1
EXHIBIT 1.1
BPHNY DRAFT 9/23/97
BEST SOFTWARE, INC.
3,650,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
September __, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ & COMPANY
▇/▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
LADIES AND GENTLEMEN:
Best Software, Inc., a Virginia corporation (herein called the
Company), proposes to issue and sell 2,750,000 shares of its authorized but
unissued Common Stock, no par value (herein called the Common Stock), and the
shareholders of the Company named in Schedule II hereto (herein collectively
called the Selling Shareholders) propose to sell an aggregate of 900,000 shares
of Common Stock of the Company (said 3,650,000 shares of Common Stock being
herein called the Underwritten Stock). The Selling Shareholders propose to
grant to the Underwriters (as hereinafter defined) an option to purchase up to
700,000 additional shares of Common Stock (herein called the Option Stock and
with the Underwritten Stock herein collectively called the Stock). The Common
Stock is more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.
The Company and the Selling Shareholders severally hereby confirm the
agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent
and warrant that you have been authorized by each of the other Underwriters to
enter into this Agreement on its behalf and to act for it in the manner herein
provided.
1. REGISTRATION STATEMENT. The Company has filed with the
Securities and Exchange Commission (herein called the Commission) a
registration statement on Form S-1 (No. 333-33275), including the related
preliminary prospectus, for the registration under the Securities Act of 1933,
as amended (herein called the Securities Act), of the Stock. Copies of such
registration statement and of each amendment thereto, if any, including the
related preliminary prospectus (meeting the requirements of Rule 430A of the
rules and regulations of the Commission promulgated under the Securities Act
(herein called the Rules and Regulations)) heretofore filed by the Company with
the Commission have been delivered to you.
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(1) Plus an option to purchase from the Selling Shareholders up to 547,500
additional shares to cover over-allotments.
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The term Registration Statement as used in this agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations with respect to the Stock (herein called a Rule 462(b) registration
statement), and, in the event of any amendment thereto after the effective date
of such registration statement (herein called the Effective Date), shall also
mean (from and after the effectiveness of such amendment) such registration
statement as so amended (including any Rule 462(b) registration statement).
The term Prospectus as used in this Agreement shall mean the prospectus
relating to the Stock first filed with the Commission pursuant to Rule 424(b)
and Rule 430A (or if no such filing is required, as included in the
Registration Statement) and, in the event of any supplement or amendment to
such prospectus after the Effective Date, shall also mean (from and after the
filing with the Commission of such supplement or the effectiveness of such
amendment) such prospectus as so supplemented or amended. The term Preliminary
Prospectus as used in this Agreement shall mean each preliminary prospectus
included in such registration statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PRINCIPAL
SELLING SHAREHOLDERS.
(a) Each of the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually
(herein called the Principal Selling Shareholder) hereby, jointly and
severally, represent and warrant as follows:
(i)The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of
the Commonwealth of Virginia, with corporate power and authority to
own or lease its properties and conduct its business as described in
the Registration Statement. Each of the subsidiaries of the Company
as listed in Exhibit 21 to the Registration Statement (herein
collectively called the Subsidiaries) has been duly organized and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, with corporate power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement. The Subsidiaries are the
only subsidiaries (as defined in Rule 405 under the Securities Act),
direct or indirect, of the Company. The Company and each of the
Subsidiaries are duly qualified to transact business in all
jurisdiction in which the conduct of their business requires such
qualification, except for those jurisdictions in which the failure to
qualify would not have a material adverse effect upon the earnings,
business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole. The outstanding shares of capital
stock of each of the Subsidiaries have been duly authorized and
validly issued and are fully paid and non- assessable. The capital
stock in such Subsidiaries are owned by the Company or another
Subsidiary free and clear of all liens, encumbrances and equities and
claims; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in
the Subsidiaries are outstanding.
(ii)The outstanding shares of Common Stock of the
Company, including all Stock to be sold by the Selling Shareholders,
have been duly authorized and validly issued and are fully paid and
non-assessable; the Stock to be issued and sold by the Company have
been duly authorized and, when issued and paid for as contemplated
herein, will be validly issued, fully paid and non-assessable; and no
preemptive, co-sale, right of first refusal or other similar rights of
shareholders
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exist with respect to any of the Stock or the issue and sale thereof.
Neither the filing of the Registration Statement nor the offering or
sale of the Stock as contemplated by this Agreement gives rise to any
rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock. Except as
described in the Prospectus, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement
under the Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant
to any other registration statement filed by the Company under the
Securities Act. Except as described in the Prospectus, there are no
outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any shares of
the capital stock of, or other ownership interest in, the Company.
(iii)The information set forth under the caption
"Capitalization" in the Prospectus is true and correct in all material
respects. All of the Stock conforms in all material respects to the
description thereof contained in the Registration Statement. The form
of certificates for the Stock conforms to the legal requirements of
the jurisdiction of the Company's incorporation.
(iv)The Commission has not issued an order preventing
or suspending the use of any Prospectus relating to the proposed
offering of the Stock, nor, to the best knowledge of the Company and
the Principal Selling Shareholder, instituted proceedings for that
purpose.
(v)The consolidated financial statements of the
Company and the Subsidiaries, together with related notes and
schedules as set forth in the Registration Statement, present fairly,
in all material respects, the consolidated financial position and the
results of operations and cash flows of the Company and the
Subsidiaries, at the indicated dates and for the indicated periods.
Such financial statements and related schedules have been prepared in
accordance with the generally accepted principles of accounting,
consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of results for such
periods have been made. The summary and selected financial and
statistical data included in the Registration Statement presents
fairly the information shown therein and such data has been compiled
on a basis consistent with the financial statements presented therein
and the books and records of the Company.
(vi)▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified certain
of the financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required
by the Securities Act and the Rules and Regulations.
(vii)There is no action, suit, claim or proceeding
pending, or, to the knowledge of the Company, threatened against the
Company or any of the Subsidiaries, or any of their respective
officers or properties, before any court or administrative agency or
otherwise, which if determined adversely to the Company or any of the
Subsidiaries could reasonably be expected to result in any material
adverse change in the earnings, business, management, properties,
assets, right, operations, condition (financial or otherwise) or
prospects of the Company and the Subsidiaries taken as a whole or
prevent the consummation of the transactions contemplated hereby; and
there are no agreements, contracts, leases or documents of the Company
or any of the Subsidiaries of a character required to be described or
referred to in the Registration Statement or Prospectus or to be filed
as an exhibit to the Registration Statement by the Securities Act or
the Rules and Regulations which have not been accurately described in
all material respects or referred to in the Registration Statement or
Prospectus or filed as exhibits to the Registration Statement. The
contracts so
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described in the Registration Statement and Prospectus are in full
force and effect on the date hereof, and neither the Company nor any
of the Subsidiaries, nor, to the best of the Company's knowledge, any
other party, is in breach of or default under any of such contracts.
(viii)The Company and the Subsidiaries have good
and marketable title to all of the properties and assets reflected in
the financial statements (or as described in the Registration
Statement) filed with the Commission as part of the Registration
Statement, free and clear of any lien, mortgage, pledge, charge or
encumbrance of any kind except those reflected in such financial
statements (or as described in the Registration Statement). All
leases to which the Company or any Subsidiary is a party are valid and
binding obligations of the Company or the Subsidiary, as the case may
be, and no default by the Company or any Subsidiary has occurred or is
continuing thereunder which could reasonably be expected to result in
any material adverse change in the earnings, business, management,
properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a
whole, and the Company and each Subsidiary enjoy peaceful and
undisturbed possession under all such leases to which it is a party as
lessee.
(ix)The Company and the Subsidiaries have timely
filed all federal, state, local and foreign income tax returns which
have been required to be filed and have paid all taxes indicted by
said returns and all assessments received by them or any of them to
the extent that such taxes have become due and are not being contested
in good faith. All tax liabilities (including those being contested
in good faith) for the periods covered by the financial statements of
the Company that are included in the Registration Statement have been
adequately provided for in such financial statements.
(x)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 any development
involving a prospective material adverse change in or affecting the
earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the
Company and the Subsidiaries taken as a whole, whether or not
occurring in the ordinary course of business, and there has not been
any material transaction entered into or any material transaction that
is probable of being entered into by the Company or any Subsidiary,
other than transactions in the ordinary course of business and changes
and transactions described in the Registration Statement and the
Prospectus, as each may be amended or supplemented. The Company and
the Subsidiaries have no material contingent obligations which are not
disclosed or provided for in the Company's consolidated financial
statements that are included in the Registration Statement.
(xi)This Agreement has been duly authorized, executed
and delivered by the Company an is a valid and binding agreement of
the Company, enforceable in accordance with its terms except insofar
as indemnification and contribution provisions may be limited by
applicable law or equitable principles and except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting creditors' rights generally
or by general equitable principles.
(xii)Neither the Company nor any of the Subsidiaries
is, or with the giving of notice or lapse of time or both will be, in
violation of or in default under its Certificate or Articles of
Incorporation or Bylaws or under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or
by which it, or any of its properties, is bound and which default
would have material adverse effect on the earnings, business,
management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the
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Subsidiaries taken as a whole. The execution and delivery of this
Agreement and the consummation of the transactions herein contemplated
and the fulfillment of the terms hereof will not conflict with or
result in a breach of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any Subsidiary is a
party, or of the Certificate or Articles of Incorporation or Bylaws of
the Company or, to the best knowledge of the Company and the Principal
Selling Shareholder, any law, order, rule or regulation, injunction,
judgement, or decree applicable to the Company or any Subsidiary of
any court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or any
Subsidiary, which conflict, breach or default could have a material
adverse effect on the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and the Subsidiaries taken as a whole.
(xiii)Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with
the execution and delivery by the Company of this Agreement and the
consummation of the transactions herein contemplated (except such
additional steps as may be required by the National Association of
Securities Dealers, Inc. (herein called the NASD) or such additional
steps as may be necessary to qualify the Stock for public offering by
the Underwriters under state securities or blue sky laws) has been
obtained or made and is in full force and effect.
(xiv)The Company and the Subsidiaries are operating
in compliance with all statutes, laws, regulations, ordinances or
court decrees applicable to their respective businesses and
operations, except where any such non-compliance would not have a
material adverse effect on the earnings, business, management,
properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a
whole. Neither the Company nor any Subsidiary has violated any
foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (herein called
Environmental Laws), or relating to discrimination in the hiring,
promotion or pay of, or to the wages and hours of, employees, except
for such violations as in the aggregate would not result in any
material adverse change in the earnings, business, management,
properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a
whole. To the best of Company's knowledge, no labor disturbance by
the employees of the Company or any of the Subsidiaries exists or is
imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers,
value added resellers, authorized dealers or distributors that might
be expected to result in a material adverse change in the earnings,
business, management, properties, assets, rights, operations,
condition (financial of otherwise) or prospects of the Company and the
Subsidiaries taken as a whole. No collective bargaining agreement
exists with any of the Company's employees and, to he best of the
Company's knowledge, no such agreement is imminent.
(xv)The Company is in compliance in all material
respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder (herein called
ERISA); no "reportable event" (as defined in ERISA) has occurred with
respect to any "pension plan" (as defined in ERISA) for which the
Company would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or
(ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretation
thereunder (the Code); and each "pension
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plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in
all material respects and nothing has occurred, whether by action or
by failure to act, that would cause the loss of such qualification.
(xvi)The Company and each of the Subsidiaries holds
all material licenses, certificate and permits from governmental
authorities that are necessary to the conduct of their businesses.
(xvii)The Company and each of the Subsidiaries owns
or possesses adequate rights to use all inventions, designs, computer
programs, computer code, communications protocols, security devices,
trade secrets, know-how, trademarks, service marks, trade names,
copyright works or other information (herein collectively called
Intellectual Property) which are necessary to conduct its businesses
as described in the Registration Statement and the Prospectus; the
Company and the Subsidiaries have not received any notice of, and have
no knowledge of, any infringement of or conflict with any rights of
the Company or any Subsidiary by others with respect to any
Intellectual Property which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the earnings, business, management,
properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a
whole; the Company and the Subsidiaries have not received any notice
of, and have no knowledge of, any infringement of or conflict with any
rights of others with respect to any Intellectual Property which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the
earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the
Company and the Subsidiaries taken as a whole; to the Company's best
knowledge, none of the Intellectual Property licensed to or by the
Company or any of the Subsidiaries are unenforceable or invalid; and
the Company and the Subsidiaries are not aware of the granting of any
patent rights to third parties or the filing of any patent
applications by third parties or any other rights of third parties to
any Intellectual Property owned by the Company or the Subsidiaries.
(xviii)Neither the Company, nor any of its
Subsidiaries or affiliates, has taken or may take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common
Stock to facilitate the sale or resale of the Stock.
(xix)Neither the Company nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment
company" within the meaning of such terms under the Investment Company
Act of 1940, as amended (herein called the Investment Company Act),
and the rules and regulations of the Commission thereunder.
(xx)The Company and each Subsidiary maintains a
system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles
and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxi)The Company and each of the Subsidiaries carry,
or are covered by, insurance with insurers of nationally recognized
reputability in such amounts and covering such risks as is customary
for companies engaged in similar industries.
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(xxii)The Company confirms as of the date hereof that
it is in compliance with all provisions of Section 1 of Laws of
Florida, Chapter 92-198, An Act Relating to Disclosure of Doing
Business with Cuba, and the Company further agrees that if it
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Commission or with
the Florida Department of Banking and Finance (herein called the
Department), whichever date is later, or if the information reported
or incorporated by reference in the Prospectus, if any, concerning the
Company's business with Cuba or with any person or affiliate located
in Cuba changes in any material way, the Company will provide the
Department notice of such business or change, as appropriate, in a
form acceptable to the Department.
(xxiii)The Stock has been approved for listing on
the Nasdaq Stock Market.
(xxiv)The Registration Statement and the Prospectus
comply, and on the Closing Date and the Option Closing Date (as such
dates are hereinafter defined) the Prospectus will comply, in all
material respects, with the provisions of the Securities Act and the
Rules and Regulations; on the Effective Date the Registration
Statement did not, and on each of the Closing Date and the Option
Closing Date, will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and,
on the Effective Date the Prospectus did not and, on each of the
Closing Date and the Option Closing Date, will not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that none of the representations and warranties in this
Section 2(a)(xxv) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information herein or otherwise furnished in writing
to the Company by or on behalf of the Underwriters for use in the
Registration Statement or the Prospectus.
(b) Each of the Selling Shareholders (including the Principal
Selling Shareholder) hereby severally and not jointly represents and warrants
as follows:
(i)Such Selling Shareholder now has and at the
Closing Date and the Option Closing Date, as the case may be, will
have good and marketable title to the Stock to be sold by such Selling
Shareholder, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, including any liability for
estate inheritance taxes or any liability to or claim of any creditor,
devisee, legatee or beneficiary of such Selling Shareholder, with full
right, power and authority to effect the sale and delivery of such
Stock as herein contemplated, subject in the case of each Selling
Shareholder to the rights of the Custodian (as hereinafter defined),
pursuant to the Custody Agreement executed by such Selling
Shareholder; and upon the delivery of, against payment for, such Stock
pursuant to this Agreement, the Underwriters will acquire good and
marketable title thereto, free and clear of any lien, security
interest, encumbrance, claims or equitable interest, including any
liability for estate inheritance taxes, or any liability to or claim
of any creditor, devisee, legatee or beneficiary of such Selling
Shareholder, whatsoever.
(ii)Such Selling Shareholder has full right, power
and authority to execute and deliver this Agreement and the Custody
Agreement referred to below and to perform its obligations under such
agreements. The execution and delivery of this Agreement and the
Custody Agreement and Power of Attorney (the "Custody Agreement") has
been duly authorized, each such document constitutes a valid and
binding agreement of such Selling Shareholder and is enforceable
against
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such Selling Shareholder in accordance with the terms of each such
document, and the consummation by such Selling Shareholder of the
transactions contemplated hereunder or thereunder and the fulfillment
by such Selling Shareholder of the terms of each such document will
not require any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental
body (except as may be required under the Act and state securities
laws or blue sky laws) and will not result in a breach of any of the
terms and provisions of, or constitute a default under, the
organizational documents of such Selling Shareholder, if other than a
natural person, or any indenture, mortgage, deed of trust or other
agreement or instrument to which such Selling Shareholder is a party,
or of any order, rule or regulation applicable to such Selling
Shareholder of any court or of any regulatory body or administrative
agency or other governmental body. Such Selling Shareholder, if other
than a natural person, has been duly organized and is validly existing
and in good standing under the laws of the jurisdiction of its
organization as the type of entity that it purports to be.
(iii)Such Selling Shareholder has not taken, directly
or indirectly, any action designed to, or which has, or which might
reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Stock of the Company.
(iv)Such Selling Shareholder does not have, or has
waived prior to the date hereof, any preemptive right, co-sale right
or right of first refusal or other similar right to purchase any of
the Stock that are to be sold by the Company or any of the other
Selling Shareholders to the Underwriters pursuant to this Agreement;
such Selling Shareholder does not have, or has waived prior to the
date hereof, any registration right or other similar right to
participate in the offering made by the Prospectus, other than such
rights of participation as have been satisfied by the participation of
such Selling Shareholder in the transactions to which this Agreement
relates in accordance with the terms of this Agreement; and such
Selling Shareholder (who is specifically named in the Prospectus) does
not own any warrants, options or similar rights to acquire, and does
not have any right or arrangement to acquire, any capital stock,
rights, warrants, options or other securities from the Company, other
than those described in the Registration Statement and the Prospectus.
(c) Each of the Selling Shareholders (other than the Principal
Selling Shareholder) hereby severally represents and warrants that such Selling
Shareholder has reviewed the Registration Statement and Prospectus, and
although such Selling Shareholder has not independently verified the accuracy
or completeness of all the information contained therein, nothing has come to
the attention of such Selling Shareholder that would lead such Selling
Shareholder to believe that: (a) on the Effective Date the Registration
Statement contained and, on the Closing Date and the Option Closing Date,
contains any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, (b) on the Effective Date the
Prospectus contained and, on the Closing Date and on the Option Closing Date,
contains any untrue statement of a material fact or omitted or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
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3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject
to the terms and conditions herein set forth, the Company agrees to issue and
sell 2,750,000 shares of Underwritten Stock to the several Underwriters, and
each Selling Shareholder agrees to sell to the several Underwriters the number
of shares of the Underwritten Stock set forth on Schedule II opposite the name
of such Selling Shareholder, and each of the Underwriters agrees to purchase
from the Company and each of the Selling Shareholders the respective aggregate
number of shares of Underwritten Stock set forth opposite its name in Schedule
I. The price at which such shares of Underwritten Stock shall be sold by the
Company and the Selling Shareholders and purchased by the several Underwriters
shall be $___ per share. The obligations of each Underwriter to the Company
and each of the Selling Shareholders shall be to purchase from the Company and
the Selling Shareholders that number of shares of the Underwritten Stock which
represents the same proportion of the total number of shares of the
Underwritten Stock to be sold by each of the Company and the Selling
Shareholders pursuant to this Agreement as the number of shares of the
Underwritten Stock set forth opposite the name of such Underwriter in Schedule
I hereto represents of the total number of shares of the Underwritten Stock to
be purchased by all Underwriters pursuant to this Agreement, as adjusted by you
in such manner as you deem advisable to avoid fractional shares. In making
this Agreement, each Underwriter is contracting severally and not jointly;
except as provided in paragraphs (c) and (d) of this Section 3, the agreement
of each Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail
or refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company or any Selling Shareholder shall
immediately give notice thereof to you, and the non-defaulting Underwriters
shall have the right within 24 hours after the receipt by you of such notice to
purchase, or procure one or more other Underwriters to purchase, in such
proportions as may be agreed upon between you and such purchasing Underwriter
or Underwriters and upon the terms herein set forth, all or any part of the
shares of the Stock which such defaulting Underwriter or Underwriters agreed to
purchase. If the non-defaulting Underwriters fail so to make such arrangements
with respect to all such shares and portion, the number of shares of the Stock
which each non-defaulting Underwriter is otherwise obligated to purchase under
this Agreement shall be automatically increased on a pro rata basis to absorb
the remaining shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase; provided, however, that the non-defaulting
Underwriters shall not be obligated to purchase the shares and portion which
the defaulting Underwriter or Underwriters agreed to purchase if the aggregate
number of such shares of the Stock exceeds 10% of the total number of shares of
the Stock which all Underwriters agreed to purchase hereunder. If the total
number of shares of the Stock which the defaulting Underwriter or Underwriters
agreed to purchase shall not be purchased or absorbed in accordance with the
two preceding sentences, the Company and the Selling Shareholders shall have
the right, within 24 hours next succeeding the 24-hour period above referred
to, to make arrangements with other underwriters or purchasers satisfactory to
you for purchase of such shares and portion on the terms herein set forth. In
any such case, either you or the Company and the Selling Shareholders shall
have the right to postpone the Closing Date determined as provided in Section 5
hereof for not more than seven business days after the date originally fixed as
the Closing Date pursuant to said Section 5 in order that any necessary changes
in the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If neither the non-defaulting Underwriters nor the
Company and the Selling Shareholders shall make arrangements within the 24-hour
periods stated above for the purchase of all the shares of the Stock which the
defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the part of the Company or the Selling Shareholders to any
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non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company or the Selling Shareholders. Nothing
in this paragraph (b), and no action taken hereunder, shall relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth,
each Selling Shareholder grants an option to the several Underwriters to
purchase, severally and not jointly, the number of shares of Option Stock set
forth on Schedule II opposite the name of such Selling Shareholder at the same
price per share as the Underwriters shall pay for the Underwritten Stock. Said
option may be exercised only to cover over-allotments in the sale of the
Underwritten Stock by the Underwriters and may be exercised in whole or in part
at any time (but not more than once) on or before the thirtieth day after the
date of this Agreement upon written or telegraphic notice by you to the Company
setting forth the aggregate number of shares of the Option Stock as to which
the several Underwriters are exercising the option. If the option granted
hereby is exercised in part, the number of shares of Option Stock to be sold by
each Selling Shareholder shall be determined on a pro rata basis based on the
maximum number of shares of Stock that could be sold by each Selling
Shareholder as set forth on Schedule II. Delivery of certificates for the
shares of Option Stock, and payment therefor, shall be made as provided in
Section 5 hereof. The number of shares of the Option Stock to be purchased by
each Underwriter shall be the same percentage of the total number of shares of
the Option Stock to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Stock, as adjusted by you in such
manner as you deem advisable to avoid fractional shares.
(d) Certificates in negotiable form for the total number of shares
of Stock to be sold hereunder by the Selling Shareholders have been placed in
custody with the Company as custodian (the Custodian), pursuant to the Custody
Agreement executed by each Selling Shareholder for delivery of all Stock to be
sold hereunder by the Selling Shareholders. Each of the Selling Shareholders
specifically agrees that the Stock represented by the certificates held in
custody for the Selling Shareholders under the Custody Agreement are subject to
the interests of the Underwriters hereunder, that the arrangements made by the
Selling Shareholders for such custody are to that extent irrevocable, and that
the obligations of the Selling Shareholders hereunder shall not be terminable
by any act or deed of the Selling Shareholders (or by any other person, firm or
corporation including the Company, the Custodian or the Underwriters) or by
operation of law (including the death of an individual Selling Shareholder or
the dissolution of a corporate Selling Shareholder) or by the occurrence of any
other event or events, except as set forth in the Custody Agreement. If any
such event should occur prior to the delivery to the Underwriters of the Stock
hereunder, certificates for the Stock shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such event has
not occurred. The Custodian is authorized to receive and acknowledge receipt
of the proceeds of sale of the Stock held by it against delivery of such Stock.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the public offering by the Underwriters of the
Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the public offering and increase or decrease the concessions and
discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front
cover page, the stabilization legend on the inside front cover and the first,
third and tenth paragraphs under "Underwriting" in the Registration Statement,
any Preliminary Prospectus and the Prospectus relating to the Stock filed by
the Company constitutes the only information furnished by the Underwriters to
the Company for inclusion in
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the Registration Statement, any Preliminary Prospectus, and the Prospectus, and
you on behalf of the respective Underwriters represent and warrant to the
Company that the statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten
Stock and the Option Stock (if the option granted by Section 3(c) hereof shall
have been exercised not later than 10:00 a.m., New York time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, at 10:00 a.m., New York time, on the fourth business day after the date
of this Agreement, or at such time on such other day, not later than seven full
business days after such fourth business day, as shall be agreed upon in
writing by the Company and you. The date and hour of such delivery and payment
(which may be postponed as provided in Section 3(b) hereof) are herein called
the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be
exercised after 10:00 a.m., New York time, on the date two business days
preceding the Closing Date, delivery of certificates for the shares of Option
Stock, and payment therefor, shall be made at the office of ▇▇▇▇▇▇▇, Phleger &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., New York time,
on the third business day after the exercise of such option. The date and hour
of such delivery and payment (which may be postponed as provided in Section
3(b) hereof) are herein called the Option Closing Date.
(c) Payment for the Stock purchased from the Company shall be made
to the Company or its order by one or more certified or official bank check or
checks or by electronic wire transfer, in any event in same day funds. Payment
for the Stock purchased from the Selling Shareholders shall be made to the
Custodian, for the account of the Selling Shareholders by one or more certified
of official bank check or checks or by electronic wire transfer, in any event
in same day funds. Such payment shall be made upon delivery of certificates
for the Stock to you for the respective accounts of the several Underwriters
against receipt therefor signed by you. Certificates for the Stock to be
delivered to you shall be registered in such name or names and shall be in such
denominations as you may request at least one business day before the Closing
Date, in the case of Underwritten Stock, and at least one business day prior to
the purchase thereof, in the case of the Option Stock. Such certificates will
be made available to the Underwriters for inspection, checking and packaging at
the offices of Lewco Securities, ▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on the
business day prior to the Closing Date or, in the case of the Option Stock, by
3:00 p.m., New York time, on the business day preceding the Option Closing
Date.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Shareholders for shares to be purchased by any Underwriter
whose check or electronic wire transfer shall not have been received by you on
the Closing Date or the Option Closing Date, as the case may be. Any such
payment by you shall not relieve such Underwriter from any of its obligations
hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
(a) The Company covenants and agrees as follows:
(i)The Company will (i) prepare and timely file with
the Commission under Rule 424(b) a Prospectus containing information
previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A and (ii) not file any amendment to
the Registration Statement or supplement to the Prospectus of which
you shall not previously have been advised and
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furnished with a copy or to which you shall have reasonably objected
in writing or which is not in compliance with the Securities Act or
the Rules and Regulations.
(ii)The Company will promptly notify you in the event
of (i) the request by the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, (ii) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, (iii) the
institution or notice of intended institution of any action or
proceeding for that purpose, (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification of
the Stock for sale in any jurisdiction, or (v) the receipt by it of
notice of the initiation or threatening of any proceeding for such
purpose. The Company will make every reasonable effort to prevent the
issuance of such a stop order and, if such an order shall at any time
be issued, to obtain the withdrawal thereof at the earliest possible
moment.
(iii)The Company will (i) on or before the Closing
Date, deliver to you a signed copy of the Registration Statement as
originally filed and of each amendment thereto filed prior to the time
the Registration Statement becomes effective and, promptly upon the
filing thereof, a signed copy of each post-effective amendment, if
any, to the Registration Statement (together with, in each case, all
exhibits thereto unless previously furnished to you) and will also
deliver to you, for distribution to the Underwriters, a sufficient
number of additional conformed copies of each of the foregoing (but
without exhibits) so that one copy of each may be distributed to each
Underwriter, (ii) as promptly as possible deliver to you and send to
the several Underwriters, at such office or offices as you may
designate, as many copies of the Prospectus as you may reasonably
request, and (iii) thereafter from time to time during the period in
which a prospectus is required by law to be delivered by an
Underwriter or dealer, likewise send to the Underwriters as many
additional copies of the Prospectus and as many copies of any
supplement to the Prospectus and of any amended prospectus, filed by
the Company with the Commission, as you may reasonably request for the
purposes contemplated by the Securities Act.
(iv)If at any time during the period in which a
prospectus is required by law to be delivered by an Underwriter or
dealer any event relating to or affecting the Company, or of which the
company shall be advised in writing by you, shall occur as a result of
which it is necessary, in the opinion of counsel for the Company or of
counsel for the Underwriters, to supplement or amend the Prospectus in
order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser of
the Stock, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus of an amended prospectus so
that the Prospectus as so supplemented or amended will not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time such Prospectus is delivered to
such purchaser, not misleading. If, after the public offering of the
Stock by the Underwriters and during such period, the Underwriters
shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the
Company in writing of the proposed variation, and, if in the opinion
either of counsel for the Company or of counsel for the Underwriters
such proposed variation requires that the Prospectus be supplemented
or amended, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus or an amended prospectus
setting forth such variation. The Company authorizes the Underwriters
and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance
with the applicable provisions of the Securities Act and the
applicable rules and regulations thereunder for such period.
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(v)Prior to the filing thereof with the Commission,
the Company will submit to you, for your information, a copy of any
post-effective amendment to the Registration Statement and any
supplement to the Prospectus or any amended prospectus proposed to be
filed.
(vi)The Company will cooperate, when and as requested
by you, in the qualification of the Stock for offer and sale under the
securities or blue sky laws of such jurisdictions as you may designate
and, during the period in which a prospectus is required by law to be
delivered by an Underwriter or dealer, in keeping such qualifications
in good standing under said securities or blue sky laws; provided,
however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation
in any jurisdiction in which it is not so qualified. The Company
will, from time to time, prepare and file such statements, reports,
and other documents as are or may be required to continue such
qualifications in effect for so long a period as you may reasonably
request for distribution of the Stock.
(vii)During a period of five years commencing with
the date hereof, the Company will furnish to you, and to each
Underwriter who may so request in writing, copies of all periodic and
special reports furnished to shareholders of the Company and of all
information, documents and reports filed with the Commission.
(viii)The Company agrees to pay all costs and
expenses incident to the performance of the obligations of the Company
and the Selling Shareholders under this Agreement, including all costs
and expenses incident to (i) the preparation, printing and filing with
the Commission and the NASD of the Registration Statement, any
Preliminary Prospectus and the Prospectus, including listing fees
prescribed by the Nasdaq National Market, (ii) the furnishing to the
Underwriters of copies of any Preliminary Prospectus and of the
several documents required by paragraph (iii) of this Section 6(a) to
be so furnished, (iii) the printing of this Agreement and related
documents delivered to the Underwriters, (iv) the preparation,
printing and filing of all supplements and amendments to the
Prospectus referred to in paragraph (iv) of this Section 6(a), (v) the
furnishing to you and the Underwriters of the reports and information
referred to in paragraph (vii) of this Section 6(a) and (vi) the
printing and issuance of stock certificates, including the transfer
agent's fees. Notwithstanding anything to the contrary set forth
above, the Company shall not be obligated to pay any costs and
expenses incurred by or on behalf of the Selling Shareholders (other
than those costs and expenses enumerated above) without the Company's
prior consent.
(ix)The Company agrees to reimburse you, for the
account of the several Underwriters, for reasonable fees and related
disbursements (including counsel fees and disbursements and cost of
printing memoranda for the Underwriters) paid by or for the account of
the Underwriters or their counsel in qualifying the Stock under state
securities or blue sky laws and in the review of the offering by the
NASD.
(x)The Company hereby agrees that, without the prior
written consent of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC on behalf of the
Underwriters, the Company will not, for a period of 180 days following
the commencement of the public offering of the Stock by the
Underwriters (which shall be deemed to be the date of the Prospectus),
directly or indirectly, (i) sell, offer, contract to sell, transfer
the economic risk of ownership in, make any short sale, pledge, or
otherwise dispose of any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for or any rights to
purchase or acquire Common Stock. The foregoing sentence shall not
apply to (A) the Stock to be sold to the Underwriters pursuant to this
Agreement, (B) shares of Common Stock issued by the Company upon the
exercise of options granted under the stock option plans of the
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Company as described in the Registration Statement (herein called the
Option Plans) or upon the exercise of warrants or the conversion of
Preferred Stock described in the Registration Statement, and (C)
options to purchase Common Stock granted under the Option Plans.
(xi)If at any time during the 25-day period after the
Registration Statement becomes effective any rumor, publication or
event relating to or affecting the Company shall occur as a result of
which in your opinion the market price for the Stock has been or is
likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you advising
the Company to the effect set forth above, forthwith consult with you
concerning the advisability of, and if applicable the substance of, a
press release or other public statement, responding to or commenting
on such rumor, publication or event.
(xii)The Company is familiar with the Investment
Company Act and has in the past conducted its affairs, and will in the
future conduct its affairs, in such a manner to ensure that the
Company was not and will not be an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act and the rules and regulations thereunder.
(xiii)The Company will comply with the Securities Act
and the Rules and Regulations, and the Securities Exchange Act of 1934
(herein called the Exchange Act) and the rules and regulations of the
Commission thereunder, so as to permit the completion of the
distribution of the Stock as contemplated in this Agreement and the
Prospectus.
(xiv)The Company shall apply the net proceeds of its
sale of the Stock as set forth in the Prospectus under "Use of
Proceeds."
(xv)The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Stock of the
Company.
(xvi)The Company agrees to use reasonable efforts to
cause all directors, officers, and shareholders to agree that, without
the prior written consent of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC on behalf of the
Underwriters, such person or entity will not, for a period of 180 days
following the commencement of the public offering of the Stock by the
Underwriters (which shall be deemed to be the date of the Prospectus,
directly or indirectly, (i) sell, offer, contract to sell, make any
short sale, pledge, sell any option or contract to purchase, purchase
any option or shares of Common Stock or any securities convertible
into or exercisable for or any rights to purchase or acquire common
Stock or (ii) enter into any swap or other agreement that whether any
such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash
or otherwise.
(b) Each of the Selling Shareholders severally covenants and agrees as
follows:
(i)Each Selling Shareholder hereby agrees that,
without the prior written consent of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC on behalf
of the Underwriters, such person or entity will not, for a period of
180 days following the commencement of the public offering of the
Stock by the Underwriters, directly or indirectly, (i) sell, offer,
contract to sell, make any short sale, pledge, sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or
dispose of any shares of Common Stock or any securities
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convertible into or exchangeable or exercisable for or any rights to
purchase or acquire Common Stock or (ii) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic
consequences or ownership of Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to the Stock to be
sold to the Underwriters pursuant to this Agreement.
(ii)In order to document the Underwriters' compliance
with the reporting and withholding provisions of the Tax Equity and
Fiscal Responsibility Act of 1982 and the Interest and Dividend Tax
Compliance Act of 1983 with respect to the transactions herein
contemplated, such Selling Shareholder shall deliver to you prior to
or at the Closing Date a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof).
(iii)Such Selling Shareholder shall not take,
directly or indirectly, any action designed to cause or result in, or
that has constituted or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any Common Stock of
the Company, and other than as permitted by the Securities Act, such
Selling Shareholder shall not distribute any prospectus or other
offering material in connection with the offering of the Shares.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of this Section 7,
the Company and each Selling Shareholder agree, jointly and severally, to
indemnify and hold harmless each Underwriter and each person (including each
partner or officer thereof) who controls any Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Securities Act, the Exchange Act, or
the common law or otherwise, and the Company and each Selling Shareholder,
jointly and severally, agree to reimburse each such Underwriter and controlling
person for any legal or other expenses (including, except as otherwise
hereinafter provided, reasonable fees and disbursements of counsel) incurred by
the respective indemnified parties in connection with defending against any
such losses, claims, damages or liabilities or in connection with any
investigation or inquiry of, or other proceeding which may be brought against,
the respective indemnified parties, in each case arising out of or based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement), or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that (1) the indemnity agreements of the Company and the
Selling Shareholders contained in this paragraph (a) shall not apply to any
such losses, claims, damages, liabilities or expenses if such statement or
omission was made in reliance upon and in conformity with information furnished
as herein stated or otherwise furnished in writing to the Company by or on
behalf of any Underwriter for use in any Preliminary Prospectus or the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto and (2) the indemnity agreement contained in this paragraph
(a) with respect to any Preliminary Prospectus shall not inure to the benefit
of any Underwriter from whom the person asserting any such losses, claims,
damages, liabilities or expenses purchased the Stock which is the subject
thereof (or to the benefit of any person controlling such
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Underwriter) if at or prior to the written confirmation of the sale of such
Stock a copy of the Prospectus (or the Prospectus as amended or supplemented)
was not sent or delivered to such person and the untrue statement or omission
of a material fact contained in such Preliminary Prospectus was corrected in
the Prospectus (or the Prospectus as amended or supplemented) unless the
failure is the result of noncompliance by the Company with paragraph (iii) of
Section 6(a) hereof, and (3) each Selling Shareholder other than the Principal
Selling Shareholder shall only be liable under this paragraph with respect to
(A) information pertaining to such Selling Shareholder furnished by or on
behalf of such Selling Shareholder expressly for use in any Preliminary
Prospectus or the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto or (B) facts that would constitute a
breach of any representation or warranty of such Selling Shareholder set forth
in Sections 2(b) and 2(c) hereof.
The indemnity agreements of the Company and the Selling Shareholders
contained in this paragraph (a) and the representations and warranties of the
Company and the Selling Shareholders contained in Section 2 hereof shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party and shall survive the delivery of and
payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its officers who signs the Registration Statement
on his own behalf or pursuant to a power of attorney, each of its directors,
each other Underwriter and each person (including each partner or officer
thereof) who controls the Company or any such other Underwriter within the
meaning of Section 15 of the Securities Act and the Selling Shareholders, from
and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act, or the common law or otherwise and
to reimburse each of them for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment thereof or supplement thereto) or
the omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of such
indemnifying Underwriter for use in the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto. The indemnity
agreement of each Underwriter contained in this paragraph (b) shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party and shall survive the delivery of and
payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a)
and (b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought
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hereunder. No indemnification provided for in such paragraphs shall be
available to any party who shall fail so to give the Notice if the party to
whom such Notice was not given was unaware of the action, suit, investigation,
inquiry or proceeding to which the Notice would have related and was prejudiced
by the failure to give the Notice, but the omission so to notify such
indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party shall be entitled at its
own expense to participate in the defense of any action, suit or proceeding
against, or investigation or inquiry of, an indemnified party. Any
indemnifying party shall be entitled, if it so elects within a reasonable time
after receipt of the Notice by giving written notice (herein called the Notice
of Defense) to the indemnified party, to assume (alone or in conjunction with
any other indemnifying party or parties) the entire defense of such action,
suit, investigation, inquiry or proceeding, in which event such defense shall
be conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or
parties shall be entitled to conduct the defense to the extent reasonably
determined by such counsel to be necessary to protect the interests of the
indemnified party or parties and (ii) in any event, the indemnified party or
parties shall be entitled to have counsel chosen by such indemnified party or
parties participate in, but not conduct, the defense. If, within a reasonable
time after receipt of the Notice, an indemnifying party gives a Notice of
Defense and the counsel chosen by the indemnifying party or parties is
reasonably satisfactory to the indemnified party or parties, the indemnifying
party or parties will not be liable under paragraphs (a) through (c) of this
Section 7 for any legal or other expenses subsequently incurred by the
indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear the legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the proviso to
the preceding sentence and (B) the indemnifying party or parties shall bear
such other expenses as it or they have authorized to be incurred by the
indemnified party or parties. Notwithstanding anything to the contrary set
forth above, the indemnified party shall not, in connection with any action,
suit, investigation, inquiry or proceeding in the same jurisdiction, be liable
for the fees and expenses of more than one firm, acting as legal counsel, for
all indemnified parties. If, within a reasonable time after receipt of the
Notice, no Notice of Defense has been given, the indemnifying party or parties
shall be responsible for any legal or other expenses incurred by the
indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnifying party
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Selling Shareholders on the one hand, and the Underwriters on
the other, shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Stock received by the Company and
the Selling Shareholders and the total underwriting discount received by the
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Underwriters, as set forth in the table on the cover page of the Prospectus,
bear to the aggregate public offering price of the Stock. Relative fault shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by each indemnifying
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this
paragraph (d). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities, or actions in respect thereof, referred
to in the first sentence of this paragraph (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigation, preparing to defend or defending against any
action or claim which is the subject of this paragraph (d). Notwithstanding
the provisions of this paragraph (d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Stock purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this paragraph
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give
written notice of such service to the party or parties from whom contribution
may be sought, but the omission so to notify such party or parties of any such
service shall not relieve the party from whom contribution may be sought from
any obligation it may have hereunder or otherwise (except as specifically
provided in paragraph (c) of this Section 7).
(e) Neither the Company nor the Selling Shareholders will, without
the prior written consent of each Underwriter, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit
or proceeding in respect of which indemnification may be sought hereunder
(whether or not such Underwriter or any person who controls such Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of such
Underwriter and each such controlling person from all liability arising out of
such claim, action, suit or proceeding.
(f) The liability of each Selling Shareholder, including the
Principal Selling Shareholders, under such Selling Shareholder's
representations and warranties contained in paragraphs (a), (b) and (c) of
Section 2 hereof, as applicable, and under the indemnity and reimbursement
agreements contained in the provisions of this Section 7 and Section 11 hereof
shall be limited to an amount equal to the lesser of (i) the net proceeds
received by such Selling Shareholder from the sale of the Stock sold by such
Selling Shareholder to the Underwriters, or (ii) that portion of the total
amount of such losses, damages or liabilities which equals the percentage
obtained by dividing the total number of shares of Stock sold by such Selling
Shareholder by the total number of shares of Stock sold hereunder. The Company
and the Selling Shareholder may agree, as among themselves and without limiting
the rights of the Underwriters under this Agreement, as to the respective
amounts of such liability for which they each shall be responsible.
8. TERMINATION. This Agreement may be terminated by you at any
time prior to the Closing Date by giving written notice to the Company and the
Selling Shareholders if after the date of this Agreement trading in the Common
Stock shall have been suspended, or if there shall have occurred (i) the
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engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States
on or after the date hereof, (ii) any outbreak of hostilities or other national
or international calamity or crisis or change in economic or political
conditions if the effect of such outbreak, calamity, crisis or change in
economic or political conditions in the financial markets of the United States
would, in the Underwriters' reasonable judgment, make the offering or delivery
of the Stock impracticable, (iii) suspension of trading in securities generally
or a material adverse decline in value of securities generally on the New York
Stock Exchange, the American Stock Exchange, The Nasdaq Stock Market, or
limitations on prices (other than limitations on hours or numbers of days of
trading) for securities on either such exchange or system, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of, or commencement of any proceeding or
investigation by, any court, legislative body, agency or other governmental
authority which in the Underwriters' reasonable opinion materially and
adversely affects or will materially or adversely affect the business or
operations of the Company, (v) declaration of a banking moratorium by either
federal or New York State authorities or (vi) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the Underwriters' reasonable opinion has a material
adverse effect on the securities markets in the United States. If this
Agreement shall be terminated pursuant to this Section 8, there shall be no
liability of the Company or the Selling Shareholders to the Underwriters and no
liability of the Underwriters to the Company or the Selling Shareholders;
provided, however, that in the event of any such termination the Company and
the Selling Shareholders agree to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of
the Company and the Selling Shareholders under this Agreement, including all
costs and expenses referred to in paragraphs (viii) and (ix) of Section 6(a)
hereof (with the total obligation of each Selling Shareholder being limited to
its pro rata share of such costs and expenses based on the percentage that the
number of shares of Stock sold by such Selling Shareholder bears to the total
number of shares of Stock that could be sold pursuant to this Agreement.).
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters to purchase and pay for the Stock shall be subject to
the performance by the Company and by the Selling Shareholders of all their
respective obligations to be performed hereunder at or prior to the Closing
Date or Option Closing Date, as the case may be, and to the following further
conditions:
(a) The Registration Statement shall have become effective; and no
stop order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock
hereunder and the validity and form of the certificates representing the Stock,
all corporate proceedings and other legal matters incident to the foregoing,
and the form of the Registration Statement and of the Prospectus (except as to
the financial statements contained therein), shall have been approved at or
prior to the Closing Date by ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters.
(c) You shall have received from ▇▇▇▇ and ▇▇▇▇ LLP, counsel for
the Company, an opinion, addressed to the Underwriters and dated the Closing
Date, covering the matters set forth in Annex A hereto, and if Option Stock is
purchased at any date after the Closing Date, an additional opinion from such
counsel, addressed to the Underwriters and dated such later date, confirming
that the statements expressed as of the Closing Date in such opinions remain
valid as of such later date.
(d) You shall have received from ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
counsel for the Selling Shareholders an opinion, addressed to the Underwriters
and dated the Closing Date, covering the matters set
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forth in Annex B hereto, and if Option Stock is purchased at any date after the
Closing Date, an additional opinion from such counsel, addressed to the
Underwriters and dated such later date, confirming that the statements
expressed as of the Closing Date in such opinions remain valid as of such later
date.
(e) You shall have received from ______________________, Canadian
counsel to the Company, an opinion, addressed to the Underwriters and dated the
Closing Date, covering the matters set forth in Annex C hereto, and if Option
Stock is purchased at any date after the Closing Date, an additional opinion
from such counsel, addressed to the Underwriters and dated such later date,
confirming that the statements expressed as of the Closing Date in such
opinions remain valid as of such later date.
(f) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct and neither the Registration Statement nor the Prospectus omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, respectively, not misleading, (ii) since the
Effective Date, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus which has not been set forth in such
a supplement or amendment, (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, and, since such
dates, except in the ordinary course of business, neither the Company nor any
of its Subsidiaries has entered into any material transaction not referred to
in the Registration Statement in the form in which it originally became
effective and the Prospectus contained therein, (iv) neither the Company nor
any of its Subsidiaries has any material contingent obligations which are not
disclosed in the Registration Statement and the Prospectus, (v) there are not
any pending or known threatened legal proceedings to which the Company or any
of its Subsidiaries is a party or of which property of the Company or any of
its Subsidiaries is the subject which are material and which are not disclosed
in the Registration Statement and the Prospectus, (vi) there are not any
franchises, contracts, leases or other documents which are required to be filed
as exhibits to the Registration Statement which have not been filed as
required, (vii) the representations and warranties of the Company and the
Selling Shareholders herein are true and correct in all material respects as of
the Closing Date or the Option Closing Date, as the case may be, and (viii)
there has not been any material change in the market for securities in general
or in political, financial or economic conditions from those reasonably
foreseeable as to render it impracticable in your reasonable judgment to make a
public offering of the Stock, or a material adverse change in market levels for
securities in general (or those of companies in particular) or financial or
economic conditions which render it inadvisable to proceed.
(g) You shall have received on the Closing Date and the Option
Closing Date a certificate, dated the Closing Date or Option Closing Date, as
the case may be, and signed by the President and the Chief Financial Officer of
the Company, stating that the respective signers of said certificate have
carefully examined the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein and any
supplements or amendments thereto, and that the statements included in clauses
(i) through (vii) of paragraph (f) of this Section f are true and correct.
(h) You shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, a letter or
letters, addressed to the Underwriters and dated the Closing Date and the
Option Closing Date, confirming that they are independent public accountants
with respect to the Company within the meaning of the Securities Act and the
Rules and Regulations and based upon the procedures described in their letter
delivered to you concurrently with the execution of this Agreement (herein
called the Original Letter), but carried out to a date not more than three
business days prior to the Closing Date or such later date on which Option
Stock is purchased (i)
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confirming, to the extent true, that the statements and conclusions set forth
in the Original Letter are accurate as of the Closing Date or such later date,
as the case may be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter which are necessary
to reflect any changes in the facts described in the Original Letter since the
date of the Original Letter or to reflect the availability of more recent
financial statements, data or information. The letters shall not disclose any
change, or any development involving a prospective change, in or affecting the
business or properties of the Company or its Subsidiaries which, in your sole
judgment, makes it impractical or inadvisable to proceed with the public
offering of the Stock or the purchase of the Option Stock as contemplated by
the Prospectus.
(i) You shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, a letter
stating that their review of the Company's system of internal accounting
controls, to the extent they deemed necessary in establishing the scope of
their examination of the Company's financial statements as at [__________,]
1997, did not disclose any weakness in internal controls that they considered
to be material weaknesses.
(j) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (vi) of Section 6(a) hereof.
(k) Prior to the Closing Date, the Stock to be issued and sold by
the Company and the Selling Shareholders shall have been duly authorized for
listing by the Nasdaq Stock Market.
(l) On or prior to the Closing Date, you shall have received from
all directors, officers, and shareholders listed on Exhibit A hereto
agreements, in form reasonably satisfactory to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, stating
that without the prior written consent of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC on behalf of
the Underwriters, such person or entity will not, for a period of 180 days
following the commencement of the public offering of the Stock by the
Underwriters (which shall be deemed to be the date of the Prospectus, directly
or indirectly, (i) sell, offer, contract to sell, make any short sale, pledge,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or acquire Common
Stock or (ii) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences or ownership of Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters, shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and the Selling Shareholders. Any such termination shall be without
liability of the Company or the Selling Shareholders to the Underwriters and
without liability of the Underwriters to the Company or the Selling
Shareholders; provided, however, that (i) in the event of such termination, the
Company and the Selling Shareholders agree to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company or the Selling Shareholders under this Agreement,
including all costs and expenses referred to in paragraphs (viii) and (ix) of
Section 6(a) hereof (with the total obligation of each Selling Shareholder
being limited to its pro rata share of such costs and expenses based on the
percentage that the number of shares of Stock sold by such Selling Shareholder
bears to the total number of shares of Stock that could be sold pursuant to
this Agreement), and (ii) if this Agreement is terminated by you because of any
refusal, inability or failure on the part of the Company or the Selling
Shareholders to perform any agreement herein, to fulfill any of the
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conditions herein, or to comply with any provision hereof other than by reason
of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
SHAREHOLDERS. The obligation of the Company and the Selling Shareholders to
deliver the Stock shall be subject to the conditions that (a) the Registration
Statement shall have become effective and (b) no stop order suspending the
effectiveness thereof shall be in effect and no proceedings therefor shall be
pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall
not be fulfilled, this Agreement may be terminated by the Company and the
Selling Shareholders by giving notice to you. Any such termination shall be
without liability of the Company and the Selling Shareholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Shareholders; provided, however, that in the event of any such
termination the Company and the Selling Shareholders, jointly and severally,
agree to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company and the
Selling Shareholders under this Agreement, including all costs and expenses
referred to in paragraphs (viii) and (ix) of Section 6(a) hereof (with the
total obligation of each Selling Shareholder being limited to its pro rata
share of such costs and expenses based on the percentage that the number of
shares of Stock sold by such Selling Shareholder bears to the total number of
shares of Stock that could be sold pursuant to this Agreement).
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement, (and subject, in the case of the
Selling Shareholder, to the last sentence of this Section 11 and the provisions
of paragraph (f) of the Section 7), the Company and the Selling Shareholders
hereby, jointly and severally, agree to reimburse on a quarterly basis the
Underwriters for all reasonable legal and other expenses incurred in connection
with investigating or defending 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 paragraph (a) of Section 7 of this
Agreement, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the obligations under this Section 11 and the
possibility that such payments might later be held to be improper; provided,
however, that (i) to the extent any such payment is ultimately held to be
improper, the persons receiving such payments shall promptly refund them and
(ii) such persons shall provide to the Company, upon request, reasonable
assurances of their ability to effect any refund, when and if due. The
foregoing notwithstanding, each Selling Shareholder shall only be obligated
under this Section 11 if the statement or omission, or alleged statement or
omission, giving rise to the claim, action, investigation, inquiry or other
proceeding related to (a) information pertaining to such Selling Shareholder
furnished by or on behalf of such Selling Shareholder expressly for use in any
Preliminary Prospectus or the Registration Statement or the Prospectus or any
such amendment thereof or supplement thereto or (b) facts that would constitute
a breach of any representation or warranty of such Selling Shareholder
contained herein.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of the Company, the Selling Shareholders and the
several Underwriters and, with respect to the provisions of Section 7 hereof,
the several parties (in addition to the Company, the Selling Shareholders and
the several Underwriters) indemnified under the provisions of said Section 7,
and their respective personal representatives, successors and assigns. Nothing
in this Agreement is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable remedy or claim under or in
respect of this Agreement or any provision herein contained. The term
"successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the Stock from any of the several Underwriters.
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13. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, with a copy to
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.; and if to the Company, shall be
mailed, telegraphed or delivered to it at its office, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Executive Officer, with a
copy to ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.; and if to
the Selling Shareholders, shall be mailed, telegraphed or delivered to the
Selling Shareholders in care of _________ at _____________ with a copy to
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. All
notices given by telegraph shall be promptly confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or controlling person
thereof, or by or on behalf of the Company or any Selling Shareholder, or their
respective directors or officers, and (c) delivery and payment for the Stock
under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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This Agreement shall be governed by, and construed in accordance with, the laws
of the State of New York.
Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
BEST SOFTWARE, INC.
By
--------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
PRINCIPAL SELLING SHAREHOLDERS:
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually
SELLING SHAREHOLDERS LISTED ON SCHEDULE I
By:
-------------------------------------------
, Attorney-in-Fact
----------------------------
The foregoing Agreement is hereby
confirmed and accepted as of the date first
above written.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ & COMPANY
By: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
By:
----------------------------------------
Managing Director
Acting on behalf of the several
Underwriters, including themselves,
named in Schedule I hereto.
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EXHIBIT A
LIST OF STOCKHOLDERS SUBJECT TO LOCK-UP
-25-
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SCHEDULE I
UNDERWRITERS
UNDERWRITERS NUMBER OF
------------ SHARES
TO BE
PURCHASED
---------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-------------------
-
===================
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SCHEDULE II
SELLING SHAREHOLDERS
NAME AND ADDRESS NUMBER OF SHARES OF UNDERWRITTEN STOCK NUMBER OF SHARES OF
TO BE SOLD OPTION STOCK TO BE SOLD
Total
=================== ===================
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ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF ▇▇▇▇ AND ▇▇▇▇ LLP
COUNSEL FOR THE COMPANY
(i) The Company is validly existing as a corporation in
good standing under the laws of the Commonwealth of Virginia, with
corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. Each
of the Subsidiaries of the Company organized in the United States
(each, a "U.S. Subsidiary") is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation,
with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. To
the best of such counsel's knowledge, the Subsidiaries are the only
subsidiaries (as defined in Rule 405 under the Securities Act), direct
or indirect, of the Company. The Company and each of the Subsidiaries
are duly qualified to transact business in the jurisdictions set forth
on Exhibit A hereto. The outstanding shares of capital stock of each
of the U.S. Subsidiaries have been duly authorized and validly issued
and are fully paid and non-assessable. The capital stock in such U.S.
Subsidiaries are owned by the Company or another U.S. Subsidiary, and
to the best knowledge of such counsel, are free and clear of all
liens, encumbrances and equities and claims; and to the best knowledge
of such counsel, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in
the U.S. Subsidiaries are outstanding.
(ii) the authorized capital stock of the Company consists
of - shares of Preferred Stock, of which there are
outstanding - shares, and - shares Common Stock,
[$.01] par value, of which there are outstanding - shares of
(including the Underwritten Stock plus the number of shares of Option
Stock issued on the date hereof); all of the outstanding shares of
such capital stock (including the Underwritten Stock and the shares of
Option Stock issued, if any) have been duly authorized and validly
issued and are fully paid and nonassessable; any Option Stock
purchased after the Closing Date, when issued and delivered to and
paid for by the Underwriters as provided in the Underwriting
Agreement, will be duly authorized and validly issued and will be
fully paid and nonassessable; and no preemptive, co-sale or similar
rights of, or rights of refusal in favor of, shareholders exist with
respect to the Stock, or the issue and sale thereof, pursuant to the
Articles of Incorporation or Bylaws of the Company;
(iii) the Registration Statement has become effective under
the Securities Act and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration Statement
or suspending or preventing the use of the Prospectus is in effect and
no proceedings for that purpose have been instituted or are pending or
contemplated by the Commission;
(iv) the Registration Statement and the Prospectus (except
as to the financial statements and schedules and other financial and
statistical data contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Securities Act and the Rules and Regulations;
(v) the information required to be set forth in the
Registration Statement in answer to Items 9 and 10 (insofar as it
relates to such counsel) of Form S-1 is to the best of such counsel's
knowledge accurately and adequately set forth therein in all material
respects or no response is required with respect to such Items.
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(vi) the Company has the corporate power and authority to
enter into the Underwriting Agreement and to issue, sell and deliver
to the Underwriters the Stock to be issued and sold thereunder; and
the Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(vii) the issue and sale by the Company of the shares of
Stock sold by the Company as contemplated by the Underwriting
Agreement will not conflict with, or result in a breach of or default
under (A) the Certificate or Articles of Incorporation or Bylaws of
the Company or any of its U.S. Subsidiaries, (B) any applicable law or
regulation known to such counsel, or (C) so far as is known to such
counsel, any order, writ, injunction or decree, of any jurisdiction,
court or governmental instrumentality specifically naming the Company
or one of its U.S. Subsidiaries;
(viii) the information in the Prospectus under the captions
"Management - Employment Agreements," "Management - Stock Plans,"
"Management - Limitation of Liability and Indemnification," "Certain
Transactions," "Description of Capital Stock" and "Underwriting," to
the extent that such information constitutes matters of law or legal
conclusions, has been reviewed by such counsel and is a fair summary
in all material respects of such matters and conclusions; and the form
of certificate evidencing the Common Stock and filed as an exhibit to
the Registration Statement complies with Virginia law;
(ix) to such counsel's best knowledge, there are no
agreements, contracts, leases or documents to which the Company is a
party of a character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an exhibit to
the Registration Statement which are not described or referred to
therein or filed as required.
(x) no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
of the transactions contemplated in the Underwriting Agreement, except
such as have been obtained under the Securities Act and such as may be
required under state securities or blue sky laws in connection with
the purchase and distribution of the Stock by the Underwriters;
(xi) to such counsel's best knowledge, there are no legal
or governmental proceedings pending or threatened against the Company
or any of the Subsidiaries of a character required to be disclosed in
the Registration Statement or the Prospectus, by the Securities Act or
the applicable Rules and Regulations other than those described
therein;
(xii) neither the Company nor any of the Subsidiaries is
presently (a) in violation of its respective Certificate or Articles
of Incorporation or Bylaws, or (b) to the best of such counsel's
knowledge, in material breach of, or in default under, any bond,
debenture, note or other evidence of indebtedness or any lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument listed as an exhibit to the
Registration Statement or any applicable statute, rule or regulation
known to such counsel or, to such counsel's best knowledge, any order,
writ or decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries, or over any
of their properties or operations; and
(xiii) to such counsel's best knowledge, except as set forth
in the Registration Statement and Prospectus, no holders of Common
Stock or other securities of the Company have registration rights with
respect to securities of the Company and, except as set forth in the
Registration Statement and Prospectus, all holders of securities of
the Company having rights to registration of
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such shares of Common Stock or other securities, because of the filing
of the Registration Statement by the Company have, with respect to the
offering contemplated thereby, waived such rights or such rights have
expired by reason of lapse of time following notification of the
Company's intent to file the Registration Statement or have included
securities in the Registration Statement pursuant to the exercise of
and in full satisfaction of such rights;
(xiv) to such counsel's best knowledge, the issuances and
sales by the Company of the securities described in Item 15 of the
Registration Statement were exempt from the registration requirements
of the Act, and, to such counsel's best knowledge, no event
(including, without limitation, the offering and sale of the Stock)
has occurred or is contemplated by the Company which has rendered or
will render such exemptions unavailable.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives
of the Company, the Representatives, Underwriters' counsel and the
independent certified public accountants of the Company, at which such
conferences the contents of the Registration Statement and Prospectus
and related matters were discussed, and although they have not
verified the accuracy or completeness of the statements contained in
the Registration Statement or the Prospectus, nothing has come to the
attention of such counsel which caused them to be believe that the
Registration Statement (other than the financial statements including
supporting schedules and financial and statistical data derived
therefrom, as to which such counsel need express no opinion), at the
Effective Date and at all times subsequent thereto up to and on the
Closing Date and on any later date on which Option Stock is to be
purchased, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
prospectus (except as aforesaid) at the Closing Date or any later date
on which the Option Stock is to be purchased, as the case may be,
contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
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ANNEX B
MATTERS TO BE COVERED IN THE OPINION OF
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
COUNSEL TO THE SELLING SHAREHOLDERS
(i) each of the Selling Shareholders has full legal right, power
and authority, and any approval required by law (other than as required by
State securities and blue sky laws as to which such counsel need express no
opinion) to sell, assign, transfer and deliver the portion of the Stock to be
sold by such Selling Shareholder.
(ii) this Agreement and the Custody Agreement and Power of Attorney
have been duly authorized, executed and delivered each Selling Shareholder,
and, to the best knowledge of such counsel after due inquiry, the consummation
by such Selling Shareholder of the transactions contemplated hereunder or
thereunder and the fulfillment by such Selling Shareholder of the terms of each
such document will not require any consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other
governmental body (except as may be required under the Act and state securities
laws or blue sky laws) and will not result in a breach of any of the terms and
provisions of, or constitute a default under, the organizational documents of
such Selling Shareholder, if other than a natural person, or any indenture,
mortgage, deed of trust or other agreement or instrument to which such Selling
Shareholder is a party, or of any order, rule or regulation applicable to such
Selling Shareholder of any court or of any regulatory body or administrative
agency or other governmental body. Such Selling Shareholder, if other than a
natural person, has been duly organized and is validly existing and in good
standing under the laws of the jurisdiction of its organization as the type of
entity that it purports to be.
(iii) Assuming that the Underwriters are bona fide purchasers
purchasing in good faith without notice of any adverse claim within the meaning
of the Uniform Commercial Code, by delivery of a certificate or certificates
evidencing the Stock to be sold by the Selling Shareholders, the Selling
Shareholders will transfer to the Underwriters who have purchased such Stock
pursuant to the Underwriting Agreement all rights the Selling Shareholders have
in such Stock, and the Underwriters will acquire such Stock free and clear of
any adverse claim (within the meaning of the Uniform Commercial Code).
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ANNEX C
MATTERS TO BE COVERED IN THE OPINION OF
CANADIAN COUNSEL TO THE COMPANY
(xv) The Subsidiary has been duly organized and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority
to own or lease its properties and conduct its business as described
in the Registration Statement. The Subsidiary is duly qualified to
transact business in all jurisdiction in which the conduct of its
business requires such qualification, except for those jurisdictions
in which the failure to qualify would not have a material adverse
effect upon the earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of
the Company and the Subsidiary taken as a whole. The outstanding
shares of capital stock of the Subsidiary have been duly authorized
and validly issued and are fully paid and non-assessable. The capital
stock in such Subsidiary is owned by the Company or another Subsidiary
free and clear of all liens, encumbrances and equities and claims; and
no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests in the Subsidiary are
outstanding;
(xvi) the authorized capital stock of the Subsidiary
consists of - shares of Preferred Stock, of which there are
outstanding - shares, and - shares Common Stock,
[$.01] par value, of which there are outstanding - shares;
all of the outstanding shares of such capital stock have been duly
authorized and validly issued and are fully paid and nonassessable;
and
(xvii) the Subsidiary is not (a) in violation of its
Certificate or Articles of Incorporation or Bylaws, or (b) to the best
of such counsel's knowledge, in material breach of, or in default
under, any bond, debenture, note or other evidence of indebtedness or
any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which it
is a party or by which any of its property is bound that is material
to the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the
Company and the Subsidiaries taken as a whole or any applicable
statute, rule or regulation known to such counsel or, to such
counsel's best knowledge, any order, writ or decree of any court or
governmental agency or body having jurisdiction over the Subsidiary,
or over any of its properties or operations.
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