UNDERWRITING AGREEMENT
October __, 2000
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇ Securities Inc.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
As Representatives of the several Underwriters
c/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
INTRODUCTORY. ▇▇▇▇▇▇▇▇ Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell to the several underwriters named
in SCHEDULE A (the "Underwriters") an aggregate of 2,000,000 shares (the
"Company Shares") of its Common Stock, par value $.01 per share (the "Common
Stock"); and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. (the "Principal Selling Stockholder") and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and SAIC
Venture Capital Corporation (the "Other Selling Stockholders," collectively
with the Principal Selling Stockholder, the "Selling Stockholders") severally
propose to sell to the Underwriters an aggregate of 2,000,000 shares of Common
Stock (the "Selling Stockholder Shares"). The 2,000,000 Company Shares and the
2,000,000 Selling Stockholder Shares are collectively called the "Firm
Shares." In addition, the Selling Stockholders have severally granted to the
Underwriters an option to purchase up to an additional 600,000 shares of
Common Stock (the "Option Shares"), as provided in Section 2, each Selling
Stockholder selling up to the amount set forth opposite such Selling
Stockholder's name in SCHEDULE B. The Firm Shares and, if and to the extent
such option is exercised, the Option Shares are collectively called the
"Shares." ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. ("▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ Securities
Inc. and U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. have agreed to act as representatives
of the several Underwriters (in such capacity, the "Representatives") in
connection with the offering and sale of the Shares.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(File No. 333-47160), which contains a form of prospectus, subject to
completion, to be used in connection with the public offering and sale of the
Shares. Each such prospectus, subject to completion, used in connection with
such public offering is called a "preliminary prospectus." Such registration
statement, as amended, including the financial statements, exhibits and
schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (collectively, the "Securities Act"),
including all documents incorporated or deemed to be incorporated by reference
therein and any information deemed to be a part thereof at the time of
effectiveness pursuant to
Rule 430A or Rule 434 under the Securities Act or the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Exchange Act"), is called the "Registration Statement."
Any registration statement filed by the Company pursuant to Rule 462(b) under
the Securities Act is called the "Rule 462(b) Registration Statement," and,
from and after the date and time of filing of the Rule 462(b) Registration
Statement, the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Shares as included in such Registration
Statement at the time it becomes effective (including, if the Company omitted
information from the Registration Statement pursuant to Rule 430A(a) under
the Securities Act, the information deemed to be a part of the Registration
Statement at the time it became effective pursuant to Rule 430A(b) under the
Securities Act); provided, however, that if in reliance on Rule 434 under the
Securities Act and with the consent of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, on behalf of the
several Underwriters, the Company shall have provided to the Underwriters a
term sheet pursuant to Rule 434(b) or (c), as applicable, prior to the time
that a confirmation is sent or given for purposes of Section 2(10)(a) of the
Securities Act, the term "Prospectus" shall mean the "prospectus subject to
completion" (as defined in Rule 434(g) under the Securities Act) last
provided to the Underwriters by the Company and circulated by the
Underwriters to all prospective purchasers of the Shares (including the
information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 434(d) under the Securities Act).
Notwithstanding the foregoing, if any revised prospectus shall be provided to
the Underwriters by the Company for use in connection with the offering of
the Shares that differs from the prospectus referred to in the immediately
preceding sentence (whether or not such revised prospectus is required to be
filed with the Commission pursuant to Rule 424(b) under the Securities Act),
the term "Prospectus" shall refer to such revised prospectus from and after
the time it is first provided to the Underwriters for such use. If in
reliance on Rule 434 under the Securities Act and with the consent ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, on behalf of the several Underwriters, the Company shall have
provided to the Underwriters a term sheet pursuant to Rule 434(b) or (c), as
applicable, prior to the time that a confirmation is sent or given for
purposes of Section 2(10)(a) of the Securities Act, the Prospectus and the
term sheet, together, will not be materially different from the prospectus in
the Registration Statement. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus, the Prospectus or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval System ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included," "provided" or "stated" in
the Registration Statement or the Prospectus (and all other references or
like import) shall be deemed to mean and include all such financial
statements and schedules and other information which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed
to mean and include the filing of any document under the Exchange Act which
is or is deemed to be incorporated by reference in the Registration Statement
or the Prospectus, as the case may be.
The Company and each of the Selling Stockholders hereby
confirms their respective agreements with the Underwriters as follows:
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SECTION 1. REPRESENTATIONS AND WARRANTIES.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL
SELLING STOCKHOLDER. The Company and the Principal Selling Stockholder, to the
best of his knowledge, hereby represent, warrant and agree with each
Underwriter as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has complied
to the Commission's satisfaction with all requests of the Commission for
additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect, and no proceedings for such purpose have been
instituted or are pending or, to the best knowledge of the Company or the
Principal Selling Stockholder, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the Prospectus when filed
complied in all material respects with the Securities Act and, if filed by
electronic transmission pursuant to ▇▇▇▇▇ (except as may be permitted by
Regulation S-T under the Securities Act), the text thereof (excluding any
tables and pictures, which are fairly and accurately described in all material
respects) was identical to the copy thereof delivered to the Underwriters for
use in connection with the offer and sale of the Shares. Each of the
Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times up to and on the First Closing Date (as defined below) and on
any Second Closing Date (as defined below), complied and will comply in all
material respects with the Securities Act and did not and will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. Each preliminary prospectus, as of its date, and the Prospectus,
as amended or supplemented, as of its date and at all subsequent times up to
and on the First Closing Date and on any Second Closing Date, did not and will
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or any preliminary prospectus or the Prospectus, or any
amendments or supplements thereto, made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in
writing by the Representatives expressly for use therein. There are no
contracts or other documents required to be described in the Prospectus or to
be filed as exhibits to the Registration Statement which have not been
described or filed as required.
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company has
delivered to the Representatives three complete conformed copies of the
Registration Statement and of each consent and certificate of experts filed as
a part thereof. The Company has delivered conformed copies of the Registration
Statement (without exhibits) and preliminary prospectuses and on the Closing
Date will have delivered the Prospectus, as amended or supplemented, all in
such quantities and at such places as the Representatives have reasonably
requested for each of the Underwriters.
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(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The Company has
not distributed and will not distribute, prior to the later of the Second
Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than a preliminary prospectus, the
Prospectus, the Registration Statement or other materials permitted by the
Securities Act.
(d) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement
of, the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(e) AUTHORIZATION OF THE SHARES TO BE SOLD BY THE COMPANY. The
Company Shares have been duly authorized for issuance and sale pursuant to
this Agreement and, when issued and delivered by the Company pursuant to this
Agreement, will be validly issued, fully paid and nonassessable.
(f) AUTHORIZATION OF THE SHARES TO BE SOLD BY THE SELLING
STOCKHOLDERS. The Selling Stockholder Shares, when issued, were validly
issued, fully paid and nonassessable.
(g) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have
been satisfied under this Agreement or have been duly waived.
(h) NO MATERIAL ADVERSE CHANGE. Subsequent to the respective dates as
of which information is given in the Prospectus: (i) there has been no
material adverse change, in the condition, financial or otherwise, or in the
earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change or effect, where the
context so requires, is called a "Material Adverse Change" or a "Material
Adverse Effect"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect,
direct or contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of business;
and (iii) there has been no dividend or distribution of any kind declared,
paid or made by the Company or, except for dividends paid to the Company or
other subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any
class of capital stock.
(i) INDEPENDENT ACCOUNTANTS. Ernst & Young LLP, who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) and supporting schedules
filed with the Commission as a part of the Registration Statement and included
in the Prospectus, are independent public or certified public accountants as
required by the Securities Act and the Exchange Act.
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(j) PREPARATION OF THE FINANCIAL STATEMENTS. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus, together with the related schedules and notes, present
fairly the consolidated financial position of the Company and its subsidiaries
as of and at the dates indicated and the results of their operations and cash
flows for the periods specified. The supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. Such financial statements and supporting schedules and the notes
thereto have been prepared in conformity with generally accepted accounting
principles as applied in the United States applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules
are required to be included in the Registration Statement. The financial data
set forth in the Prospectus under the captions "Summary--Summary Consolidated
Financial Data", "Selected Consolidated Financial Data" and "Capitalization"
fairly present the information set forth therein on a basis consistent with
that of the audited financial statements contained in the Registration
Statement.
(k) COMPANY'S ACCOUNTING SYSTEM. The Company and each of its
subsidiaries maintains a system of 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 as applied in the United States 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.
(l) SUBSIDIARIES OF THE COMPANY. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other
than the subsidiaries listed in Exhibit 21 to the Company's Annual Report on
Form 10-K for the fiscal year ended January 31, 2000.
(m) INCORPORATION AND GOOD STANDING OF THE COMPANY AND ITS
SUBSIDIARIES. Each of the Company and its subsidiaries has been duly organized
and is validly existing as a corporation or limited liability company, as the
case may be, in good standing under the laws of the jurisdiction in which it
is organized with full corporate or limited liability company power and
authority to own its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction which requires such
qualification except where the failure to be so qualified would not have a
Material Adverse Effect.
(n) CAPITALIZATION OF THE SUBSIDIARIES. All the outstanding shares of
capital stock of each subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as otherwise set
forth in the Prospectus, all outstanding shares of capital stock of the
subsidiaries are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any security interests, claims, liens or
encumbrances.
(o) NO PROHIBITION ON SUBSIDIARIES FROM PAYING DIVIDENDS OR MAKING
OTHER DISTRIBUTIONS. No subsidiary of the Company is currently prohibited,
directly or indirectly, from
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paying any dividends to the Company, from making any other distribution on
such subsidiary's capital stock, from repaying to the Company any loans or
advances to such subsidiary from the Company or from transferring any of such
subsidiary's property or assets to the Company or any other subsidiary of the
Company, except as described in or contemplated by the Prospectus.
(p) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options described in the
Prospectus). The Common Stock (including the Shares) conform in all material
respects to the description thereof contained in the Prospectus. All of the
issued and outstanding shares of Common Stock (excluding the Company Shares)
have been duly authorized and validly issued, are fully paid and nonassessable
and have been issued in compliance with federal and state securities laws.
None of the shares of outstanding Common Stock were issued in violation of any
preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company. There are no authorized
or outstanding options, warrants, preemptive rights, rights of first refusal
or other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of
its subsidiaries other than those accurately described in the Prospectus and
the financial statements of the Company, and related notes thereto, included
in the Prospectus. The description of the Company's stock option, stock bonus
and other stock plans or arrangements, and the options or other rights granted
thereunder, set forth in the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.
(q) STOCK EXCHANGE LISTING. The Company's Common Stock is registered
pursuant to Section 12(g) of the Exchange Act, and the Shares are listed, or
have been approved for listing upon notice of issuance, on the Nasdaq National
Market. The Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Shares from the Nasdaq National Market, nor has the
Company received any notification that the Commission or the National
Association of Securities Dealers, Inc. (the "NASD") is contemplating
terminating such registration or listing.
(r) NO CONSENTS, APPROVALS OR AUTHORIZATIONS REQUIRED. No consent,
approval, authorization, filing with or order of any court or governmental
agency or regulatory body is required in connection with the transactions
contemplated herein, except such as have been obtained or made under the
Securities Act and such as may be required (i) under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Shares by
the Underwriters in the manner contemplated here and in the Prospectus, (ii)
by the NASD and (iii) by the federal and provincial laws of Canada.
(s) NON-CONTRAVENTION OF EXISTING INSTRUMENTS AGREEMENTS. Neither the
issue and sale of the Shares nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, (i) the charter or by-laws of the Company or any of
its subsidiaries, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the
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Company or any of its subsidiaries is a party or bound or to which their
property is subject or (iii) any statute, law, rule, regulation, judgment,
order or decree applicable to the Company or any of its subsidiaries of any
court, regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or any of its
subsidiaries or any of their properties, except with respect to (ii) and (iii)
such breaches, violations or impositions that would not individually or in the
aggregate have a Material Adverse Effect or could materially affect the
Company's ability to consummate the transactions contemplated hereby.
(t) NO DEFAULTS OR VIOLATIONS. Neither the Company nor any subsidiary
is in violation of or default under (i) any provision of its charter or
by-laws, (ii) the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which it is a party or bound or to which
its property is subject or (iii) any statute, law, rule, regulation, judgment,
order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company or such subsidiary or any of its properties, as applicable, except any
such violation or default which would not, singly or in the aggregate, result
in a Material Adverse Change except as otherwise disclosed in the Prospectus.
(u) NO ACTIONS, SUITS OR PROCEEDINGS. Except as otherwise disclosed
in the Prospectus, no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries or their property is pending or, to the best
knowledge of the Company, threatened that (i) could reasonably be expected to
have a material adverse effect on the Company's ability to perform its
obligations under this Agreement or to consummate any of the transactions
contemplated hereby or (ii) could reasonably be expected to result in a
Material Adverse Effect.
(v) ALL NECESSARY PERMITS, ETC. The Company and each subsidiary
possess such valid and current certificates, authorizations or permits issued
by the appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, and neither the Company nor
any subsidiary has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, could result in a Material Adverse
Change.
(w) TITLE TO PROPERTIES. The Company and each of its subsidiaries has
good and valid title to all the properties and assets reflected as owned in
the financial statements referred to in Section 1(A)(j) above (or elsewhere in
the Prospectus), in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects, except
such as do not materially and adversely affect the value of such property and
do not materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary. The real property, improvements,
equipment and personal property held under lease by the Company or any
subsidiary are held under valid and enforceable leases, with such exceptions
as are not material and do not materially interfere with the use made or
proposed to be made of such real property, improvements, equipment or personal
property by the Company or such subsidiary.
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(x) TAX LAW COMPLIANCE. The Company and its consolidated subsidiaries
have filed all necessary federal, state and foreign income and franchise tax
returns and have paid all taxes required to be paid by any of them and, if due
and payable, any related or similar assessment, fine or penalty levied against
any of them. The Company has made adequate charges, accruals and reserves in
the applicable financial statements referred to in Section 1(A)(j) above in
respect of all federal, state and foreign income and franchise taxes for all
periods as to which the tax liability of the Company or any of its
consolidated subsidiaries has not been finally determined. The Company has no
knowledge of any tax deficiency that has been or might be asserted or
threatened against the Company that could result in a Material Adverse Change.
(y) INTELLECTUAL PROPERTY RIGHTS. Except as disclosed in the
Prospectus each of the Company and its subsidiaries owns or possesses
adequate rights to use all patents, patent rights or licenses, inventions,
collaborative research agreements, trade secrets, know-how, trademarks,
service marks, trade names and copyrights which are necessary to conduct its
businesses as described in the Registration Statement and Prospectus; the
expiration of any patents, patent rights, trade secrets, trademarks, service
marks, trade names or copyrights would not result in a Material Adverse
Change; the Company has not received any notice of, and has no knowledge of,
any infringement of or conflict with asserted rights of the Company by others
with respect to any patent, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names or copyrights the loss of
which by the Company would result in a Material Adverse Effect; and the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of others with respect to
any patent, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names or copyrights which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, might have a
Material Adverse Effect. There is no claim being made against the Company
regarding patents, patent rights or licenses, inventions, collaborative
research, trade secrets, know-how, trademarks, service marks, trade names or
copyrights that is not otherwise disclosed in the Prospectus. The Company and
its subsidiaries do not in the conduct of their business as now or proposed
to be conducted as described in the Prospectus infringe or conflict with any
right or patent of any third party, or any discovery, invention, product or
process which is the subject of a patent application filed by any third
party, known to the Company or any of its subsidiaries, which such
infringement or conflict is reasonably likely to result in a Material Adverse
Change.
(z) NO TRANSFER TAXES OR OTHER FEES. There are no transfer taxes or
other similar fees or charges under federal law or the laws of any state, or
any political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance and sale by the
Company of the Company Shares.
(aa) COMPANY NOT AN "INVESTMENT COMPANY". The Company has been
advised of the rules and requirements under the Investment Company Act of
1940, as amended (the "Investment Company Act"). The Company is not, and after
receipt of payment for the Shares will not be, an "investment company" or an
entity "controlled" by an "investment company" within the meaning of the
Investment Company Act and will conduct its business in a manner so that it
will not become subject to the Investment Company Act.
(bb) INSURANCE. Each of the Company and its subsidiaries are insured
by recognized, financially sound and reputable institutions with policies in
such amounts and with such
8
deductibles and covering such risks as are generally deemed adequate and
customary for their businesses, including, but not limited to, policies
covering real and personal property owned or leased by the Company and its
subsidiaries against theft, damage, destruction, and acts of vandalism,
general liability and Directors and Officers liability. The Company has no
reason to believe that it or any of its subsidiaries will not be able (i) to
renew its existing insurance coverage as and when such policies expire or (ii)
to obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change. Neither of the Company nor any
subsidiary has been denied any insurance coverage which it has sought or for
which it has applied.
(cc) LABOR MATTERS. To the best of Company's and Principal Selling
Stockholder's knowledge, no labor disturbance by the employees of the Company
or any of its subsidiaries exists or is imminent that might be expected to
result in a Material Adverse Change.
(dd) NO PRICE STABILIZATION OR MANIPULATION. The Company has not
taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.
(ee) LOCK-UP AGREEMENTS. Each officer and director of the company,
each Selling Stockholder and each beneficial owner known to the Company to
hold five or more percent of the outstanding issued share capital of the
Company has signed an agreement substantially in the form attached hereto as
EXHIBIT A (the "Lock-up Agreements"). The Company has provided to counsel for
the Underwriters a complete and accurate list of all stockholders of record
of the Company and the number and type of securities held by each such
securityholder. The Company has provided to counsel for the Underwriters
true, accurate and complete copies of all of the Lock-up Agreements presently
in effect or effected hereby. The Company hereby agrees that it will not
release any of its officers, directors or other stockholders from any Lock-up
Agreements currently existing or hereafter effected without the prior written
consent of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
(ff) RELATED PARTY TRANSACTIONS. There are no business relationships
or related-party transactions involving the Company or any subsidiary or any
other person required to be described in the Prospectus that have not been
described as required.
(gg) EXCHANGE ACT COMPLIANCE. The documents incorporated or deemed to
be incorporated by reference in the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the Exchange Act, and when read
together with the other information in the Prospectus, at the time the
Registration Statement and any amendments thereto become effective and at the
First Closing Date and the Second Closing Date, as the case may be, will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the 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.
(hh) REPORTS FILED. The Company has filed all reports required to be
filed pursuant to the Securities Act and the Exchange Act.
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(ii) CONDITIONS FOR USE OF FORM S-3. The Company has satisfied the
conditions for the use of Form S-3, as set forth in the general instructions
thereto, with respect to the Registration Statement.:
(jj) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. During the past
five (5) years, neither the Company nor any of its subsidiaries nor, to the
best of the Company's knowledge, any employee or agent of the Company or any
subsidiary, has made any contribution or other payment to any official of, or
candidate for, any federal, state or foreign office in violation of any law or
of the character required to be disclosed in the Prospectus.
(kk) ENVIRONMENTAL LAWS. The Company is in compliance with all
rules, laws and regulations relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to its business, except where the
failure to comply would not result in a Material Adverse Change. The Company
has received no notice from any governmental authority or third party of an
asserted claim under Environmental Laws, which claim is required to be
disclosed in the Registration Statement and the Prospectus. The Company is
not currently aware that it will be required to make future material capital
expenditures to comply with Environmental Laws. No property which is owned,
leased or occupied by the Company has been designated as a Superfund site
pursuant to the Comprehensive Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. ss. 9601, ET SEQ.), or otherwise designated as a
contaminated site under applicable state or locaL law.
(ll) ERISA COMPLIANCE. The Company and its subsidiaries and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained
by the Company, its subsidiaries or their "ERISA Affiliates" (as defined
below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company or a subsidiary, any member of
any group of organizations described in Sections 414(b),(c),(m) or (o) of the
Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such
subsidiary is a member. No "reportable event" (as defined under ERISA) has
occurred or is reasonably expected to occur with respect to any "employee
benefit plan" established or maintained by the Company, its subsidiaries or
any of their ERISA Affiliates. No "employee benefit plan" established or
maintained by the Company, its subsidiaries or any of their ERISA Affiliates,
if such "employee benefit plan" were terminated, would have any "amount of
unfounded benefit liabilities" (as defined under ERISA). Neither the Company,
its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably
expects to incur any liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "employee benefit plan" or (ii)
Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification.
10
Any certificate signed by an officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the
matters set forth therein.
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder represents, warrants and covenants, severally and not
jointly, to each Underwriter as follows:
(a) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling Stockholder
and is a valid and binding agreement of such Selling Stockholder, enforceable
in accordance with its terms, except as rights to indemnification hereunder
may be limited by applicable law and except as the enforcement hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(b) THE CUSTODY AGREEMENT AND POWER OF ATTORNEY. Each of the (i)
Custody Agreement signed by such Selling Stockholder and the Company, as
custodian (the "Custodian"), relating to the deposit of the Selling
Stockholder Shares to be sold by such Selling Stockholder (the "Custody
Agreement") and (ii) Power of Attorney appointing certain individuals named
therein as such Selling Stockholder's attorneys-in-fact (each, an
"Attorney-in-Fact") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus (the "Power of
Attorney"), of such Selling Stockholder has been duly authorized, executed and
delivered by such Selling Stockholder and is a valid and binding agreement of
such Selling Stockholder, enforceable in accordance with its terms, except as
rights to indemnification thereunder may be limited by applicable law and
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles. Each
Selling Stockholder agrees that the Selling Stockholder Shares to be sold by
such Selling Stockholder on deposit with the Custodian are subject to the
interests of the Underwriters, that the arrangements made for such custody are
to that extent irrevocable, and that the obligations of such Selling
Stockholder hereunder shall not be terminated, except as provided in this
Agreement or in the Custody Agreement, by any act of the Selling Stockholder,
by operation of law, by death or incapacity of such Selling Stockholder or by
the occurrence of any other event. To the maximum extent permitted by
applicable law, if such Selling Stockholder should die or become
incapacitated, or in any other event should occur, before the delivery of the
Selling Stockholder Shares to be sold by such Selling Stockholder hereunder,
the documents evidencing the Selling Stockholder Shares to be sold by such
Selling Stockholder then on deposit with the Custodian shall be delivered by
the Custodian in accordance with the terms and conditions of this Agreement as
if such death, incapacity or other event had not occurred, regardless of
whether or not the Custodian shall have received notice thereof.
(c) TITLE TO SHARES TO BE SOLD. Such Selling Stockholder is the
lawful owner of the Selling Stockholder Shares to be sold by such Selling
Stockholder hereunder and upon sale and delivery of, and payment for, such
Selling Stockholder Shares, as provided herein, such Selling Stockholder will
convey good and valid title to such Selling Stockholder Shares, free and clear
of
11
all liens, encumbrances, equities and claims whatsoever (except any that might
have been created by or through any Underwriter).
(d) ALL AUTHORIZATIONS OBTAINED. Such Selling Stockholder has, and on
the First Closing Date and the Second Closing Date (as defined below) will
have the legal right and power, and all authorizations and approvals required
by law and under its charter or by-laws or other organizational documents, as
applicable, to enter into this Agreement and its Custody Agreement and Power
of Attorney, to sell, transfer and deliver all of the Selling Stockholder
Shares which may be sold by such Selling Stockholder pursuant to this
Agreement and to comply with its other obligations hereunder and thereunder.
(e) NO FURTHER CONSENTS, AUTHORIZATION OR APPROVALS. No consent,
approval, authorization or order of any court or governmental agency or body
is required for (i) the execution and delivery by such Selling Stockholder of
this Agreement or such Selling Stockholder's Custody Agreement and Power of
Attorney or (ii) the consummation by such Selling Stockholder of the
transactions contemplated herein, except such as may be required or have been
obtained under the Securities Act and the rules and regulations of the NASD
and such as may be required under the federal and provincial securities laws
of Canada or the blue sky laws or any jurisdiction in connection with the
purchase and distribution of the Shares by the Underwriters and such other
approvals as have been obtained.
(f) NON-CONTRAVENTION. Neither the sale of the Selling Stockholder
Shares being sold by such Selling Stockholder nor the consummation of any
other of the transactions herein contemplated by such Selling Stockholder or
the fulfillment of the terms hereof by such Selling Stockholder will conflict
with, result in a breach or violation of, or constitute a default under any
terms of any indenture or other agreement or instrument to which such Selling
Stockholder is a party or bound, any law, judgment, order or decree applicable
to such Selling Stockholder or any court or regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over such Selling
Stockholder.
(g) NO REGISTRATION OR OTHER SIMILAR RIGHTS. The Selling Stockholder
Shares to be offered and sold by such Selling Stockholder under this Agreement
is in full satisfaction of the registration rights of such Selling Stockholder
to participate in the offering contemplated by the Registration Statement; or,
in the alternative, such Selling Stockholder does not have any registration or
other similar rights to have any equity or debt securities registered for sale
by the Company under the Registration Statement or included in the offering
contemplated by this Agreement.
(h) NO PREEMPTIVE, CO-SALE OR OTHER RIGHTS. Such Selling Stockholder
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 Shares that are to be sold by the Company or any of the other Selling
Stockholders to the Underwriters pursuant to this Agreement; and such Selling
Stockholder does not own any warrants, options or similar rights to acquire,
and does not have any right or arrangement to acquire, any capital stock,
right, warrants, options or other securities from the Company, other than
those described in the Registration Statement and the Prospectus.
12
(i) DISCLOSURE MADE BY SUCH SELLING STOCKHOLDER IN THE PROSPECTUS.
All information furnished by or on behalf of such Selling Stockholder in
writing expressly for use in the Registration Statement and Prospectus is, and
on the First Closing Date and the Second Closing Date (as defined below) will
be, true, correct, and complete in all material respects, and does not, and on
the First Closing Date and the Second Closing Date will not, contain any
untrue statement of a material fact or omit to state any material fact
necessary to make such information, in light of the circumstances in which
such statement is made, not misleading. Such Selling Stockholder confirms as
accurate the number of shares of Common Stock beneficially owned by such
Selling Stockholder set forth opposite such Selling Stockholder's name in the
Prospectus under the caption "Principal and Selling Stockholders" (both prior
to and after giving effect to the sale of the Shares).
(j) NO PRICE STABILIZATION OR MANIPULATION. Such Selling Stockholder
has not taken and will not take, directly or indirectly, any action designed
to or that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.
(k) NO TRANSFER TAXES OR OTHER FEES. There are no transfer taxes or
other similar fees or charges under federal law or the laws of any state, or
any political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the sale by such Selling
Stockholder of the Shares being sold by such Selling Stockholder, except such
as may be required or have been obtained under the Securities Act and the
rules and regulations of the NASD and such as may be required under the
federal and provincial securities laws of Canada or the blue sky laws or any
jurisdiction in connection with the purchase and distribution of the Shares by
the Underwriters and such other approvals as have been obtained.
(l) DISTRIBUTION OF OFFERING MATERIALS BY THE SELLING STOCKHOLDERS.
Such Selling Stockholder has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Stock.
(m) CONFIRMATION OF COMPANY REPRESENTATIONS AND WARRANTIES.
(i) In addition to the other representations and warranties set forth
in this Section 1B, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ further represents and warrants
that (A) to the best of his knowledge, the representations and
warranties of the Company contained in Section 1A hereof are true and
correct, (B) he is familiar with the Registration Statement and the
Prospectus and (C) he is not prompted to sell the Shares to be sold by
such Selling Stockholder by any information concerning the Company
which is not set forth in the Registration Statement and the Prospectus
PROVIDED, HOWEVER, that the foregoing representations, warranties and
covenants shall not apply to the extent, but only to the extent, they
arise out of or based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Selling
Stockholders by the Representatives expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto).
(ii) In addition to the other representations and warranties set forth
in this Section 1B, each of ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, and SAIC Venture Capital
13
Corporation, severally and not jointly, further represents and warrants
that such Selling Stockholder is familiar with the Registration
Statement and such Selling Stockholder is not aware that (A) any
preliminary prospectus, as of its date, included any untrue statement
of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; or at the time the Registration
Statement became or becomes, as the case may be, effective and at all
times subsequent thereto up to and on the Closing Date and on any later
date on which Option Shares are to be purchased by the Underwriters
from such Selling Stockholder, the Registration Statement, or any
amendments or supplements thereto, has included or will include any
untrue statement of a material fact or omission of, or will omit to
state, a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, or any
amendments or supplements thereto, has included or will include any
untrue statement of a material fact or omission of, or omit to state, a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and (B)
such Selling Stockholder is not prompted to sell the Shares to be sold
by such Selling Stockholder by any information concerning the Company
which is not set forth in the Registration Statement and the Prospectus
PROVIDED, HOWEVER, that the foregoing representations, warranties and
covenants shall not apply to the extent, but only to the extent, they
arise out of or based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Selling
Stockholders by the Representatives expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto). For the purposes of this
Section 1B(m)(ii), the awareness of SAIC shall be limited to the
awareness of [_____________].
Any certificate signed by or on behalf of any Selling
Stockholder and delivered to the Representatives or to counsel for the
Underwriters shall be deemed to be a representation and warranty by such Selling
Stockholder to each Underwriter as to the matters covered thereby.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) THE FIRM SHARES. On the basis of the representations, warranties
and agreements herein contained, and upon the terms but subject to the
conditions herein set forth, (i) the Company agrees to issue and sell to the
several Underwriters an aggregate of 2,000,000 Firm Shares and (ii) the
Selling Stockholders agree, severally and not jointly, to sell to the several
Underwriters an aggregate of 2,000,000 Firm Shares, each Selling Stockholder
selling the number of Firm Shares set forth opposite such Selling
Stockholder's name on SCHEDULE B. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Underwriters agree, severally and not
jointly, to purchase from the Company and the Selling Stockholders the
respective number of Firm Shares set forth opposite their names on SCHEDULE A.
The purchase price per Firm Share to be paid by the several Underwriters to
the Company and the Selling Stockholders shall be $[___] per share.
(b) THE FIRST CLOSING DATE. Delivery of the Firm Shares to be
purchased by the Underwriters and payment therefor shall be made by the
Company and the Selling Stockholders and the Representatives at 8:00 a.m.
Dallas time, at the Dallas offices of ▇▇▇▇▇ Liddell & ▇▇▇▇
14
LLP (or at such other place as may be agreed upon among the Representatives
and the Company), (i) if this Agreement is executed and delivered before 1:30
p.m., San Francisco time, on the third (3rd) full business day following the
first day that Shares are traded, (ii) if this Agreement is executed and
delivered after 1:30 p.m., San Francisco time, on the fourth (4th) full
business day following the day that this Agreement is executed and delivered
or (iii) at such other time and date not later than seven (7) full business
days following the first day that Firm Shares are traded as the
Representatives and the Company may determine (or at such time and date to
which payment and delivery shall have been postponed pursuant to Section 8
hereof), such time and date of payment and delivery being herein called the
"Closing Date;" provided, however, that if the Company has not made available
to the Representatives copies of the Prospectus within the time provided in
Section 2(g) and 3A(e) hereof, the Representatives may, in their sole
discretion, postpone the Closing Date until no later than two (2) full
business days following delivery of copies of the Prospectus to the
Representatives.
(c) THE OPTION SHARES; THE SECOND CLOSING DATE. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Selling
Stockholders, severally and not jointly, hereby grant an option to the several
Underwriters to purchase up to an aggregate of 600,000 Option Shares from the
Selling Stockholders at the purchase price per share to be paid by the
Underwriters for the Firm Shares. The option granted hereunder is for use by
the Underwriters solely in covering any over-allotments in connection with the
sale and distribution of the Firm Shares. The option granted hereunder may be
exercised in whole or in part at any time or from time to time upon notice by
the Representatives to the Selling Stockholders (with a copy to the Company),
which notice may be given at any time within 30 days from the date of this
Agreement. Each time and date of delivery of the Option Shares, if subsequent
to the First Closing Date, is called the "Second Closing Date," shall be
determined by the Representatives and shall not be earlier than three nor
later than five full business days after delivery of such notice of exercise.
If any Option Shares are to be purchased, (i) each Underwriter agrees,
severally and not jointly, to purchase the number of Option Shares (subject to
such adjustments to eliminate fractional shares as the Representatives may
determine) that bears the same proportion to the total number of Option Shares
to be purchased as the number of Firm Shares set forth on SCHEDULE A opposite
the name of such Underwriter bears to the total number of Firm Shares and (ii)
each Selling Stockholder agrees, severally and not jointly, to sell the number
of Option Shares (subject to such adjustments to eliminate fractional shares
as the Representatives may determine) that bears the same proportion to the
total number of Option Shares to be sold as the number of Option Shares set
forth in SCHEDULE B opposite the name of such Selling Stockholder. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Selling Stockholders (with a
copy to the Company).
(d) PUBLIC OFFERING OF THE SHARES. The Representatives hereby advises
the Company and the Selling Stockholders that the Underwriters intend to offer
for sale to the public, as described in the Prospectus, their respective
portions of the Shares as soon after this Agreement has been executed and the
Registration Statement has been declared effective as the Representatives, in
their sole judgment, have determined is advisable and practicable.
15
(e) PAYMENT FOR THE SHARES.
(i) Payment for the Company Shares shall be made at the First
Closing Date by wire transfer of immediately available funds to the
order of the Company. Payment for the Selling Stockholder Shares shall
be made at the First Closing Date (and, if applicable, at the Second
Closing Date) by wire transfer of immediately available funds to the
order of the Custodian.
(ii) It is understood that the Representatives have been
authorized, for their own account and the accounts of the several
Underwriters, to accept delivery of and receipt for, and make payment
of the purchase price for, the Firm Shares and any Option Shares the
Underwriters have agreed to purchase. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually
and not as one of the Representatives of the Underwriters, may (but
shall not be obligated to) make payment for any Shares to be purchased
by any Underwriter whose funds shall not have been received by the
Representatives by the First Closing Date or the Second Closing Date,
as the case may be, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
(iii) Each Selling Stockholder hereby agrees that (A) it will
pay all income tax, capital gains tax, stock transfer taxes, stamp
duties and other similar taxes, if any, payable upon the sale or
delivery of the Selling Stockholder Shares, or otherwise in connection
with the performance of such Selling Stockholder's obligations
hereunder and (B) the Custodian is authorized to deduct for such
payment any such amounts from the proceeds to such Selling Stockholder
hereunder and to pay such amounts for the account of such Selling
Stockholder in accordance with the Custody Agreement.
(f) DELIVERY OF THE SHARES. The Company and the Selling Stockholders
shall deliver, or cause to be delivered, at the First Closing Date, a credit
representing the Firm Shares to an account or accounts at The Depository Trust
Company as designated by the Representatives for the accounts of the
Representatives and the several Underwriters, against the irrevocable release
of a wire transfer of immediately available funds for the amount of the
purchase price therefor. The Selling Stockholders shall also deliver, or cause
to be delivered, at the First Closing Date or the Second Closing Date, as the
case may be, a credit representing the Option Shares to an account or accounts
at The Depository Trust Company as designated by the Representatives for the
accounts of the Representatives and the several Underwriters against the
irrevocable release of a wire transfer of immediately available funds for the
amount of the purchase price therefor. Time shall be of the essence, and
delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
(g) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than 12:00
noon on the second business day following the date the Firm Shares are
released by the Underwriters for sale to the public, the Company shall deliver
or cause to be delivered copies of the Prospectus in such quantities and at
such places as the Representatives shall request.
16
SECTION 3. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.
A. COVENANTS OF THE COMPANY. The Company further covenants and agrees
with each Underwriter as follows:
(a) REGISTRATION STATEMENT MATTERS. The Company will (i) use its
reasonable best efforts to cause the Registration Statement to become
effective or, if the procedure in Rule 430A of the Securities Act is followed,
to prepare and timely file with the Commission under Rule 424(b) under the
Securities Act a Prospectus, containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A
of the Securities Act and (ii) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall
not previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Securities Act. If the Company elects to rely on Rule
462(b) under the Securities Act, the Company shall promptly file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule 462(b)
under the Securities Act prior to the time confirmations are sent or given, as
specified by Rule 462(b)(2) under the Securities Act, and shall pay the
applicable fees in accordance with Rule 111 under the Securities Act.
(b) SECURITIES ACT COMPLIANCE. The Company will advise the
Representatives promptly (i) when the Registration Statement or any
post-effective amendment thereto shall have become effective, (ii) of receipt
of any comments from the Commission and shall deliver a copy of (or summary
of, if such comments were delivered orally) to the Representatives promptly
upon their receipt, (iii) of any request of the Commission for amendment of
the Registration Statement or for supplement to the Prospectus or for any
additional information and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the use of
the Prospectus or of the institution of any proceedings for that purpose. The
Company will use its reasonable best efforts to prevent the issuance of any
such stop order preventing or suspending the use of the Prospectus and, if
issued, to obtain as soon as possible the withdrawal thereof.
(c) BLUE SKY COMPLIANCE. The Company will cooperate with the
Representatives and counsel for the Underwriters in endeavoring to qualify the
Shares for sale under the securities laws of such jurisdictions (both national
and foreign) other than the United States federal laws as the Representatives
may reasonably have designated in writing and will make such applications,
file such documents, and furnish such information as may be reasonably
required for that purpose, provided the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to
file such a consent. 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 the
Representatives may reasonably request for distribution of the Shares.
(d) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES
ACT MATTERS. The Company will comply with the Securities Act and the Exchange
Act so as to permit the completion of the distribution of the Shares as
contemplated in this Agreement and the Prospectus. If during the period in
which a prospectus is required by law to be delivered by
17
an Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Representatives or
counsel for the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission, and furnish at its own expense to the Underwriters and to
dealers, an appropriate amendment to the Registration Statement or supplement
to the Prospectus so that the Prospectus, as so amended or supplemented, will
not, in the light of the circumstances when it is so delivered, be misleading,
or so that the Prospectus will comply with the law.
(e) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. The
Company agrees to furnish the Representatives, without charge, during the
period beginning on the date hereof and ending on the later of the First
Closing Date or such date, as in the reasonable opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
Period"), as many copies of the Prospectus and any amendments and supplements
thereto (including any documents incorporated or deemed incorporated by
reference therein) as the Representatives may request.
(f) INSURANCE. The Company shall (i) obtain Directors and Officers
liability insurance in the minimum amount of $10 million which shall apply to
the offering contemplated hereby and (ii) cause ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to be added
to such policy such that up to $500,000 of its expenses pursuant to section
7(a) shall be paid directly by such insurer and (iii) shall cause ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ to be added as an additional insured to such policy in respect of the
offering contemplated hereby.
(g) NOTICE OF SUBSEQUENT EVENTS. If at any time during the ninety
(90) 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 the Representatives' reasonable opinion, the market price
of the Common 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 the Representatives advising the Company to the effect set forth
above, forthwith prepare, consult with the Representatives concerning the
substance of and disseminate a press release or other public statement,
reasonably satisfactory to the Representatives, responding to or commenting on
such rumor, publication or event.
(h) USE OF PROCEEDS. The Company shall apply the net proceeds from
the sale of the Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(i) TRANSFER AGENT. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Shares.
(j) EARNINGS STATEMENT. As soon as practicable but in any event no
later than the 45th day following the end of the first fiscal quarter
occurring after the first anniversary of the effective date of the
Registration Statement, the Company will make generally available to its
security holders and to the Representatives an earnings statement (which need
not be audited)
18
covering the twelve-month period beginning after the date of the Registration
Statement that satisfies the provisions of Section 11(a) of the Securities
Act.
(k) PERIODIC REPORTING OBLIGATIONS. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and the
Nasdaq National Market all reports and documents required to be filed under
the Exchange Act.
(l) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. The Company
will not offer, sell or contract to sell, or otherwise dispose of or enter
into any transaction which is designed to, or could be expected to, result in
the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise by the Company or any
affiliate of the Company or any person in privity with the Company or any
affiliate of the Company) directly or indirectly, or announce the offering of,
any other shares of Common Stock or any securities convertible into, or
exchangeable for, Common Stock; provided, however, that the Company may (i)
issue and sell shares of Common Stock pursuant to any director or employee
stock option plan, stock ownership plan or dividend reinvestment plan of the
Company in effect at the date of the Prospectus and described in the
Prospectus so long as none of those shares may be transferred and the Company
shall enter stop transfer instructions with its transfer agent and registrar
against the transfer of any such shares of Common Stock and (ii) the Company
may issue shares of Common Stock issuable upon the conversion of securities or
the exercise of warrants outstanding at the date of the Prospectus and
described in the Prospectus. These restrictions terminate the earlier of (A)
the date that is 90 days after the Registration Statement is declared
effective by the Commission or (B) the date on which the Company receives
written notice from ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ that the offering has been postponed,
delayed or cancelled.
(m) FUTURE REPORTS TO THE REPRESENTATIVEs. During the period of five
years hereafter the Company will furnish to the Representatives (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of
such fiscal year and statements of income, stockholders' equity and cash flows
for the year then ended and the opinion thereon of the Company's independent
public or certified public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report
filed by the Company with the Commission, the Nasdaq National Market or any
securities exchange; and (iii) as soon as available, copies of any report or
communication of the Company mailed generally to holders of its capital stock.
B. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling Stockholder
further covenants and agrees with each Underwriter:
(a) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. Such
Selling Stockholder will abide by the terms and conditions of the lock-up
agreements substantially in the form of Exhibit A hereto, during the Lock-Up
Period.
(b) DELIVERY OF FORMS W-8 AND W-9. To deliver to the Representatives
prior to the First Closing Date a properly completed and executed United
States Treasury Department Form W-8 (if the Selling Stockholder is a
non-United States person) or Form W-9 (if the Selling Stockholder is a United
States person).
19
(c) NOTIFICATION OF UNTRUE STATEMENTS, ETC. If, at any time prior to
the date on which the distribution of the Shares as contemplated herein and in
the Prospectus has been completed, as determined by the Representatives, such
Selling Stockholder has knowledge of the occurrence of any event as a result
of which the Prospectus or the Registration Statement, in each case as then
amended or supplemented, would include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, such
Selling Stockholder will promptly notify the Company and the Representatives.
SECTION 4. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Firm
Shares as provided herein on the First Closing Date and, with respect to the
Option Shares, the Second Closing Date, shall be subject to the accuracy of
the representations and warranties on the part of the Company and the Selling
Stockholders set forth in Sections 1(A) and 1(B) hereof as of the date hereof
and as of the First Closing Date as though then made and, with respect to the
Option Shares, as of the Second Closing Date as though then made, to the
timely performance by the Company and the Selling Stockholders of their
respective covenants and other obligations hereunder, and to each of the
following additional conditions:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER; NO
OBJECTION FROM THE NASD. The Registration Statement shall have become
effective prior to the execution of this Agreement, or at such later date as
shall be consented to in writing by you; and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that
purpose shall have been initiated or, to the knowledge of the Company, any
Selling Stockholder or any Underwriter, threatened by the Commission, and any
request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the satisfaction of Underwriters' Counsel; and the NASD
shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(b) CORPORATE PROCEEDINGS. All corporate proceedings and other legal
matters in connection with this Agreement, the form of Registration Statement
and the Prospectus, and the registration, authorization, issuance, sale and
delivery of the Shares, shall have been reasonably satisfactory to counsel for
the Underwriters, and such counsel shall have been furnished with such papers
and information as they may reasonably have requested to enable them to pass
upon the matters referred to in this Section.
(c) NO MATERIAL ADVERSE CHANGE. Subsequent to the execution and
delivery of this Agreement and prior to the First Closing Date, or the Second
Closing Date, as the case may be, there shall not have been any Material
Adverse Change which, in the Representatives' sole judgment, is material and
adverse and that makes it, in the Representatives' sole judgment,
impracticable or inadvisable to proceed with the public offering of the Shares
as contemplated by the Prospectus.
20
(d) OPINION OF COUNSEL FOR THE COMPANY.
(i) The Representatives shall have received on the First
Closing Date and the Second Closing Date, as the case may be, an
opinion of ▇▇▇▇▇ Liddell & ▇▇▇▇ LLP, counsel for the Company, in form
reasonably satisfactory to the Representatives, dated the First Closing
Date or the Second Closing Date, addressed to the Underwriters and with
reproduced copies or signed counterparts thereof for each of the
Underwriters.
(ii) Counsel rendering the opinion REQUIRED IN SUBSECTION (I)
ABOVE may rely as to questions of law not involving the laws of the
United States or the States of Delaware and Texas upon opinions of
local counsel, and as to questions of fact upon representations or
certificates of officers of the Company, the Selling Stockholders or
officers of the Selling Stockholders (when the Selling Stockholder is
not a natural person), and of government officials, in which case their
opinion is to state that they are so relying and that they have no
knowledge of any material misstatement or inaccuracy in any such
opinion, representation or certificate. Copies of any opinion,
representation or certificate so relied upon shall be delivered to the
Representatives and to Underwriters' Counsel.
(e) OPINION OF COUNSEL FOR THE UNDERWRITERS. The Representatives
shall have received on the First Closing Date or the Second Closing Date, as
the case may be, an opinion of ▇▇▇▇▇▇ & Bird LLP, in form and substance
reasonably satisfactory to the Representatives. The Company shall have
furnished to such counsel such documents as they may have requested for the
purpose of enabling them to pass upon such matters.
(f) ACCOUNTANTS' COMFORT LETTER. The Representatives shall have
received on the First Closing Date and on the Second Closing Date, as the case
may be, a letter from Ernst & Young LLP addressed to the Underwriters, dated
the First Closing Date or the Second Closing Date, as the case may be,
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Securities Act and the Exchange Act
and the applicable published rules and regulations of the Commission
thereunder, as the case may be, and based upon the procedures described in
such letter delivered to the Representatives concurrently with the execution
of this Agreement (herein called the "Original Letter"), but carried out to a
date not more than four (4) business days prior to the First Closing Date or
the Second Closing Date, as the case may be, (i) confirming, to the extent
true, that the statements and conclusions set forth in the Original Letter are
accurate as of the First Closing Date or the Second Closing 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 such letter, or to reflect the availability of more recent financial
statements, data or information. The letter shall not disclose any change in
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise from that set forth in the Registration Statement or Prospectus,
which, in the Representatives' sole judgment, is material and adverse and that
makes it, in the Representatives' sole judgment, impracticable or inadvisable
to proceed with the public offering of the Shares as contemplated by the
Prospectus. The Original Letter from the Representatives shall be addressed to
or for the use of the Underwriters in form and substance satisfactory to the
Underwriters and shall (A) represent, to
21
the extent true, that they are independent certified public accountants with
respect to the Company within the meaning of the Securities Act and the
Exchange Act, as the case may be, (B) set forth their opinion with respect to
their examination of the consolidated balance sheet of the Company and
related consolidated statements of operations, stockholders' equity, and cash
flows for the periods that are included in the Registration Statement (C)
state that Ernst & Young LLP has performed the procedures set out in
Statement on Auditing Standards No. 71 ("SAS 71") for a review of interim
financial information and providing the report of Ernst & Young LLP as
described in SAS 71 on the financial statements for each of the quarters for
which financial information is provided in the Registration Statement (the
"Quarter Financial Statements"), (D) state that in the course of such
review, nothing came to their attention that leads them to believe that any
material modifications need to be made to any of the Quarterly Financial
Statements in order for them to be in compliance with generally accepted
accounting principles consistently applied across the periods presented and
(E) address other matters agreed upon by Ernst & Young LLP and the
Representatives. In addition, the Representatives shall have received from
Ernst & Young LLP a letter addressed to the Company and made available to the
Representatives for the use of the Underwriters 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 consolidated financial statements as of January 31, 2000, did not
disclose any weaknesses in internal controls that they considered to be
material weaknesses.
(g) OFFICERS' CERTIFICATE. The Representatives shall have received on
the First Closing Date and the Second Closing Date, as the case may be, a
certificate of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, signed by the Chief Executive Officer and Chief
Financial Officer of the Company, to the effect that, and the Representatives
shall be satisfied that:
(i) The representations and warranties of the Company in this Agreement
are true and correct, as if made on and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the First Closing
Date or the Second Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Securities Act;
(iii) When the Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto contained all material information required to be
included therein by the Securities Act, and in all material respects
conformed to the requirements of the Securities Act, the Registration
Statement, and any amendments or supplements thereto, did not and does
not include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not
22
misleading; the Prospectus, and any amendments or supplements thereto
did not and does not include any untrue statement of a material fact
or omit to state or material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been so set forth;
and
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been
(A) any Material Adverse Change, (B) any transaction that is material
to the Company and its subsidiaries considered as one enterprise,
except transactions entered into in the ordinary course of business,
(C) any obligation, direct or contingent, that is material to the
Company and its subsidiaries considered as one enterprise, incurred by
the Company or its subsidiaries, except obligations incurred in the
ordinary course of business, (D) any change in the capital stock or
outstanding indebtedness of the Company or any of its subsidiaries that
is material to the Company and its subsidiaries considered as one
enterprise, (E) any dividend or distribution of any kind declared, paid
or made on the capital stock of the Company or any of its subsidiaries,
or (F) any loss or damage (whether or not insured) to the property of
the Company or any of its subsidiaries which has been sustained or will
have been sustained which has a Material Adverse Effect.
(h) LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF THE COMPANY. The
Company shall have obtained and delivered to the Representatives an agreement
substantially in the form of EXHIBIT A attached hereto from each officer and
director of the Company, each Selling Stockholder and each beneficial owner of
five or more percent of the outstanding issued share capital of the Company.
(i) OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS. The
Representatives shall have received on the First Closing Date and the Second
Closing Date, as the case may be, an opinion of counsel for each of the Selling
Stockholders substantially in the form of EXHIBIT B hereto.
In rendering such opinion, such counsel may rely as to
questions of law not involving the laws of the United States or States of
Delaware and Texas upon opinions of local counsel and as to questions of fact
upon representations or certificates of the Selling Stockholders or officers
of the Selling Stockholders (when the Selling Stockholder is not a natural
person), and of governmental officials, in which case their opinion is to
state that they are so relying and that they have no knowledge of any material
misstatement or inaccuracy of any material misstatement or inaccuracy in any
such opinion, representation or certificate so relied upon shall be delivered
to the Representatives of the Underwriters, and to Underwriters' Counsel.
(j) SELLING STOCKHOLDERS' CERTIFICATE. On each of the First Closing
Date and the Second Closing Date, as the case may be, the Representatives
shall receive a written certificate executed by the Attorney-in-Fact of each
Selling Stockholder, dated as of such Closing Date, to the effect that:
23
(i) The representations and warranties made by such Selling Stockholder
herein are not true or correct in any material respect on such Closing
Date; or
(ii) Such Selling Stockholder has not complied in any material respect
with any obligation or failed to satisfy in any material respect any
condition which is required to be performed or satisfied on the part of
such Selling Stockholder at or prior to such Closing Date.
(k) SELLING STOCKHOLDERS' DOCUMENTS. At least three business days
prior to the date hereof, the Company and the Selling Stockholders shall have
furnished for review by the Representatives copies of the Powers of Attorney
and Custody Agreements executed by each of the Selling Stockholders and such
further information, certificates and documents as the Representatives may
reasonably request.
(l) STOCK EXCHANGE LISTING. The Shares shall have been listed or
approved for inclusion on the Nasdaq National Market, subject only to official
notice of issuance.
(m) COMPLIANCE WITH PROSPECTUS DELIVERY REQUIREMENTS. The Company
shall have complied with the provisions of Sections 2(g) and 3A(e) hereof with
respect to the furnishing of Prospectuses.
(n) ADDITIONAL DOCUMENTS. On or before each of the First Closing Date
and the Second Closing Date, as the case may be, the Representatives and
counsel for the Underwriters shall have received such information, documents
and opinions as they may reasonably require for the purposes of enabling them
to pass upon the issuance and sale of the Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties,
or the satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 4 is not
satisfied when and as required to be satisfied, this Agreement may be
terminated by the Representatives by notice to the Company and the Selling
Stockholders at any time on or prior to the First Closing Date and, with
respect to the Option Shares, at any time prior to the Second Closing Date,
which termination shall be without liability on the part of any party to any
other party, except that Section 5 (Payment of Expenses), Section 6
(Reimbursement of Underwriters' Expenses), Section 7 (Indemnification and
Contribution) and Section 10 (Representations and Indemnities to Survive
Delivery) shall at all times be effective and shall survive such termination.
SECTION 5. PAYMENT OF EXPENSES. The Company and the Selling
Stockholders, jointly and severally, agree to pay in such proportions as they
may agree upon among themselves all costs, fees and expenses incurred in
connection with the performance of their obligations hereunder and in
connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the
Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Shares to the Underwriters, (iv) all fees and
expenses of the Company's counsel, independent public or certified public
accountants and other advisors, (v) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution
24
of the Registration Statement (including financial statements, exhibits,
schedules, consents and certificates of experts), each preliminary prospectus
and the Prospectus, and all amendments and supplements thereto, and this
Agreement, (vi) all filing fees, attorneys' fees and expenses incurred by the
Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any
part of the Shares for offer and sale under the state securities or blue sky
laws or the provincial securities laws of Canada or any other country, and, if
requested by the Representatives, preparing and printing a "Blue Sky Survey",
an "International Blue Sky Survey" or other memorandum, and any supplements
thereto, advising the Underwriters of such qualifications, registrations and
exemptions, (vii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD review
and approval of the Underwriters' participation in the offering and
distribution of the Shares, (viii) the fees and expenses associated with
including the Shares on the Nasdaq National Market, (ix) all costs and
expenses incident to the travel and accommodation of the Company's employees
on the "roadshow", and (x) all other fees, costs and expenses referred to in
Item 14 of Part II of the Registration Statement. Except as provided in this
Section 5, Section 6, and Section 7 hereof, the Underwriters shall pay their
own expenses, including the fees and disbursements of their counsel.
The Selling Stockholders further agree with each Underwriter
to pay (directly or by reimbursement) all fees and expenses incident to the
performance of their obligations under this Agreement which are not otherwise
specifically provided for herein, including but not limited to (i) fees and
expenses of counsel and other advisors for such Selling Stockholders, (ii)
fees and expenses of the Custodian and (iii) expenses, underwriting discounts
and commissions and taxes incident to the sale and delivery of the Selling
Stockholder Shares (which amounts, if any, may be deducted by the Custodian
under the provisions of Section 2 of this Agreement).
This Section 5 shall not affect or modify any separate,
valid agreement relating to the allocation of payment of expenses between the
Company, on the one hand, and the Selling Stockholders, on the other hand.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this Agreement
is terminated by the Representatives pursuant to Section 4, Section 8, Section
9 or Section 15, or if the sale to the Underwriters of the Shares on the First
Closing Date is not consummated because of any refusal, inability or failure
on the part of the Company or the Selling Stockholders to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse the Representatives and the other Underwriters (or such Underwriters
as have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Representatives and the Underwriters in connection with the proposed
purchase and the offering and sale of the Shares, including but not limited to
fees and disbursements of counsel, printing expenses, travel and accommodation
expenses, postage, facsimile and telephone charges.
25
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION OF THE UNDERWRITERS.
(i) The Company agrees to:
(A) indemnify and hold harmless each Underwriter, its officers
and employees, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the
Exchange Act, against any loss, claim, damage or liability, as
incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act
or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be
unreasonably withheld), insofar as such loss, claim, damage or
liability (or actions in respect thereof as contemplated
below) arises out of or is based:
(1) upon any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof
pursuant to Rule 430A under the Securities Act, or
the omission or alleged omission therefrom of a
material fact required to be stated therein or
necessary to make the statements therein not
misleading; or
(2) upon any untrue statement or alleged untrue
statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading; or
(3) in whole or in part upon any inaccuracy in the
representations and warranties of the Company
contained herein; or
(4) in whole or in part upon any failure of the
Company to perform its obligations hereunder or
under law; or
(5) upon any untrue statement or alleged untrue
statement of any material fact contained in any audio
or visual materials provided by the Company or based
upon written information furnished by or on behalf of
the Company, including, without limitation, slides,
videos, films or tape recordings, used in connection
with the marketing of the Shares or
(6) upon any act or failure to act or any alleged act
or failure to act by any Underwriter in connection
with, or relating in any manner to, the Shares or the
offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon any
matter covered by clause (1), (2), (3), (4) or (5)
above,
26
provided that the Company shall not be liable under
this clause (6) to the extent that a court of
competent jurisdiction shall have determined by a
final judgment that such loss, claim, damage,
liability or action resulted directly from any such
acts or failures to act undertaken or omitted to be
taken by such Underwriter through its bad faith or
willful misconduct; and
(B) reimburse each Underwriter and each such controlling
person for any and all expenses (including the fees and
disbursements of counsel chosen by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇) as such
expenses are reasonably incurred by such Underwriter or such
controlling person in connection with investigating,
defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action;
PROVIDED, HOWEVER, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent,
but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information
furnished to the Company by the Representatives expressly for use in
the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided,
further, that with respect to any preliminary prospectus, the foregoing
indemnity agreement shall not inure to the benefit of any Underwriter
from whom the person asserting any loss, claim, damage, liability or
expense purchased Shares, or any person controlling such Underwriter,
if copies of the Prospectus were timely delivered to the Underwriter
pursuant to Section 2 and a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss,
claim, damage, liability or expense. The indemnity agreement set forth
in this Section 7(a) shall be in addition to any liabilities that the
Company and the Principal Selling Stockholder may otherwise have.
(ii) Each of the Selling Stockholders, severally and not jointly,
agrees to:
(A) indemnify and hold harmless each Underwriter, its officers
and employees, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the
Exchange Act against any loss, claim, damage or liability, as
incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act
or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be
unreasonably withheld), insofar as such loss, claim, damage or
liability (or actions in respect thereof as contemplated
below) arises out of or is based:
(1) upon any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof
pursuant to
27
Rule 430A under the Securities Act, or the
omission or alleged omission therefrom of a
material fact required to be stated therein
or necessary to make the statements therein
not misleading; or
(2) upon any untrue statement or alleged untrue
statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact
necessary in order to make the statements therein, in
light of the circumstances under which they were
made, not misleading; or
(3) in whole or in part upon any inaccuracy in the
representations and warranties of such Selling
Stockholder contained herein; or
(4) in whole or in part upon any failure of such
Selling Stockholder to perform its or his obligations
hereunder; and
(B) reimburse each Underwriter and each such controlling
person for any and all expenses (including the fees and
disbursements of counsel chosen by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇) as such
expenses are reasonably incurred by such Underwriter or such
controlling person in connection with investigating,
defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action;
PROVIDED, HOWEVER, that in the case of subparagraphs (1) and (2) of
this Section 7(a)(ii) the obligations under this Section 7(a)(ii) shall
apply to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to
the Company or such Underwriter by such Selling Stockholder directly or
through such Selling Stockholder's representatives, specifically for
use in the preparation thereof; and PROVIDED, FURTHER, that with
respect to any preliminary prospectus, the foregoing indemnity
agreement shall not inure to the benefit of any Underwriter from whom
the person asserting any loss, claim, damage, liability or expense
purchased Shares, or any person controlling such Underwriter, if copies
of the Prospectus were timely delivered to the Underwriter pursuant to
Section 2 and a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to
such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage,
liability or expense. The indemnity agreement set forth in this Section
7(a) shall be in addition to any liabilities that the Other Selling
Stockholders may otherwise have.
(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS, OFFICERS AND
SELLING STOCKHOLDERS.
(A) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration
Statement, the Selling Stockholders and each person, if any,
who
28
controls the Company or any Selling Stockholder within the
meaning of the Securities Act or the Exchange Act, against
any loss, claim, damage or liability, as incurred, to which
the Company, or any such director, officer, Selling
Stockholder or controlling person may become subject, under
the Securities Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of such
Underwriter), insofar as such loss, claim, damage or
liability (or actions in respect thereof as contemplated
below) arises out of or is based:
(i) upon any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof
pursuant to Rule 430A under the Securities Act, or
the omission or alleged omission therefrom of a
material fact required to be stated therein or
necessary to make the statements therein not
misleading; or
(ii) upon any untrue statement or alleged untrue
statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact
necessary in order to make the statements therein, in
light of the circumstances under which they were
made, not misleading; or
(iii) in whole or in part upon any inaccuracy in the
representations and warranties of such Underwriter
contained herein; and
(B) reimburse the Company, or any such director, officer,
Selling Stockholder or controlling person for any and all
expenses (including the fees and disbursements of counsel) as
such expenses are reasonably incurred by the Company, or any
such director, officer, Selling Stockholder or controlling
person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage,
liability, expense or action;
provided, however, that in the case of subparagraphs (i) and (ii) of
this Section 7(b)(A) the obligations under this Section 7(b) shall apply to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter directly or through such Underwriter's representatives,
specifically for use in the preparation thereof. The indemnity agreement set
forth in this Section 7(b) shall be in addition to any liabilities that each
Underwriter may otherwise have.
(c) INFORMATION PROVIDED BY THE UNDERWRITERS. The Company, each of the
Selling Stockholders, and each person, if any, who controls the Company or any
Selling Stockholder within the meaning of the Securities Act or the Exchange
Act, hereby acknowledges that the only information that the Underwriters have
furnished to the Company expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or
29
supplement thereto) are the statements set forth in the table in the first
paragraph, the second paragraph and in the paragraphs entitled "Stabilization"
and "Regulation M/Passive Market Making" under the caption "Underwriting" in
the Prospectus; and the Underwriters confirm that such statements are correct.
(d) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly
after receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7,
notify the indemnifying party in writing of the commencement thereof. The
omission, delay or failure to so notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party for
contribution or otherwise under the indemnity agreement contained in this
Section 7 to the extent it is not prejudiced as a proximate result of such
omission, delay or failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be entitled
to participate in, and, to the extent that it shall elect, jointly with all
other indemnifying parties similarly notified, by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, if the defendants
in any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that a
conflict may arise between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which
are different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of
such indemnifying party's election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under this Section 7 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with local
counsel), approved by the indemnifying party (▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the case
of Section 7(b) and Section 8), representing the indemnified parties who are
parties to such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party; provided, that in no event shall the indemnifying party be
liable to such indemnified party for any legal fees or expenses in excess of
reasonable legal fees and expenses.
(e) SETTLEMENTS. The indemnifying party under this Section 7 shall
not be liable for any settlement of any proceeding effected without its
written consent, which consent shall not be unreasonably withheld, but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party against any
loss,
30
claim, damage, liability or expense by reason of such settlement or judgment
in accordance with this Section 7. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity was or could have been sought hereunder
by such indemnified party, unless such settlement, compromise or consent
includes (A) an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding and (B) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified
party.
(f) CONTRIBUTION. If the indemnification provided for in this Section
7 is unavailable to or insufficient to hold harmless an indemnified party
under Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect the
relative benefits received by such party on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
such party on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities, (or actions or proceedings in respect thereof), as
well as any other relevant equitable considerations. The 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 the
Company and the Selling Stockholders on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, each Selling Stockholder and the Underwriters
agree that it would not be just and equitable if contributions pursuant to
this Section 7(f) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section 7(f). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above
in this Section 7(f) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (f), (i) no Underwriter shall be required to contribute any amount
in excess of the underwriting discounts and commissions applicable to the
Shares purchased by such Underwriter and (ii) 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 Section
7(f) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(g) TIMING OF ANY PAYMENTS OF INDEMNIFICATION. Any losses, claims,
damages, liabilities or expenses for which an indemnified party is entitled to
indemnification or
31
contribution under this Section 7 shall be paid by the indemnifying party to
the indemnified party as such losses, claims, damages, liabilities or expenses
are incurred, but in all cases, no later than forty-five (45) days of invoice
to the indemnifying party.
(h) SURVIVAL. The indemnity and contribution agreements contained in
this Section 7 and the representation and warranties set forth in this
Agreement shall remain operative and in full force and effect, regardless of
(i) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company, its directors or officers or any
persons controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor
to any Underwriter, or to the Company, its directors or officers, any Selling
Stockholder or any person controlling the Company or any Selling Stockholder,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 7.
(i) ACKNOWLEDGEMENTS OF PARTIES. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented
by counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7, and are fully informed
regarding said provisions. They further acknowledge that the provisions of
this Section 7 fairly allocate the risks in light of the ability of the
parties to investigate the Company and its business in order to assure that
adequate disclosure is made in the Registration Statement and Prospectus as
required by the Securities Act and the Exchange Act.
(j) Notwithstanding the foregoing provisions of this Section 7, with
respect to any claims for indemnification or contribution by any of the
Underwriters that are asserted or made against both the Company under this
Section 7 and any Selling Stockholders under this Section 7, the Underwriters
agree to first exhaust their remedies against the Company before proceeding
(only as to the enforcement of remedies available to them and not as to the
initiation of any action) against such Selling Stockholders. Notwithstanding
the foregoing provisions of this Section 7, the liability of each Selling
Stockholder under the representations, warranties and agreements contained
herein and under the indemnity and contribution agreements contained in the
provisions of this Section 7 shall be limited to an amount equal to the public
offering price of the Selling Stockholder Shares sold by such Selling
Stockholder to the Underwriters minus the amount of the underwriting discount
paid thereon to the Underwriters by such Selling Stockholder. The Company and
such Selling Stockholders 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.
SECTION 8. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If, on
the First Closing Date or the Second Closing Date, as the case may be, any one
or more of the several Underwriters shall fail or refuse to purchase Shares
that it or they have agreed to purchase hereunder on such date, and the
aggregate number of shares of Common Stock which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase does not exceed 10%
of the aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Shares set forth opposite their respective names on SCHEDULE A bears
to the aggregate number of Firm Shares set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as may
32
be specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Shares and the
aggregate number of Shares with respect to which such default occurs exceeds
10% of the aggregate number of Shares to be purchased on such date, and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Shares are not made within 48 hours after such default, this
Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 5, Section 6 and Section 7 shall at all
times be effective and shall survive such termination. In any such case either
the Representatives or the Company shall have the right to postpone the First
Closing Date or the Second Closing Date, as the case may be, but in no event
for longer than seven days in order that the required changes, if any, to the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be
deemed to include any person substituted for a defaulting Underwriter under
this Section 8. Any action taken under this Section 8 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
SECTION 9. TERMINATION OF THIS AGREEMENT. This Agreement may be
terminated by the Representatives by notice given to the Company and the
Selling Stockholders if (a) at any time after the execution and delivery of
this Agreement and prior to the First Closing Date (i) trading or quotation in
any of the Company's securities shall have been suspended or limited by the
Commission or by the Nasdaq Stock Market, Inc. or trading in securities
generally on either the Nasdaq National Market or the New York Stock Exchange
shall have been suspended or limited, or minimum or maximum prices shall have
been generally established on any of such stock exchanges by the Commission or
the Nasdaq Stock Market, Inc.; (ii) a general banking moratorium shall have
been declared by any of federal, New York, Delaware, Texas or California
governmental authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity,
or any change in the United States or international financial markets, or any
substantial change or development involving a prospective change in United
States' or international political, financial or economic conditions, as in
the reasonable judgment of the Representatives is material and adverse and
makes it impracticable or inadvisable to market the Shares in the manner and
on the terms contemplated in the Prospectus; (iv) in the judgment of the
Representatives there shall have occurred any Material Adverse Change; or (v)
the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the judgment of the
Representatives may interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss shall have
been insured. Any termination pursuant to this Section 9 shall be without
liability on the part of (x) the Company or the Selling Stockholders to any
Underwriter, except that the Company and the Selling Stockholders shall be
obligated to reimburse the expenses of the Representatives and the
Underwriters pursuant to Sections 5 and 6 hereof, (y) any Underwriter to the
Company or any Selling Stockholders or any person controlling the Company or
any Selling Stockholders, or (z) of any party hereto to any other party except
that the provisions of Section 7 shall at all times be effective and shall
survive such termination.
33
SECTION 10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or any person controlling the Company, of its
officers, of the Selling Stockholders or any person controlling any Selling
Stockholder and of the several Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
its or their partners, officers or directors or any controlling person, or the
Selling Stockholders, as the case may be, and will survive delivery of and
payment for the Shares sold hereunder and any termination of this Agreement.
SECTION 11. NOTICES. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representatives:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ & BIRD LLP
One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
If to the Company:
▇▇▇▇▇▇▇▇ CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: [___]
Attention: [___]
If to the Selling Stockholders:
▇▇▇▇▇▇▇▇ CORPORATION, as Custodian
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: [___]
Attention: [___]
34
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 12. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 8 hereof, and to the benefit of the employees, officers
and directors and controlling persons referred to in Section 7, and to their
respective successors, and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of the Shares
as such from any of the Underwriters merely by reason of such purchase.
SECTION 13. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes) as
are necessary to make it valid and enforceable.
SECTION 14. GOVERNING LAW PROVISIONS.
(a) GOVERNING LAW. This agreement shall be governed by and construed
in accordance with the internal laws of the state of New York applicable to
agreements made and to be performed in such state.
(b) CONSENT TO JURISDICTION. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the City and County of San Francisco or
the courts of the State of California in each case located in the City and
County of San Francisco (collectively, the "Specified Courts"), and each party
irrevocably submits to the personal jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court (a
"Related Judgment"), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. Service of any process,
summons, notice or document by mail to such party's address set forth above
shall be effective service of process for any suit, action or other proceeding
brought in any such court. The parties irrevocably and unconditionally waive
any objection to the laying of venue of any suit, action or other proceeding
in the Specified Courts and irrevocably and unconditionally waive and agree
not to plead or claim in any such court that any such suit, action or other
proceeding brought in any such court has been brought in an inconvenient
forum. Each party not located in the United States irrevocably appoints CT
Corporation System, which currently maintains a San Francisco office at ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America,
as its agent to receive service of process or other legal summons for purposes
of any such suit, action or proceeding that may be instituted in any state or
federal court in the City and County of San Francisco.
SECTION 15. FAILURE OF ONE OR MORE OF THE SELLING STOCKHOLDERS TO
SELL AND DELIVER COMMON SHARES. If one or more of the Selling Stockholders
shall fail to sell and deliver to the Underwriters the Shares to be sold and
delivered by such Selling Stockholders at the First Closing Date pursuant to
this Agreement, then the Underwriters may at their option, by written
35
notice from the Representatives to the Company and the Selling Stockholders,
either (i) terminate this Agreement without any liability on the part of any
Underwriter or, except as provided in Sections 5, 6, and 7 hereof, the Company
or the Selling Stockholders, or (ii) purchase the shares which the Company and
other Selling Stockholders have agreed to sell and deliver in accordance with
the terms hereof. If one or more of the Selling Stockholders shall fail to
sell and deliver to the Underwriters the Shares to be sold and delivered by
such Selling Stockholders pursuant to this Agreement at the First Closing Date
or the Second Closing Date, then the Underwriters shall have the right, by
written notice from the Representatives to the Company and the Selling
Stockholders, to postpone the First Closing Date or the Second Closing Date,
as the case may be, but in no event for longer than seven days in order that
the required changes, if any, to the Registration Statement and the Prospectus
or any other documents or arrangements may be effected.
SECTION 16. GENERAL PROVISIONS. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in
two or more counterparts, each one of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit. Section headings herein are for the convenience of the parties only
and shall not affect the construction or interpretation of this Agreement.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company and the Custodian the
enclosed copies hereof, whereupon this instrument, along with all counterparts
hereof, shall become a binding agreement in accordance with its terms.
36
Very truly yours,
▇▇▇▇▇▇▇▇ CORPORATION
By:
------------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
SELLING STOCKHOLDERS
By:
------------------------------------------
Attorney-in-fact for the Selling
Stockholders named in Schedule B hereto
By:
------------------------------------------
37
The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Representatives as of the date first above written.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
▇▇▇▇▇ SECURITIES INC.
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
On their behalf and on behalf of each of the several underwriters named in
SCHEDULE A hereto.
BY ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
By:
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
38
SCHEDULE A
NUMBER OF FIRM SHARES
UNDERWRITERS TO BE PURCHASED
-----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC...................................... [___]
CHASE SECURITIES INC......................................... [___]
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC............................... [___]
Total............................................... 4,000,000
S-A
SCHEDULE B
MAXIMUM NUMBER OF OPTION
NUMBER OF FIRM SHARES TO SHARES
SELLING STOCKHOLDER BE SOLD TO BE SOLD
------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
[address]
Attention: [___]........................................ 1,018,000 210,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
[address]
Attention: [___]........................................ 618,500 130,000
SAIC Venture Capital Corporation
[address]
Attention: [___]........................................ 220,500 183,000
▇▇▇▇▇ ▇. ▇▇▇▇▇
[address]
Attention: [___]........................................ 69,000 31,000
▇▇▇ ▇. ▇▇▇▇▇
[address]
Attention: [___]........................................ 54,000 46,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[address]
Attention: [___]........................................ 20,000 0
Total:......................................... 2,000,000 600,000
=========== ===========