Exhibit 1.1
3,000,000 SHARES*
XXXXXXX CARDIOLOGY SYSTEMS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
May ___, 2004
XXXXXXX & COMPANY, INC.
SUNTRUST XXXXXXXX XXXXXXXX
XXXXX, XXXXXXXX & XXXX, INC.
XXXXXXXXX XXXXXXXXX, INC.
As Representatives of the several Underwriters
c/o Needham & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxxx Cardiology Systems, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell 3,000,000 shares (the "Firm Shares") of the Company's
Common Stock, $0.001 par value per share (the "Common Stock"), to you and to the
several other Underwriters named in Schedule I hereto (collectively, the
"Underwriters"), for whom you are acting as Representatives (the
"Representatives"). The Company has also agreed to grant to you and the other
Underwriters an option (the "Option") to purchase up to an additional 450,000
shares (the "Option Shares") on the terms and for the purposes set forth in
Section 1(b). The Firm Shares and the Option Shares are referred to collectively
herein as the "Shares."
The Company confirms as follows its agreements with the Representatives
and the several other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and agreements of the
Company herein contained and subject to all the terms and conditions of this
Agreement, (i) the Company agrees to issue and sell the Firm Shares to the
Underwriters and (ii) each of the Underwriters, severally and not jointly,
agrees to purchase from the Company the respective number of Firm Shares set
forth opposite that Underwriter's name in Schedule I hereto, at the purchase
price of $______ for each Firm Share.
(b) Subject to all the terms and conditions of this Agreement, the Company
grants the Option to the several Underwriters to purchase, severally and not
jointly, up to the maximum number of Option Shares set forth in Schedule II
hereto at the same price per share as the Underwriters shall pay for the Firm
Shares. The Option may be exercised only to cover over-allotments in the sale of
the Firm Shares by the Underwriters and may be exercised in whole or in part at
any time (but not more than once) on or before the 30th day after the date of
this Agreement upon written notice (the "Option Shares Notice") by the
Representatives to the Company no later than 12:00 noon, New York City time, at
least two and no more than five business days before the date specified for
closing in the Option
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* Plus an option to purchase up to an additional 450,000 shares to cover
over-allotments.
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Shares Notice (the "Option Closing Date"), setting forth the aggregate number of
Option Shares to be purchased and the time and date for such purchase. On the
Option Closing Date, the Company will issue and sell to the Underwriters the
number of Option Shares set forth in the Option Shares Notice and each
Underwriter will purchase such percentage of the Option Shares as is equal to
the percentage of Firm Shares that such Underwriter is purchasing, as adjusted
by the Representatives in such manner as they deem advisable to avoid fractional
shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be made to
Xxxxxxx & Company, Inc. for the accounts of the Underwriters against payment of
the purchase price by wire transfer payable in same-day funds to the order of
the Company for the Firm Shares to be sold by it at the office of Xxxxxxx &
Company, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New
York City time, on the third (or, if the purchase price set forth in Section
1(b) hereof is determined after 4:30 p.m., Washington D.C. time, the fourth)
business day following the commencement of the offering contemplated by this
Agreement, or at such time on such other date, not later than seven business
days after the date of this Agreement, as may be agreed upon by the Company and
the Representatives (such date is hereinafter referred to as the "Closing
Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(and on the date of delivery thereof, which may be the Closing Date) specified
in the Option Shares Notice.
The Shares shall, if certificated, be in definitive form, and, whether
certificated or in book-entry form, shall be registered in such names and in
such denominations as the Representatives shall request at least two business
days prior to the Closing Date or the Option Closing Date, as the case may be,
by written notice to the Company. For the purpose of expediting the checking and
packaging of certificates for the Shares, the Company agrees to make such
certificates available for inspection at least 24 hours prior to the Closing
Date or the Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Shares and Option Shares by the Company to the
respective Underwriters shall be borne by the Company. The Company will pay and
save each Underwriter and any subsequent holder of the Shares harmless from any
and all liabilities with respect to or resulting from any failure or delay in
paying federal and state stamp, if any, which may be payable or determined to
be payable in connection with the original issuance or sale to such Underwriter
of the Shares.
3. Representations and Warranties of the Company. The Company represents,
warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333-114908) on Form S-3 relating to the
Shares, including a preliminary prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company under the provisions of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (collectively
referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a preliminary
prospectus, including the documents incorporated by reference therein, as
contemplated by Rule 430 or Rule 430A of the Rules and Regulations included at
any time as part of the registration statement. Copies of such registration
statement and amendments and of each related preliminary prospectus have been
delivered to the Representative. If such registration statement has not become
effective, a further amendment to such registration statement, including a form
of final prospectus, necessary to permit such registration statement to become
effective will be filed promptly by the Company with the Commission. If such
registration statement has become effective, a final prospectus containing
information permitted to be omitted at the time of effectiveness by Rule 430A of
the Rules and Regulations will be filed promptly by the Company with the
Commission in accordance with Rule 424(b) of the Rules and Regulations. The term
"Registration Statement" means the registration statement as amended at the time
it becomes or became effective (the "Effective Date"), including all documents
incorporated by reference therein, financial statements and all exhibits and
schedules thereto and any information deemed to be included by Rule 430A and
includes any registration statement relating to the offering contemplated by
this
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Agreement and filed pursuant to Rule 462(b) of the Rules and Regulations. The
term "Prospectus" means the prospectus, including the documents incorporated by
reference therein, as first filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations or, if no such filing is required, the form of final
prospectus, including the documents incorporated by reference therein, included
in the Registration Statement at the Effective Date. Any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), after the Effective Date, the date of any
preliminary prospectus or the date of the Prospectus, as the case may be, and
deemed to be incorporated therein by reference.
(b) No order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and no stop order suspending the
effectiveness of the Registration Statement (including any related registration
statement filed pursuant to Rule 462(b) under the Act) or any post-effective
amendment thereto has been issued, and no proceeding for that purpose has been
initiated or threatened by the Commission. On the Effective Date, the date the
Prospectus is first filed with the Commission pursuant to Rule 424(b) (if
required), at all times during the period through and including the Closing Date
and, if later, the Option Closing Date and when any post-effective amendment to
the Registration Statement becomes effective or any amendment or supplement to
the Prospectus is filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement thereto), including the financial
statements included in the Prospectus, did and will comply with all applicable
provisions of the Act, the Exchange Act, the rules and regulations under the
Exchange Act (the "Exchange Act Rules and Regulations"), and the Rules and
Regulations and will contain all statements required to be stated therein in
accordance with the Act, the Exchange Act, the Exchange Act Rules and
Regulations, and the Rules and Regulations. On the Effective Date and when any
post-effective amendment to the Registration Statement becomes effective, no
part of the Registration Statement, the Prospectus or any such amendment or
supplement thereto did or will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. At the Effective Date, the
date the Prospectus or any amendment or supplement to the Prospectus is filed
with the Commission and at the Closing Date and, if later, the Option Closing
Date, the Prospectus did not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The foregoing representations and warranties in this Section 3(b) do
not apply to any statements or omissions made in reliance on and in conformity
with information relating to any Underwriter furnished in writing to the Company
by the Representatives specifically for inclusion in the Registration Statement
or Prospectus or any amendment or supplement thereto. The Company acknowledges
that the statements set forth in the paragraphs under the heading "Underwriting"
in the Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Representatives specifically for
inclusion in the Registration Statement.
(c) The documents that are incorporated by reference in the preliminary
prospectus and the Prospectus or from which information is so incorporated by
reference, when they became or become effective or were or are filed with the
Commission, as the case may be, complied or will comply in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and the
Rules and Regulations or the Exchange Act Rules and Regulations, as applicable.
(d) The Company does not own, and at the Closing Date and, if later, the
Option Closing Date, will not own, directly or indirectly, any shares of stock
or any other equity or long-term debt securities of any corporation or have any
equity interest in any corporation, firm, partnership, joint venture,
association or other entity, other than the subsidiaries listed in Exhibit 21.1
to, or otherwise disclosed in, the Registration Statement or the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (the
"Subsidiaries"). The Company, and each Subsidiary listed in Exhibit 21.1 to the
Company's annual report on Form 10-K for the year ended December 31, 2003 (a
"Principal Subsidiary"), is, and at the Closing Date and, if later, the Option
Closing Date, will be, a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation. The Company,
and each of its Principal Subsidiaries, has, and at the Closing Date and, if
later, the Option Closing Date, will have, full power and authority to conduct
all the activities conducted by it, to own or lease all the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The Company, and each of its Principal
Subsidiaries, is, and at the Closing Date and, if later, the Option Closing
Date,
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will be, duly licensed or qualified to do business and in good standing as a
foreign corporation in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
license or qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not materially and adversely affect
the Company and its Principal Subsidiaries, taken as a whole, or its their
respective businesses, properties, financial condition or results of operations,
taken as a whole (such effect is referred to herein as a "Material Adverse
Effect"). All of the outstanding shares of capital stock of each Subsidiary have
been duly authorized and validly issued and are fully paid and nonassessable,
and owned by the Company free and clear of all claims, liens, charges and
encumbrances; there are no securities outstanding that are convertible into or
exercisable or exchangeable for capital stock of any Subsidiary, except for such
claims, liens, charges and encumbrances that would not have a Material Adverse
Effect. The Company, and each of its Principal Subsidiaries, is not, and at the
Closing Date and, if later, the Option Closing Date, will not be, engaged in any
discussions or a party to any agreement or understanding, written or oral,
regarding the acquisition of an interest in any corporation, firm, partnership,
joint venture, association or other entity where such discussions, agreements or
understandings would require amendment to the Registration Statement pursuant to
applicable securities laws. Complete and correct copies of the certificates of
incorporation (or articles of incorporation, as the case may be) and of the
by-laws of the Company, and each of its Principal Subsidiaries, and all
amendments thereto have been made available to the Representatives, and no
changes therein will be made subsequent to the date hereof and prior to the
Closing Date or, if later, the Option Closing Date.
(e) The Company has authorized, issued and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus as of the date
set forth therein under the column titled "Actual". All of the outstanding
shares of capital stock of the Company have been duly authorized, validly issued
and are fully paid and nonassessable and were issued in compliance with all
applicable state and federal securities laws; the Firm Shares and the Option
Shares issued by the Company (if any) have been duly authorized and when issued
and paid for as contemplated herein will be validly issued, fully paid and
nonassessable; no preemptive or similar rights exist with respect to any of the
Shares or the issue and sale thereof . The description of the capital stock of
the Company incorporated by reference in the Registration Statement and the
Prospectus is, and at the Closing Date and, if later, the Option Closing Date,
will be, complete and accurate in all respects. Except as set forth in the
Prospectus, or in any documents incorporated by reference therein, and except
for transactions effected pursuant to the Company's stock option plan(s) or
employee stock purchase plan, the Company does not have outstanding, and at the
Closing Date and, if later, the Option Closing Date, will not have outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any shares of capital stock, or any such warrants, convertible
securities or obligations. No further approval or authority of stockholders or
the Board of Directors of the Company will be required for issuance and sale of
the Firm Shares and the Option Shares as contemplated herein. The certificates
evidencing the Shares are in due and proper legal form and have been duly
authorized for issuance by the Company.
(f) The financial statements and schedules included or incorporated by
reference in the Registration Statement or the Prospectus present fairly the
financial condition of the Company and its consolidated Subsidiaries as of the
respective dates thereof and the results of operations and cash flows of the
Company and its consolidated Subsidiaries for the respective periods covered
thereby, all in conformity with generally accepted accounting principles applied
on a consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. No other financial statements or schedules of the
Company are required by the Act, the Exchange Act, the Exchange Act Rules and
Regulations or the Rules and Regulations to be included in the Registration
Statement or the Prospectus. KPMG LLP (the "Accountants"), who have reported on
such financial statements and schedules, other than the financial statements for
the fiscal year ended December 31, 2001, are independent accountants with
respect to the Company as required by the Act and the Rules and Regulations. The
summary and selected consolidated financial and statistical data included in the
Registration Statement present fairly the information shown therein and have
been compiled on a basis consistent with the financial statements presented in
the Registration Statement.
(g) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus and prior to or on the Closing
Date and, if later, the Option Closing Date, except as set forth in or
contemplated by the Registration Statement and the Prospectus, (i) there has not
been and will not have been any
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change in the capitalization of the Company or any of its Principal Subsidiaries
(other than in connection with the exercise of options to purchase the Company's
Common Stock granted pursuant to the Company's stock option plans, or employee
stock purchase plan from the shares reserved therefor as described in the
Registration Statement), or any Material Adverse Effect arising for any reason
whatsoever, (ii) neither the Company nor any of its Principal Subsidiaries has
incurred nor will any of them incur, except in the ordinary course of business
as described in the Prospectus, any material liabilities or obligations, direct
or contingent, nor has the Company or any of its Principal Subsidiaries entered
into nor will any of them enter into, except in the ordinary course of business
as described in the Prospectus, any material transactions other than pursuant to
this Agreement and the transactions referred to herein and (iii) the Company has
not and will not have paid or declared any dividends or other distributions of
any kind on any class of its capital stock.
(h) The Company is not and will not become as a result of the transactions
contemplated hereby an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended.
(i) Except as set forth in the Registration Statement and the Prospectus,
there are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Principal
Subsidiaries, or any of their respective officers in their capacity as such, nor
any basis therefor, before or by any federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding is reasonably likely
to have a Material Adverse Effect.
(j) The Company and each Principal Subsidiary , is not in default, under
any contract or other instrument to which it is a party or by which its property
is bound or affected, which default might reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Company, no other party
under any contract or other instrument to which it or any such Principal
Subsidiary is a party is in default in any respect thereunder, which default
could reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any such Principal Subsidiary is, and at the Closing Date and, if
later, the Option Closing Date, will not be, in violation of any provision of
its certificate or articles of organization or by-laws or other organizational
documents.
(k) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for the
consummation by the Company of the transactions on its part contemplated herein,
except such as have been obtained under the Act or the Rules and Regulations and
such as may be required under state securities or Blue Sky laws or the by-laws
and rules of the National Association of Securities Dealers, Inc. (the "NASD")
in connection with the purchase and distribution by the Underwriters of the
Shares.
(l) The Company has full corporate power and authority to enter into this
Agreement. This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with the terms hereof except as to
(i) rights to indemnity and contribution thereunder, which may be limited under
applicable law, (ii) bankruptcy and laws relating to the rights and remedies of
creditors generally and (iii) the availability of equitable remedies. The
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company pursuant to the
terms or provisions of, or result in a breach or violation of any of the terms
or provisions of, or conflict with or constitute a default under, or give any
party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, the certificate or articles of
incorporation or by-laws of the Company or any of its Principal Subsidiaries,
any indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which the Company is a party or by
which the Company or any of its properties is bound or affected, or violate or
conflict with any judgment, ruling, decree, order, statute, rule or regulation
of any court or other governmental agency or body applicable to the business or
properties of the Company, which default or conflict would, in any such case,
have a Material Adverse Effect.
(m) The Company, and each of its Principal Subsidiaries, has good and
marketable title to all properties and assets described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Prospectus or are not material to the
business of the Company or its
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Principal Subsidiaries. The Company, and each of its Principal Subsidiaries, has
valid, subsisting and enforceable leases for the properties described in the
Prospectus as leased by it. The Company owns or leases all such properties as
are necessary to its operations as now conducted, except where the failure to so
own or lease is not reasonably likely to have a Material Adverse Effect.
(n) There is no document, contract, permit or instrument of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement that is not described or
filed as required. All such contracts to which the Company or any of its
Principal Subsidiaries is a party have been duly authorized, executed and
delivered by the Company or such Principal Subsidiary, constitute valid and
binding agreements of the Company or such Principal Subsidiary and are
enforceable against and by the Company or such Subsidiary in accordance with the
terms thereof except as to (i) rights to indemnity and contribution thereunder,
which may be limited under applicable law, (ii) bankruptcy and laws relating to
the rights and remedies of creditors generally and (iii) the availability of
equitable remedies.
(o) No statement, representation, warranty or covenant made by the Company
in this Agreement or made in any certificate or document required by Section 6
of this Agreement to be delivered to the Representatives was or will be, when
made, inaccurate, untrue or incorrect in any material respect.
(p) The Company has not distributed and will not distribute prior to the
later of (i) the Closing Date or, if later, the Option Closing Date, and (ii)
completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any preliminary
prospectuses, the Prospectus, the Registration Statement and other materials, if
any, permitted by the Act and the Rules and Regulations. Neither the Company nor
any of its directors, officers or controlling persons has taken, directly or
indirectly, any action designed, or that might reasonably be expected, to cause
or result, under the Act or otherwise, in, or that has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(q) No holder of securities of the Company has rights to the registration
of any securities of the Company because of the filing of the Registration
Statement, which rights have not been waived by the holder thereof as of the
date hereof.
(r) The Common Stock has been registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Company has filed an application to list the Shares to be sold by the Company
hereunder on the Nasdaq National Market ("NNM"), and has received notification
that the listing has been approved, subject to notice of issuance of such
Shares.
(s) Except as disclosed in or specifically contemplated by the Prospectus
(i) each of the Company and its Principal Subsidiaries owns or has adequate
rights to use all trademarks, trade names, domain names, patents, patent rights,
copyrights, technology, know-how (including trade secrets and other unpatented
or unpatentable proprietary or confidential information, systems or procedures),
service marks, trade dress rights, and other intellectual property
(collectively, "Intellectual Property") and has such other licenses, approvals
and governmental authorizations, in each case, sufficient to conduct its
business as now conducted, and, to the Company's and its Principal Subsidiaries'
knowledge, none of the foregoing Intellectual Property rights owned or licensed
by the Company or any of its Principal Subsidiaries is invalid or unenforceable,
(ii) the Company has no knowledge of any infringement by it or any of its
Principal Subsidiaries of Intellectual Property rights of others, where such
infringement could have a Material Adverse Effect, (iii) the Company is not
aware of any infringement, misappropriation or violation by others of, or
conflict by others with rights of the Company or any of its Principal
Subsidiaries with respect to, any Intellectual Property, (iv) there is no claim
being made against the Company or any of its Principal Subsidiaries, or, to the
best knowledge of the Company and its Principal Subsidiaries, any employee of
the Company or any of its Principal Subsidiaries, regarding Intellectual
Property or other infringement that could reasonably be expected to have a
Material Adverse Effect, and (v) neither the Company nor any of its Principal
Subsidiaries has received any notice of infringement with respect to any patent
or any notice challenging the validity, scope or enforceability of any
Intellectual Property owned by or licensed to the Company or any of its
Principal Subsidiaries, in each case the loss of which patent or Intellectual
Property (or loss of rights thereto) would reasonably be expect to have a
Material Adverse Effect.
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(t) The Company and each of its Principal Subsidiaries has filed all
federal, state, local and foreign income tax returns that have been required to
be filed and has paid all taxes and assessments received by it to the extent
that such taxes or assessments have become due. Neither the Company nor any of
its Principal Subsidiaries has any tax deficiency that has been or, to the best
knowledge of the Company or any Principal Subsidiary, might be asserted or
threatened against it that would reasonably be expected to have a Material
Adverse Effect.
(u) The pro forma financial information set forth in the Registration
Statement reflects, subject to the limitations set forth in the Registration
Statement as to such pro forma financial information, the results of operations
of the Company and its consolidated Subsidiaries purported to be shown thereby
for the periods indicated and conforms to the requirements of Regulation S-X of
the Rules and Regulations, and management of the Company believes (i) the
assumptions underlying the pro forma adjustments are reasonable, (ii) that such
adjustments have been properly applied to the historical amounts in the
compilation of such pro forma statements and notes thereto, and (iii) that such
statements and notes thereto present fairly, with respect to the Company and its
consolidated Subsidiaries, the pro forma financial position and results of
operations and the other information purported to be shown therein at the
respective dates or for the respective periods therein specified.
(v) The Company and each of its Principal Subsidiaries owns or possesses
all authorizations, approvals, orders, licenses, registrations, other
certificates and permits of and from all governmental regulatory officials and
bodies, necessary to conduct their respective businesses as contemplated in the
Prospectus, except where the failure to own or possess all such authorizations,
approvals, orders, licenses, registrations, other certificates and permits would
not have a Material Adverse Effect. There is no proceeding pending or, to the
knowledge of the Company, threatened (or any basis therefor known to the
Company) that may cause any such authorization, approval, order, license,
registration, certificate or permit to be revoked, withdrawn, cancelled,
suspended or not renewed; and the Company, and each of its Principal
Subsidiaries, is conducting its business in compliance with all laws, rules and
regulations applicable thereto [(including, without limitation, all applicable
federal, state and local environmental laws and regulations)] except where such
noncompliance would not have a Material Adverse Effect.
(w) The Company, and each of its Principal Subsidiaries, maintains
insurance of the types and in the amounts generally deemed adequate for its
business, including, but not limited to, insurance covering real and personal
property owned or leased by the Company or any of its Principal Subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(x) Neither the Company nor any of its Principal Subsidiaries has, nor, to
the best of the Company's knowledge, any of its or their respective employees or
agents at any time during the last five years (i) made any unlawful contribution
to any candidate for foreign office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
(y) The books, records and accounts of the Company accurately and fairly
reflect, in reasonable detail, the transactions in, and dispositions of, the
assets of, and the results of operations of, the Company and its Principal
Subsidiaries. The Company maintains (x) systems of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of the Company's
consolidated financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (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
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences, and (y) disclosure controls and procedures (as
defined in Rule 13a-14(c) under the Exchange Act).
4. Agreements of the Company. The Company covenants and agrees with the
several Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or thereafter
during such period as the Prospectus is required by law to be delivered in
connection with sales of the Shares by an Underwriter or a dealer,
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file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the Registration
Statement to become effective, and will notify the Representatives promptly, and
will confirm such advice in writing, (i) when the Registration Statement has
become effective and when any post-effective amendment thereto becomes
effective, (ii) of any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose or the threat thereof, (iv) of the happening of any event
during the period mentioned in the second sentence of Section 5(e) that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in the light of the circumstances in which they are made, not
misleading and (v) of receipt by the Company or any Representatives or attorney
of the Company of any other communication from the Commission relating to the
Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment. If the Company has omitted any information from the
Registration Statement pursuant to Rule 430A of the Rules and Regulations, the
Company will comply with the provisions of and make all requisite filings with
the Commission pursuant to said Rule 430A and notify the Representatives
promptly of all such filings. If the Company elects to rely upon Rule 462(b)
under the Act, the Company shall file a registration statement under Rule 462(b)
with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for such Rule 462(b)
registration statement or give irrevocable instructions for the payment of such
fee pursuant to the Rules and Regulations.
(c) The Company will furnish to each Representative, without charge, a
copy of one signed copy of each of the Registration Statement and of any pre- or
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Representative, without charge,
for transmittal to each of the other Underwriters, a copy of the Registration
Statement and any pre- or post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any undertakings
contained in the Registration Statement.
(e) On the Effective Date, and during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, the Company will
deliver to each of the Underwriters, without charge, as many copies of the
Prospectus or any amendment or supplement thereto as the Representatives may
reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Underwriters and by all dealers to whom
the Shares may be sold, both in connection with the offering or sale of the
Shares and for any period of time thereafter during which the Prospectus is
required by law to be delivered in connection therewith. If during such period
of time any event shall occur that in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was made,
not misleading, or if it is necessary to supplement or amend the Prospectus to
comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies of such
supplement or amendment to the Prospectus as the Representatives may reasonably
request. The Company will not file any document under the Exchange Act or the
Exchange Act Rules and Regulations before the termination of the offering of the
Shares by the Underwriters, if such document would be deemed to be incorporated
by reference into the Prospectus, that is not approved by the Representatives
after reasonable notice thereof.
(f) Prior to any public offering of the Shares, the Company will cooperate
with the Representatives and counsel to the Underwriters in connection with the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives may
request; provided, that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action that would subject it to general service of process in any jurisdiction
where it is not now so subject.
8
(g) The Company will comply with the Rules and Regulations so as to permit
the completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus.
(h) The Company will timely file such reports pursuant to the 1934 Act as
are necessary in order to make generally available to its securityholders as
soon as practicable an earnings statement for the purposes of, and to provide
the benefits contemplated by, the last paragraph of Section 11(a) of the 1933
Act.
(i) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay or reimburse
if paid by the Representatives, all costs and expenses incident to the
performance of the obligations of the Company under this Agreement and in
connection with the transactions contemplated hereby, including but not limited
to costs and expenses of or relating to (i) the preparation, printing and filing
of the Registration Statement and exhibits to it, each preliminary prospectus,
Prospectus and any amendment or supplement to the Registration Statement or
Prospectus, (ii) the preparation and delivery of certificates representing the
Shares, (iii) the printing of this Agreement, the Agreement Among Underwriters,
any Selected Dealer Agreements, any Underwriters' Questionnaires, any
Underwriters' Powers of Attorney, and any invitation letters to prospective
Underwriters, (iv) furnishing (including costs of shipping and mailing) such
copies of the Registration Statement, the Prospectus and any preliminary
prospectus, and all amendments and supplements thereto, as may be requested for
use in connection with the offering and sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold, (v) the listing of the Shares on the
NNM, (vi) any filings required to be made by the Underwriters with the NASD, and
the fees, disbursements and other charges of counsel for the Underwriters in
connection therewith, (vii) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 5(f), including the reasonable fees,
disbursements and other charges of counsel to the Underwriters in connection
therewith, and the preparation and printing of preliminary, supplemental and
final Blue Sky memoranda, if any, (viii) fees, disbursements and other charges
of counsel to the Company (but not those of counsel for the Underwriters, except
as otherwise provided herein), (ix) the transfer agent for the Shares, and (x)
any travel expenses of the Company's officers, directors and employees and any
other expenses of the Company in connection with attending or hosting meetings
with prospective purchasers of the Shares.
(j) The Company will not at any time, directly or indirectly, take any
action designed or that might reasonably be expected to cause or result in, or
that will constitute, stabilization of the price of the shares of Common Stock
to facilitate the sale or resale of any of the Shares.
(k) The Company will apply the net proceeds from the offering and sale of
the Shares to be sold by the Company in the manner set forth in the Prospectus
under "Use of Proceeds".
(l) During the period beginning from the date hereof and continuing to and
including the date 90 days after the date of the Prospectus, without the prior
written consent of Xxxxxxx & Company, Inc., which consent shall not be
unreasonably withheld, the Company will not (1) offer, sell, contract to sell,
pledge, grant options, warrants or rights to purchase or otherwise dispose of
any equity securities of the Company or any other securities convertible into or
exchangeable for its Common Stock or other equity security (other than (i)
pursuant to employee stock option plans or employee stock purchase plans, as
disclosed in the Prospectus or incorporated by reference therein, (ii) the
issuance of shares pursuant to the exercise of options outstanding on the date
hereof or pursuant to the exercise of the new options granted in accordance with
the preceding clause (i), or (iii) the Company's issuance of shares constituting
in the aggregate up to 25% of the issued and outstanding shares of capital stock
of the Company as consideration or partial consideration for business
acquisitions or in connection with the formation of joint ventures or strategic
partnerships), or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of shares of Common Stock, whether any such transaction described
in clause (1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
(m) During the period of 90 days after the date of the Prospectus, the
Company will not file with the Commission or cause to become effective any
registration statement (other than a registration statement on Form S-4 or Form
S-8) relating to any securities of the Company without the prior written consent
of Xxxxxxx & Company, Inc.
9
(n) Company will cause each of its officers and directors to enter into
lock-up agreements with the Representatives to the effect that they will not,
without the prior written consent of Xxxxxxx & Company, Inc., sell, contract to
sell or otherwise dispose of any shares of Common Stock or rights to acquire
such shares according to the terms set forth in Schedule III hereto.
5. Conditions of the Obligations of the Underwriters. The obligations of
each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become effective
shall be received by the Representatives not later than 5:00 p.m., New York City
time, on the date of this Agreement or at such later date and time as shall be
consented to in writing by the Representatives and all filings required by Rule
424 and Rule 430A of the Rules and Regulations shall have been made. If the
Company has elected to rely upon Rule 462(b), the registration statement filed
under Rule 462(b) shall have become effective by 10:00 P.M., (i) No stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall be pending or threatened by the
Commission, (ii) no order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending before or threatened or
contemplated by the Commission or the authorities of any such jurisdiction,
(iii) any request for additional information on the part of the staff of the
Commission or any such authorities shall have been complied with to the
satisfaction of the staff of the Commission or such authorities, (iv) after the
date hereof no amendment or supplement to the Registration Statement or the
Prospectus shall have been filed unless a copy thereof was first submitted to
the Representatives and the Representatives do not object thereto in good faith,
and (v) the Representatives shall have received certificates, dated the Closing
Date and, if later, the Option Closing Date and signed by the Chief Executive
Officer and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii) of this paragraph.
(b) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, properties,
management, condition (financial or otherwise) or results of operations of the
Company or any of its Principal Subsidiaries, whether or not arising from
transactions in the ordinary course of business, in each case other than as
described in or contemplated by the Registration Statement and the Prospectus,
and (ii) the Company shall not have sustained any material loss or interference
with its business or properties from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not
described in the Registration Statement and the Prospectus, if in the reasonable
judgment of the Representatives any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares by the
Underwriters at the initial public offering price.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company, any of its Principal
Subsidiaries, or any of its or their officers or directors in their capacities
as such, before or by any federal, state or local court, commission, regulatory
body, administrative agency or other governmental body, domestic or foreign, in
which litigation or proceeding an unfavorable ruling, decision or finding would
have a Material Adverse Effect or if, in the reasonable judgment of the
Representative, any such development makes it impracticable or inadvisable to
consummate the sale and delivery of the Shares by the Underwriters at the
initial public offering price.
(d) Each of the representations and warranties of the Company contained
herein shall be true and correct in all respects (in the case of any
representation and warranty containing a materiality or Material Adverse Effect
qualification) or in all material respects at the Closing Date and, with respect
to the Option Shares, at the Option Closing Date, and all covenants and
agreements contained herein to be performed on the part of the Company and all
conditions contained herein to be fulfilled or complied with by the Company at
or prior to the Closing Date and, with respect to the Option Shares, at or prior
to the Option Closing Date, shall have been duly performed, fulfilled or
complied with.
10
(e) The Representatives shall have received an opinion, dated the Closing
Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to the Representatives and counsel for the
Underwriters from Xxxxxxx Coie LLP, counsel to the Company, with respect to the
following matters:
(i) Each of the Company and its Principal Subsidiaries, is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation; has full corporate power
and authority to own or lease all the assets owed or leased by it as
described in the Registration Statement and Prospectus and to conduct its
business as described in the Registration Statement and Prospectus; and is
duly licensed or qualified to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of the
activities conducted by it or the character of the assets owned or leased
by it makes such license or qualification necessary and where the failure
to be licensed or qualified would have a material and adverse effect on
the business or consolidated financial condition of the Company.
(ii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Registration Statement and the Prospectus
in the column entitled "Actual" under the caption "Capitalization" (except
for subsequent issuances, if any, pursuant to this Agreement or pursuant
to reservations, agreements, employee benefit plans or the exercise of
convertible securities, options or warrants referred to in the
Prospectus). All of such outstanding shares of capital stock of the
Company have been duly authorized, validly issued and are fully paid and
nonassessable, and, to such counsel's knowledge, were not issued in
violation of or subject to any preemptive or, to such counsel's knowledge,
similar rights;
(iii) To such counsel's knowledge, other than its Subsidiaries, the
Company does not own or control, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation
or have any equity interest in any corporation, firm, partnership, joint
venture, association or other entity. To such counsel's knowledge, all of
the outstanding shares of capital stock of each Principal Subsidiaries
have been duly authorized and validly issued and are fully paid and
nonassessable, and owned by the Company free and clear of all claims,
liens, charges and encumbrances, other than such claims, liens, charges
and encumbrances that would not have a Material Adverse Effect; to such
counsel's knowledge, there are no securities outstanding that are
convertible into or exercisable or exchangeable for capital stock of any
Subsidiary.
(iv) The description of the capital stock of the Company
incorporated by reference in the Registration Statement and the Prospectus
conforms in all material respects to the terms thereof.
(v) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened to which the Company or any of its
Principal Subsidiaries is a party or to which any of their respective
properties is subject that are required to be described in the
Registration Statement or the Prospectus but are not so described.
(vi) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required
for the consummation by the Company of the transactions on its part
contemplated under this Agreement, except such as have been obtained or
made under the Act or the Rules and Regulations and such as may be
required under state securities or Blue Sky laws or the by-laws and rules
of the NASD in connection with the purchase and distribution by the
Underwriters of the Shares.
(vii) The Company has full corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company.
(viii) The execution and delivery of this Agreement, the compliance
by the Company with all of the terms hereof and the consummation of the
transactions contemplated hereby (A) does not contravene any provision of
applicable law or the Certificate of Incorporation or By-Laws of the
Company or any of its Principal Subsidiaries, except for such
contraventions that would not have a Material Adverse Effect, (B) to such
counsel's knowledge, will not result in the creation or imposition of any
lien, charge or encumbrance
11
upon any of the assets of the Company pursuant to the terms and provisions
of, conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or give any party a right
to terminate any of its obligations under, or result in the acceleration
of any obligation under, any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note agreement or other
evidence of indebtedness, lease, contract or other agreement, document or
instrument known to such counsel to which the Company is a party or by
which the Company, any of its Principal Subsidiaries, or any of their
respective properties is bound or affected, except for such liens,
charges, encumbrances, conflicts, breaches, violations, defaults or rights
that would not have a Material Adverse Effect or (C) violate or conflict
with (i) any judgment, ruling, decree or order known to such counsel or
(ii) any statute, rule or regulation of any court or other governmental
agency or body, applicable to the business or properties of the Company or
any of its Principal Subsidiaries, except for such violations or conflicts
that would not have a Material Adverse Effect.
(ix) To such counsel's knowledge, there is no document or contract
of a character required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement
that is not described or filed or incorporated by reference as required,
and each description of such contracts and documents that is contained or
incorporated by reference in the Registration Statement and Prospectus
fairly presents in all material respects the information required under
the Act and the Rules and Regulations; provided that counsel need not
express any opinion with respect to the statements contained in the
Registration Statement and Prospectus under the caption "Underwriting".
(x) The Company is not required, and upon the issuance and sale of
the Shares as herein contemplated and the application of the net proceeds
therefrom as described in the Registration Statement and Prospectus will
not be required, to register as an "investment company" under the 1940
Act.
(xi) The Company Shares have been duly authorized for listing on the
NNM, subject to notice of issuance.
(xii) To such counsel's knowledge, no holder of securities of the
Company has rights, which have not been waived or satisfied, to require
the Company to register with the Commission shares of Common Stock or
other securities, as part of the offering contemplated hereby.
(xiii) The Registration Statement has become effective under the
Act, and to the best of such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or is pending, threatened
or contemplated.
(xiv) The Registration Statement and the Prospectus comply as to
form in all material respects with the requirements of the Act and the
Rules and Regulations (other than the financial statements, schedules and
other financial data contained or incorporated by reference in the
Registration Statement or the Prospectus, as to which such counsel need
express no opinion).
(xv) Such counsel has participated in the preparation of the
Registration Statement and Prospectus and, without undertaking to
determine independently or assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or in the Prospectus, has no reason to believe that the
Registration Statement as of the Effective Date contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of its date or as of the Closing
Date, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances in which they were made,
not misleading (except that counsel need not express an opinion or belief
with respect to any financial statements and schedules and other financial
data included in or omitted from the Registration Statement or the
Prospectus).
(xvi) The documents incorporated by reference in the Prospectus
(other than the financial statements, schedules and other financial data
contained therein, as to which such counsel need express no
12
opinion), when they were filed with the Commission, complied as to form in
all material respects with the requirements of the Exchange Act and the
Exchange Act Rules and Regulations.
In rendering such opinion, such counsel may include in its opinion
customary assumptions and qualifications and may rely upon as to matters of
local law on opinions of counsel satisfactory in form and substance to the
Representatives and counsel for the Underwriters, provided that the opinion of
counsel to the Company shall state that such counsel is doing so, that such
counsel has no reason to believe that such counsel and the Underwriters are not
entitled to rely on such opinions and that copies of such opinions are to be
attached to the opinion.
(f) The Representatives shall have received an opinion, dated the Closing
Date and the Option Closing Date, from Xxxxxx Pepper Tooze LLP, counsel to the
Underwriters, with respect to the Registration Statement, the Prospectus, and
this Agreement, which opinion shall be satisfactory in all respects to the
Representative.
(g) Concurrently with the execution and delivery of this Agreement, the
Accountants shall have furnished to the Representatives a letter, dated the date
of its delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants with respect to the Company as required by the Act and the Exchange
Act and the Rules and Regulations and with respect to certain financial and
other statistical and numerical information contained or incorporated by
reference in the Registration Statement. At the Closing Date and, as to the
Option Shares, the Option Closing Date, the Accountants shall have furnished to
the Representatives a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set forth in
the letter from the Accountants, that nothing has come to their attention during
the period from the date of the letter referred to in the prior sentence to a
date (specified in the letter) not more than three days prior to the Closing
Date and the Option Closing Date, as the case may be, which would require any
change in their letter dated the date hereof if it were required to be dated and
delivered at the Closing Date and the Option Closing Date.
(h) At the Closing Date and, as to the Option Shares, the Option Closing
Date, there shall be furnished to the Representatives a certificate, dated the
date of its delivery, signed by each of the Chief Executive Officer and the
Chief Financial Officer of the Company, in form and substance satisfactory to
the Representative, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus (including any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus) and (A) as of the date of such certificate, such documents are
true and correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein not untrue or misleading and (B) in the case of the
certificate delivered at the Closing Date and the Option Closing Date,
since the Effective Date no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading.
(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct.
(iii) Each of the covenants required to be performed by the Company
herein on or prior to the date of such certificate has been duly, timely
and fully performed and each condition herein required to be satisfied or
fulfilled on or prior to the date of such certificate has been duly,
timely and fully satisfied or fulfilled.
13
(i) On or prior to the Closing Date, the Representatives shall have
received the executed agreements referred to in Section 4(n).
(j) The Shares shall be qualified for sale in such jurisdictions as the
Representatives may reasonably request and each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
or the Option Closing Date.
(k) Prior to the Closing Date, the Shares shall have been duly authorized
for listing on the NNM upon official notice of issuance.
(l) The Company shall have furnished to the Representatives such
certificates, in addition to those specifically mentioned herein, as the
Representatives may have reasonably requested as to the accuracy and
completeness at the Closing Date and the Option Closing Date of any statement in
the Registration Statement or the Prospectus, as to the accuracy at the Closing
Date and the Option Closing Date of the representations and warranties of the
Company herein, as to the performance by the Company of its and their respective
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Representatives.
6. Indemnification.
(a) The Company will indemnify and hold harmless each Underwriter and each
person, if any, who controls each Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, liabilities, expenses
or damages arise out of or are based on any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus, or the omission or alleged omission to
state in such document a material fact required to be stated in it or necessary
to make the statements in it not misleading in the light of the circumstances in
which they were made, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained herein
or any failure of the Company to perform its obligations hereunder or under law
in connection with the transactions contemplated hereby; provided, however, that
(i) the Company will not be liable to the extent that such loss, claim,
liability, expense or damage arises from the sale of the Shares in the public
offering to any person by an Underwriter and is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to any Underwriter furnished in writing to
the Company by the Representative, on behalf of any Underwriter expressly for
inclusion in the Registration Statement, the preliminary prospectus or the
Prospectus; and (ii) the Company will not be liable to any Underwriter, the
directors, officers, employees or agents of such Underwriter or any person
controlling such Underwriter with respect to any loss, claim, liability,
expense, or damage arising out of or based on any untrue statement or omission
or alleged untrue statement or omission or alleged omission to state a material
fact in the preliminary prospectus that is corrected in the Prospectus if the
person asserting any such loss, claim, liability, charge or damage purchased
Shares from such Underwriter but was not sent or given a copy of the Prospectus
at or prior to the written confirmation of the sale of such Shares to such
person and if copies of the Prospectus were timely delivered to such Underwriter
pursuant to Section 5 hereof; The Company acknowledges that the statements set
forth under the heading "Underwriting" in the preliminary prospectus and the
Prospectus constitute the only information relating to any Underwriter furnished
in writing to the Company by the Representatives on behalf of the Underwriters
expressly for inclusion in the Registration Statement, the preliminary
prospectus or the Prospectus. This indemnity agreement will be in addition to
any liability that the Company might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who signs the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to each Underwriter, as set forth in
Section 6(a), but only insofar as losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished
14
in writing to the Company by the Representative, on behalf of such Underwriter,
expressly for use in the Registration Statement, the preliminary prospectus or
the Prospectus. The Company acknowledges that the statements set forth under the
heading "Underwriting" in the preliminary prospectus and the Prospectus
constitute the only information relating to any Underwriter furnished in writing
to the Company by the Representatives on behalf of the Underwriters expressly
for inclusion in the Registration Statement, the preliminary prospectus or the
Prospectus. This indemnity will be in addition to any liability that each
Underwriter might otherwise have.
(c) Any party that proposes to assert the right to be indemnified under
this Section 6 shall, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 6, notify each such
indemnifying party in writing of the commencement of such action, enclosing with
such notice a copy of all papers served, but the omission so to notify such
indemnifying party will not relieve it from any liability that it may have to
any indemnified party under the foregoing provisions of this Section 6 unless,
and only to the extent that, such omission results in the loss of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense, the indemnifying party will not be
liable to the indemnified party for any legal or other expenses except as
provided below and except for the reasonable costs of investigation incurred by
the indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (iii) a
conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (iv) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, in each of which cases
the reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement (i) includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act by
or on behalf of an indemnified party. An indemnifying party will not be liable
for any settlement of any action or claim effected without its written consent
(which consent will not be unreasonably withheld or delayed).
(d) If the indemnification provided for in this Section 6 is applicable in
accordance with its terms but for any reason is held to be unavailable to or
insufficient to hold harmless an indemnified party under paragraphs (a), (b) and
(c) of this Section 6 in respect of any losses, claims, liabilities, expenses
and damages referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than the Underwriters, such as
persons who control the Company within the meaning of the Act, officers of the
Company who signed the Registration Statement and directors of the Company, who
also may be liable for contribution) by such indemnified party as a result of
such losses, claims, liabilities, expenses and damages in such proportion as
shall be appropriate to reflect the relative benefits received by the Company ,
on the one hand, and the Underwriters, on the other hand. The relative benefits
received by the Company, on the one hand, and the Underwriters, on the other
hand, shall be deemed to be in the
15
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. If, but only if, the allocation provided by
the foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company, on the one hand, and the Underwriters, on the
other hand, with respect to the statements or omissions that resulted in such
loss, claim, liability, expense or damage, or action in respect thereof, as well
as any other relevant equitable considerations with respect to such offering.
Such relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Representatives on behalf of the Underwriters, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
6(d) were to be determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss
claim, liability, expense or damage, or action in respect thereof, referred to
above in this Section 6(d) shall be deemed to include, for purposes of this
Section 6(d), 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 Section 6(d), no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts received by it and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 6(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 6(d), any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against any such party in respect of which a claim for contribution may be made
under this Section 6(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 6(d). No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this Section 6
and the representations and warranties of the Company contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any investigation made by or on behalf of the Underwriters, (ii) acceptance of
any of the Shares and payment therefor or (iii) any termination of this
Agreement.
7. Reimbursement of Certain Expenses. In addition to its other obligations
under Section 6(a) of this Agreement, the Company hereby agrees to reimburse the
Underwriters on a quarterly basis for all reasonable legal and other expenses
incurred in connection with investigating or defending any claim, action,
investigation, inquiry or other proceeding arising out of or based upon, in
whole or in part, any statement or omission or alleged statement or omission, or
any inaccuracy in the representations and warranties of the Company contained
herein or failure of the Company to perform its obligations hereunder or under
law, all as described in Section 6(a), notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 7 and the possibility that such payment might later be held to be
improper; provided, however, that, to the extent any such payment is ultimately
held to be improper, the persons receiving such payments shall promptly refund
them.
8. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time on or prior to the Closing Date (or,
with respect to the Option Shares, on or prior to the Option Closing Date), by
notice to the Company from the Representatives, without liability on the part of
any Underwriter to the Company if, prior to delivery and payment for the Firm
Shares or Option Shares, as the case may be, in the sole judgment of the
Representative, (i) trading in any of the equity securities of the Company shall
have been suspended or limited by the Commission or by the NNM, (ii) trading in
securities generally on the NNM shall have been suspended or limited or minimum
or maximum prices shall have been generally established on such exchange, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by such
exchange, by order of the Commission or any court or other
16
governmental authority, or by the NNM (iii) a general banking moratorium shall
have been declared by federal, New York State or Washington authorities or any
material disruption of the securities settlement or clearance services in the
United States shall have occurred, or (iv) any material adverse change in the
financial or securities markets in the United States or in political, financial
or economic conditions in the United States, or other calamity or crisis, within
the United States, shall have occurred, the effect of which, in any such case,
is such as to make it, in the sole judgment of the Representative, impracticable
or inadvisable to proceed with completion of the public offering or the delivery
of and payment for the Shares.
If this Agreement is terminated pursuant to Section 8 hereof, the Company
shall not be under any liability to any Underwriter except as provided in
Sections 4(i), 6 and 7 hereof; but, if the purchase of the Firm Shares or Option
Shares by the Underwriters is not consummated due to a breach by the Company or
if for any reason (other than as a result of the events described in the
preceding paragraph) the Company shall be unable to perform its obligations
hereunder, or if the transactions contemplated by this Agreement are not
consummated for any reason other than a breach by any party of its
representations, warranties or covenants hereunder or as a result of the events
described in the preceding paragraph (other than clause (i) thereof), the
Company will reimburse the Underwriters for all out-of-pocket expenses
(including the fees, disbursements and other charges of counsel to the
Underwriters) incurred by the Underwriters in connection with the offering of
the Firm Shares or Option Shares.
9. Substitution of Underwriters. If any one or more of the Underwriters
shall fail or refuse to purchase any of the Firm Shares that it or they have
agreed to purchase hereunder, and the aggregate number of Firm Shares that such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of Firm Shares, the other
Underwriters shall be obligated, severally and not jointly, to purchase the Firm
Shares that such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the number of Firm Shares that
they have respectively agreed to purchase pursuant to Section 1 bears to the
aggregate number of Firm Shares which all such non-defaulting Underwriters have
so agreed to purchase, or in such other proportions as the Representatives may
specify; provided that in no event shall the maximum number of Firm Shares that
any Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 10 by more than one-ninth of such number of
Firm Shares without the prior written consent of such Underwriter. In any such
case either the Representatives or the Company shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or in
any other documents or arrangements may be effected. If any Underwriter or
Underwriters shall fail or refuse to purchase any Firm Shares that it or they
agreed to purchase hereunder and the aggregate number of Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
exceeds one-tenth of the aggregate number of the Firm Shares and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Firm Shares are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company for the purchase or sale of any Shares under this Agreement. Any action
taken pursuant to this Section 10 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. Miscellaneous. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 0000 Xxxxx
Xxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Chief Executive Officer,
with a copy to Xxxxxxx X. Xxxxxxxxx, Esq., Xxxxxxx Coie LLP, 0000 Xxxxx Xxxxxx,
00xx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000, or (b) if to the Underwriters, to
the Representatives at the offices of Xxxxxxx & Company, Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department, with a copy
to Xxxxxx X. Xxxx, Esq., Xxxxxx Pepper Tooze LLP, 000 X.X. Xxxxxx Xxx., Xxxxx
0000, Xxxxxxxx, Xxxxxx 00000. Any such notice shall be effective only upon
receipt. Any notice under such Section 9 or 10 may be made by telecopier or
telephone, but if so made shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company, and the controlling persons, directors and officers
referred to in Section 6, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall not
include a purchaser, as such purchaser, of Shares from any of the several
Underwriters.
17
Any action required or permitted to be made by the Representatives under
this Agreement may be taken by them jointly or by Xxxxxxx & Company, Inc.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
entirely within such State.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
THE COMPANYAND THE UNDERWRITERS EACH HEREBY WAIVE ANY RIGHT THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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Please confirm that the foregoing correctly sets forth the agreement among
the Company and the several Underwriters.
Very truly yours,
XXXXXXX CARDIOLOGY SYSTEMS, INC.
By:_________________________________________
Title:
Confirmed as of the date first
above mentioned:
XXXXXXX & COMPANY, INC
SUNTRUST XXXXXXXX XXXXXXXX
XXXXX, XXXXXXXX & XXXX, INC.
DELEFIELD XXXXXXXXX, INC.
Acting on behalf of themselves
and as the Representatives of
the other several Underwriters
named in Schedule I hereto.
By: XXXXXXX & COMPANY, INC.
By:_________________________________
Title:
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SCHEDULE I
UNDERWRITERS
Number of Firm
Underwriters Shares to be Purchased
------------ ----------------------
XXXXXXX & COMPANY, INC.
SUNTRUST XXXXXXXX XXXXXXXX
XXXXX, XXXXXXXX & XXXX, INC.
XXXXXXXXX XXXXXXXXX, INC.
.............................................................
-------------
Total ...............................................
=============
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SCHEDULE II
Total Number Total Number of
of Firm Shares Option Shares
to be Sold to be Sold
---------- ----------
Xxxxxxx Cardiology Systems, Inc. ......
........................................
---------- ----------
TOTALS ..........................
========== ==========
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SCHEDULE III
FORM OF LOCK-UP AGREEMENT
The undersigned is a holder of securities of XXXXXXX CARDIOLOGY SERVICES,
INC., a Delaware corporation (the "Company"), and wishes to facilitate the
public offering of shares of the Common Stock (the "Common Stock") of the
Company (the "Offering"). The undersigned recognizes that such Offering will be
of benefit to the undersigned.
In consideration of the foregoing and in order to induce you to act as
underwriters in connection with the Offering, the undersigned hereby agrees that
he, she or it will not, without the prior written approval of Xxxxxxx & Company,
Inc., acting on its own behalf and/or on behalf of other Representatives of the
underwriters, directly or indirectly, sell, contract to sell, make any short
sale, pledge, or otherwise dispose of, or enter into any hedging transaction
that is likely to result in a transfer of, any shares of Common Stock, options
to acquire shares of Common Stock or securities exchangeable for or convertible
into shares of Common Stock of the Company that he, she or it may own, exclusive
of any shares of Common Stock purchased in connection with the Company's public
offering or purchased in the public trading market, for a period commencing as
of the date hereof and ending on the date that is one hundred eighty (180) days
after the date of the final Prospectus relating to the Offering.
The foregoing sentence shall not apply to (A) any distribution by a partnership
to its partners, (B) the transfer of shares of Common Stock or securities
exchangeable for or convertible into shares of Common Stock by the undersigned
as a gift; (C) the transfer of shares of Common Stock or securities exchangeable
for or convertible into shares of Common Stock by the undersigned to its
affiliates, as such term is defined in Rule 405 under the Securities Act; and
(D) the exercise of stock options granted pursuant to the Company's stock option
and employee stock purchase or option plans, or options granted outside of the
Company's stock option plans but outstanding on the date hereof; or (E) the sale
or transfer of shares of Common Stock received upon or in connection with the
exercise of Company stock options if the undersigned is no longer employed by,
or no longer serving as a director of, the Company (including, without
limitation, by reason of death or disability); provided, that, in the case of
clause (A), (B) or (C) above, the recipient(s), donee(s) or transferee(s),
respectively, agrees in writing as a condition precedent to such distribution,
issuance, gift or transfer to be bound by the terms of this Agreement and, in
the case of clause (D), any shares of Common Stock acquired pursuant to the
exercise of any such stock option shall be subject to the restrictions of this
letter (unless this clause (E) applies).
The undersigned confirms that it understands that the underwriters and the
Company will rely upon the representations set forth in this Agreement in
proceeding with the Offering. The undersigned agrees and consents to the entry
of stop transfer instructions with the Company's transfer agent against the
transfer of securities held by the undersigned if such transfer would constitute
a violation or breach of this Agreement.
This Agreement shall be binding on the undersigned and his, her or its
respective successors, heirs, personal representatives and assigns.
-----------------------------------
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