and 9 hereof and except to the
extent provided in Section 11 hereof) or of any Underwriter to the Company or
the Selling Shareholders (except to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on either such
Exchange or in the over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or California
authorities, (ii) if an outbreak of major hostilities or other national or
-23-
international calamity or any change in political, financial or economic
conditions shall have occurred or shall have accelerated or escalated to such an
extent, as, in the judgment of the Underwriters, to affect adversely the
marketability of the Common Shares, (iii) if any adverse event shall have
occurred or shall exist which makes untrue or incorrect in a material respect
any statement or information contained in the Registration Statement or
Prospectus or which is not reflected in the Registration Statement or Prospectus
but should be reflected therein in order to make the statements or information
contained therein not misleading in any material respect, or (iv) if there shall
be any action, suit or proceeding pending or threatened, or there shall have
been any development or prospective development involving particularly the
business or properties or securities of the Company or the transactions
contemplated by this Agreement, which, in the judgment of the Underwriters, may
materially and adversely affect the Company's business or earnings and makes it
impracticable or inadvisable to offer or sell the Common Shares. Any termination
pursuant to this subsection (b) shall be without liability on the part of any
Underwriter to the Company or the Selling Shareholders or on the part of the
Company or the Selling Shareholders to any Underwriter (except for expenses to
be paid or reimbursed by the Company and the Selling Shareholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11 hereof).
(c) This Agreement shall also terminate at 5:00 P.M., California
Time, on the tenth full business day after the Registration Statement shall have
become effective if the initial public offering price of the Common Shares shall
not then as yet have been determined as provided in Section 5 hereof. Any
termination pursuant to this subsection (c) shall be without liability on the
part of any Underwriter to the Company or the Selling Shareholders or on the
part of the Company or the Selling Shareholders to any Underwriter (except for
expenses to be paid or reimbursed by the Company and the Selling Shareholders
pursuant to Sections 7 and 9 hereof and except to the extent provided in
Section 11 hereof).
SECTION 15
FAILURE OF THE SELLING SHAREHOLDERS TO SELL AND DELIVER
If one or more of the Selling Shareholders shall fail to sell and
deliver to the Underwriters the Common Shares to be sold and delivered by such
Selling Shareholders at the Second Closing Date under the terms of this
Agreement, then the Underwriters may at their option, by written notice from you
to the Company and the Selling Shareholders, purchase the shares which the other
Selling Shareholders have agreed to sell and deliver in accordance with the
terms hereof. In the event of a failure by one or more of the Selling
Shareholders to sell and deliver as referred to in this Section, either you or
the Company shall have the right to postpone the Second Closing Date for a
period not exceeding seven business days in order that the necessary changes in
the Registration Statement, Prospectus and any other documents, as well as any
other arrangements, may be effected.
SECTION 16
REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY
The respective indemnities, agreements, representations, warranties
and other statements of the Company, of its officers, of the Selling
Shareholders and of the several Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
its or their partners, officers or directors or any controlling person, or the
Selling Shareholders, as the case may be, and will survive delivery of and
payment for the Common Shares sold hereunder and any termination of this
Agreement.
SECTION 17
NOTICES
All communications hereunder shall be in writing and, if sent to the
Underwriters shall be mailed, delivered or telegraphed and confirmed to you at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
-24-
Saper, Esq.; and if sent to the Company or the Selling Shareholders shall be
mailed, delivered or telegraphed and confirmed to the Company at ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇, with
a copy to ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. The Company, the Selling
Shareholders or you may change the address for receipt of communications
hereunder by giving notice to the others.
SECTION 18
SUCCESSORS
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 12
hereof, and to the benefit of the officers and directors and controlling persons
referred to in Section 11, and in each case their respective successors,
personal representatives and assigns, and no other person will have any right or
obligation hereunder. No such assignment shall relieve any party of its
obligations hereunder. The term "successors" shall not include any purchaser of
the Common Shares as such from any of the Underwriters merely by reason of such
purchase.
SECTION 19
PARTIAL UNENFORCEABILITY
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
SECTION 20
APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with
the internal laws (and not the laws pertaining to conflicts of laws) of the
State of California.
SECTION 21
GENERAL
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in several counterparts, each one of
which shall be an original, and all of which shall constitute one and the same
document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Shareholders and you.
Any person executing and delivering this Agreement as Attorney-in-fact
for the Selling Shareholders represents by so doing that he has been duly
appointed as Attorney-in-fact by such Selling Shareholder pursuant to a validly
existing and binding
-25-
Power of Attorney which authorizes such Attorney-in-fact to take such action.
Any action taken under this Agreement by any of the Attorneys-in-fact will be
binding on all the Selling Shareholders.
-26-
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement among the Company, the Selling Shareholders and
the several Underwriters including you, all in accordance with its terms.
Very truly yours,
APEX PC SOLUTIONS, INC.
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇,
President and Chief Executive Officer
SELLING SHAREHOLDERS
By:
----------------------------
(Attorney-in-fact)
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
▇▇▇▇▇▇▇▇▇▇ SECURITIES
▇▇▇▇ ▇▇▇▇▇▇▇▇ INCORPORATED
By: ▇▇▇▇▇▇▇▇▇▇ SECURITIES
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
-27-
SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------------------------------ ------------------------
▇▇▇▇▇▇▇▇▇▇ Securities. . . . . . . . . . .
▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated . . . . . . . .
---------
TOTAL. . . . . . . . . 3,500,000
---------
---------
A-1
SCHEDULE B
Number of Optional
Common Shares to be Sold by
Name of Selling Shareholder Selling Shareholders
------------------------------------------------- ---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇. . . . . . . . . . . . . . . .
Britannia Holdings Limited. . . . . . . . . .
Advent VII L.P. . . . . . . . . . . . . . . .
Advent Atlantic and Pacific II L.P. . . . . .
Advent New York L.P. . . . . . . . . . . . .
TA Venture Investors Limited Partnership. . .
TOTAL. . . . . . . . . . . . . . 525,000
--------------------------
--------------------------
B-1