3,000,000 Shares
Apex PC Solutions, Inc.
Common Stock
UNDERWRITING AGREEMENT
----------------------
__________, 1997
XXXXXXXXXX SECURITIES
XXXX XXXXXXXX INCORPORATED
XXXXX & COMPANY
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies & Gentlemen:
SECTION 1
INTRODUCTORY
------------
Apex PC Solutions, Inc., a Washington corporation (the "Company"), proposes
to issue and sell 1,000,000 shares of its authorized but unissued Common Stock
(the "Common Stock") to the several underwriters named in SCHEDULE A annexed
hereto (the "Underwriters"). In addition, certain shareholders of the Company
named in SCHEDULE B annexed hereto (the "Selling Shareholders") propose to sell
an aggregate of 2,000,000 shares of Common Stock to the Underwriters. Said
1,000,000 shares to be sold and issued by the Company and 2,000,000 shares to be
sold by the Selling Shareholders are herein called the "Firm Common Shares." In
addition, certain Selling Shareholders propose to grant to the Underwriters an
option to purchase up to 450,000 additional shares of Common Stock (the
"Optional Common Shares"), as provided in Section 5 hereof. The Firm Common
Shares and, to the extent such option is exercised, the Optional Common Shares
are hereinafter collectively referred to as the "Common Shares."
You have advised the Company and the Selling Shareholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is advisable.
The Company and each of the Selling Shareholders hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the several Underwriters that:
(a) A registration statement on Form SB-2 (File No. 333-_____) with
respect to the Common Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"),
and the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, and has been filed with
the Commission. The Company has prepared and has filed or proposes to file
prior to the effective date of such registration statement an amendment or
amendments to such registration statement, which amendments have been similarly
prepared. There have been delivered to you two signed copies of such
registration statement and amendments, together with two copies of each exhibit
filed therewith. Conformed copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested for each of
the Underwriters. The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration statement, a further
amendment thereto, including the form of final prospectus, or (ii) a final
prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations. As filed, such amendment and form of final prospectus, or such
final prospectus, shall include all Rule 430A Information and, except to the
extent that you shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the date and time
that this Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the latest
Preliminary Prospectus) as the Company shall have previously advised you in
writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement at the time such registration statement becomes effective
and, in the event any post-effective amendment thereto becomes effective prior
to the First Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended; provided, however, that such term shall
also include (i) all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes effective
as provided by Rule 430A of the Rules and Regulations and (ii) a registration
statement, if any, filed pursuant to Rule 462(b) of the Rules and Regulations
relating to the Common Shares. The term "Preliminary Prospectus" shall mean any
preliminary prospectus referred to in the preceding paragraph and any
preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean the prospectus relating to the Common Shares
in the form in which it is first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations or, if no filing pursuant to
Rule 424(b) of the Rules and Regulations is required, shall mean the form of
final prospectus included in the Registration Statement at the time such
registration statement becomes effective. The term "Rule 430A Information"
means information with respect to the Common Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus, and each Preliminary Prospectus has conformed
in all material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including each Closing
Date hereinafter mentioned, the Registration Statement and the Prospectus, and
any amendments or supplements thereto, will contain all material statements and
information required to be included therein by the Act and the Rules and
Regulations and will in all material respects conform to the requirements of the
Act and the Rules and Regulations, and neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, will include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, no representation or warranty contained in this
subsection 2(b) shall be applicable to information contained in or omitted from
any Preliminary Prospectus, the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
specifically for use in the preparation thereof.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in
Exhibit 21 of the Registration Statement. The Company and each of its
subsidiaries have been duly incorporated and is validly existing as a
corporation in good standing (where applicable) under the laws of their
respective jurisdictions of incorporation, with full power and authority
(corporate and other) to own and lease their properties and conduct their
respective businesses as described in the Prospectus; the Company and each of
its subsidiaries are in possession of and operating in compliance with all
authorizations, licenses, permits, consents, certificates and orders material to
the conduct of their respective businesses, all of which are valid and in full
force and effect; the Company and each of its subsidiaries are duly qualified to
do business and in good standing as foreign corporations in each jurisdiction in
which the ownership or leasing of properties or the conduct of their respective
businesses requires such qualification, except for
-2-
jurisdictions in which the failure to so qualify would not have a material
adverse effect upon the Company; and no proceeding has been instituted in any
such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.
(d) The Company has an authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase securities,
and conform to the description thereof contained in the Prospectus. Except as
disclosed in or specifically contemplated by the Prospectus, the Company has no
outstanding options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised thereunder,
set forth in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(e) The Common Shares to be sold by the Company have been duly authorized
and, when issued, delivered and paid for in the manner set forth in this
Agreement, will be validly issued, fully paid and nonassessable, and will
conform to the description thereof contained in the Prospectus. No preemptive
rights or other rights to subscribe for or purchase exist with respect to the
issuance and sale of the Common Shares by the Company pursuant to this
Agreement. No shareholder of the Company has any right which has not been
waived to require the Company to register the sale of any shares owned by such
shareholder under the Act in the public offering contemplated by this Agreement.
No further approval or authority of the shareholders or the Board of Directors
of the Company will be required for the transfer and sale of the Common Shares
to be sold by the Selling Shareholders or the issuance and sale of the Common
Shares to be sold by the Company as contemplated herein.
(f) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company in accordance with its terms. The
making and performance of this Agreement by the Company and the consummation of
the transactions herein contemplated will not violate any provisions of the
articles or certificate of incorporation or bylaws, or other organizational
documents, of the Company or its subsidiaries, as amended to date, and will not
conflict with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries any of their respective
properties may be bound or affected, any statute or any authorization, judgment,
decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the Company or
any of its properties. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental body is
required for the execution and delivery of this Agreement or the consummation of
the transactions contemplated by this Agreement, except for compliance with the
Act, the Blue Sky laws applicable to the public offering of the Common Shares by
the several Underwriters and the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD").
(g) Coopers & Xxxxxxx L.L.P., who have expressed their opinion with
respect to the financial statements and schedules filed with the Commission as a
part of the Registration Statement and included in the Prospectus and in the
Registration Statement, are independent accountants as required by the Act and
the Rules and Regulations.
(h) The financial statements and schedules of the Company, and the related
notes thereto, included in the Registration Statement and the Prospectus present
fairly the financial position of the Company as of the respective dates of such
financial statements and schedules, and the results of operations and changes in
financial position of the Company for the respective periods covered thereby.
Such statements, schedules and related notes have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis as
certified by the independent accountants named in subsection 2(g). No other
financial statements or schedules are required to be included in the
Registration Statement. The selected financial data set forth in the Prospectus
under the captions "Capitalization" and "Selected Financial Data" fairly present
the information set forth therein on the basis stated in the Registration
Statement.
-3-
(i) The Company maintains a system of internal accounting control
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(j) The Company is not in violation or default of any provision of its
articles of incorporation or bylaws, or other organizational documents, and is
not in breach of or default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which it is a party or by which it or
any of its properties are bound except as would not be material to the Company's
business, results of operations or financial condition; and there does not exist
any state of facts which constitutes an event of default on the part of the
Company as defined in such documents or which, with notice or lapse of time or
both, would constitute such an event of default except as would not be material
to the Company's business, results of operations or financial condition.
(k) There are no contracts or other documents required to be described in
the Registration Statement or to be filed as exhibits to the Registration
Statement or by the Rules and Regulations which have not been accurately and
completely described or filed as required. Except for contracts which have been
fully performed as of the date of this Agreement, the contracts so described in
the Registration Statement are in full force and effect on the date hereof; and
neither the Company nor, to the best of the Company's knowledge, any other party
is in breach of or default under any of such contracts except as would not be
material to the Company's business, results of operations or financial
condition.
(l) There are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company's knowledge, threatened to which the
Company or any of its subsidiaries is or may be a party or of which property
owned or leased by the Company or any of its subsidiaries is or may be the
subject, or related to environmental or discrimination matters, which actions,
suits or proceedings might, individually or in the aggregate, prevent or
adversely affect the transactions contemplated by this Agreement or result in a
material adverse change in the condition (financial or otherwise), properties,
business, results of operations or prospects of the Company; and no labor
disturbance by the employees of the Company exists or is imminent which might be
expected to affect adversely such condition, properties, business, results of
operations or prospects. The Company is not a party or subject to the
provisions of any material injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other governmental body.
(m) The Company and its subsidiaries have good and marketable title to all
the properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if any,
reflected in such financial statements (or elsewhere in the Prospectus), or
(ii) those which are not material in amount and do not adversely affect the use
made and proposed to be made of such property by the Company. The Company holds
its leased properties under valid and binding leases, with such exceptions as
are not materially significant in relation to the business of the Company.
Except as disclosed in the Prospectus, the Company owns or leases all such
properties as are necessary to its operations as now conducted or as proposed to
be conducted.
(n) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, except as specifically disclosed or
contemplated therein: (i) the Company has not incurred any material liability or
obligation, indirect, direct or contingent, or entered into any material verbal
or written agreement or other transaction which is not in the ordinary course of
business; (ii) the Company has not sustained any material loss or interference
with its business or properties from fire, flood, windstorm, accident or other
calamity, whether or not covered by insurance; (iii) the Company has not paid or
declared any dividend or other distribution with respect to its capital stock
and the Company is not in default in the payment of principal or interest on any
outstanding debt obligations; (iv) there has not been any change in the capital
stock (other than upon the sale of the Common Shares hereunder and upon the
exercise of options or warrants described in the Registration Statement) or
indebtedness material to the Company (other than in the ordinary course of
business); and (v) there has not been any material adverse change in the
condition (financial or otherwise), business, properties, results of operations
or prospects of the Company.
(o) Except as disclosed in or specifically contemplated by the Prospectus,
the Company has sufficient trademarks, trade names, patent rights, mask works,
copyrights, licenses, approvals and governmental authorizations to
-4-
conduct its business as now conducted and as proposed to be conducted; and the
Company has no knowledge of any material infringement by it of trademark, trade
name rights, patent rights, mask works, copyrights, licenses, trade secret or
other similar rights of others, and there is no claim being made against the
Company regarding trademark, trade name, patent, mask work, copyright, license,
trade secret or other infringement which could have a material adverse effect on
the condition (financial or otherwise), business, results of operations or
prospects of the Company.
(p) The Company is conducting business in compliance with all applicable
laws, rules and regulations of the jurisdictions in which it is conducting
business, including, without limitation, all applicable local, state and federal
environmental laws and regulations; except where failure to be so in compliance
would not materially adversely affect the condition (financial or otherwise),
business, results of operations or prospects of the Company.
(q) The Company has filed all necessary federal, state and foreign income
and franchise tax returns, and all such tax returns are complete and correct in
all material respects, and the Company has paid all taxes shown as due thereon.
The Company has no knowledge of any tax deficiency which has been or might be
asserted or threatened against the Company which could materially and adversely
affect the business, operations or properties of the Company.
(r) The Company is not, and upon the closing of the offering contemplated
hereby will not be, an "investment company" or a company "controlled by" an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(s) The Company has not distributed and will not distribute prior to the
First Closing Date any offering material in connection with the offering and
sale of the Common Shares other than the Prospectus, the Registration Statement
and the other materials permitted by the Act.
(t) The Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
The Company has not been refused any insurance coverage sought or applied for;
and the Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition
(financial or otherwise), properties, business or results of operations of the
Company.
(u) Neither the Company nor, to the best of the Company's knowledge, any
of its employees or agents has at any time during the last five years (i) made
any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States of any jurisdiction thereof.
(v) The Company has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Shares.
(w) The Company has caused (i) each of its executive officers and
directors and (ii) each other holder of Common Stock listed on SCHEDULE C
attached hereto (including shares issuable upon the exercise or conversion of
any option, warrant or other security which is or, at any time up to October 19,
1997, will become exercisable) to furnish to the Underwriters an agreement in
the form provided by the Underwriters, pursuant to which each such party has
agreed that until October 20, 1997, without the prior written consent of
Xxxxxxxxxx Securities, such party will not directly or indirectly, sell, offer,
contract or grant any option to sell or purchase, make any short sale (including
without limitation any "short vs. the box"), pledge, transfer, establish an open
"put equivalent position" within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
dispose of any shares of Common Stock, options or warrants to acquire shares of
Common Stock, or securities exchangeable or exercisable for or convertible into
shares of Common Stock currently or hereafter owned either of record or
beneficially (as defined in Rule 13d-3 under Exchange Act) by such party, or
publicly announce such party's intention to do any of the foregoing; provided,
however, that such party may sell or otherwise transfer shares of Common Stock
(i) pursuant to the Underwriting Agreement, (ii) as a BONA FIDE gift or
-5-
gifts, provided that such party provides prior written notice of such gift or
gifts to Xxxxxxxxxx Securities and the donee or donees thereof agree to be
bound by the restrictions set forth in such agreement, (iii) with the prior
written consent of Xxxxxxxxxx Securities, or (iv) as otherwise set forth in
such holder's lock-up agreement with the Underwriters.
(x) The Company has satisfied the conditions for use of Form SB-2, as set
forth in the General Instructions thereto, with respect to the Registration
Statement.
(y) The Company has duly filed on a timely basis with the Commission all
reports, registration statements and other documents required by the Act, the
Exchange Act, or the rules and regulations of the Commission promulgated
pursuant to the Act or the Exchange Act. All of such reports, registration
statements and other documents, when they were filed with the Commission,
conformed in all material respects to the requirements of the Act, the Exchange
Act or the rules and regulations of the Commission promulgated pursuant to the
Act or the Exchange Act, as appropriate. None of such reports, registration
statements or other documents 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.
SECTION 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
OF THE SELLING SHAREHOLDERS
---------------------------
(a) Each Selling Shareholder represents and warrants, severally and not
jointly, to, and agrees with, the several Underwriters that:
(i) Such Selling Shareholder has, and, on each Closing Date
hereinafter mentioned on which such Selling Shareholder sells Common Shares
pursuant to this Agreement, will have, good and marketable title to the Common
Shares proposed to be sold by such Selling Shareholder hereunder on each such
Closing Date and full legal capacity, right, power and authority to enter into
this Agreement and to sell, assign, transfer and deliver such Common Shares
hereunder, free and clear of all voting trust arrangements, liens, encumbrances,
equities, security interests, restrictions and claims whatsoever; and upon
delivery of and payment for such Common Shares hereunder, the Underwriters will
acquire good and marketable title thereto, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests, voting trusts
or other defects of title whatsoever.
(ii) Such Selling Shareholder has executed and delivered a Power of
Attorney and caused to be executed and delivered on his, or her or its behalf a
Custody Agreement (hereinafter collectively referred to as the "Shareholders
Agreement") and in connection herewith such Selling Shareholder further
represents, warrants and agrees that such Selling Shareholder has deposited in
custody, under the Shareholders Agreement, with the agent named therein (the
"Agent") as custodian, certificates in negotiable form for the Common Shares to
be sold hereunder by such Selling Shareholder, for the purpose of further
delivery pursuant to this Agreement. Such Selling Shareholder agrees that the
Common Shares to be sold by such Selling Shareholder on deposit with the Agent
are subject to the interests of the Company and the Underwriters, that the
arrangements made for such custody are to that extent irrevocable, and that the
obligations of such Selling Shareholder hereunder shall not be terminated,
except as provided in this Agreement or in the Shareholders Agreement, by any
act of such Selling Shareholder, by operation of law, by the death or incapacity
of such Selling Shareholder or by the occurrence of any other event. If the
Selling Shareholder should die or become incapacitated, or if any other event
should occur, before the delivery of the Common Shares hereunder, the documents
evidencing Common Shares then on deposit with the Agent shall be delivered by
the Agent in accordance with the terms and conditions of this Agreement as if
such death, incapacity or other event had not occurred, regardless of whether or
not the Agent shall have received notice thereof. This Agreement and the
Shareholders Agreement have been duly executed and delivered by or on behalf of
such Selling Shareholder and the form of such Shareholders Agreement has been
delivered to you.
(iii)The performance of this Agreement and the Shareholders Agreement
and the consummation of the transactions contemplated hereby and by the
Shareholders Agreement will not result in a breach or violation by such Selling
Shareholder of any of the terms or provisions of, or constitute a default by
such Selling Shareholder under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise, license or other
agreement or instrument to which such Selling Shareholder is a party or by which
such Selling Shareholder or any of its properties is
-6-
bound, any statute, or any judgment, decree, order, rule or regulation of any
court or governmental agency or body applicable to such Selling Shareholder or
any of his, her or its properties.
(iv) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Common Shares.
(v) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity with
written information furnished to the Company by such Selling Shareholder
expressly for use therein, such Preliminary Prospectus and the Registration
Statement did, and the Prospectus and any further amendments or supplements to
the Registration Statement and the Prospectus will, when they are filed with the
Commission or became effective, as the case may be, conform in all material
respects to the requirements of the Act and the rules and regulations of the
Commission thereunder and not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statement therein not misleading.
(vi) The Selling Shareholder has carefully reviewed the
representations and warranties of the Company contained in this Agreement and
the information contained in the Registration Statement. Based on the foregoing,
(1) the Selling Shareholder has no reason to believe and does not believe that
such representations and warranties of the Company contained in this Agreement
are not true and correct in all material respects; (2) the Selling Shareholder
has no knowledge of any fact, condition or information not disclosed in the
Registration Statement which has materially adversely affected or may materially
adversely affect the business of the Company; and (3) the sale of the Common
Shares by the Selling Shareholder pursuant hereto is not prompted by any adverse
information concerning the Company which is not set forth in the Registration
Statement.
(b) Each of the Selling Shareholders agrees with the Company and the
Underwriters not to offer to sell, sell or contract to sell or otherwise dispose
of any shares of Common Stock or securities convertible into or exchangeable for
any shares of Common Stock, until October 20, 1997, without the prior written
consent of Xxxxxxxxxx Securities, which consent may be withheld at the sole
discretion of Xxxxxxxxxx Securities.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS
--------------------------------------------------
The Underwriters, represent and warrant to the Company and to the Selling
Shareholders that the information set forth (i) on the cover page of the
Prospectus with respect to price, underwriting discounts and commissions and
terms of offering and (ii) under "Underwriting" in the Prospectus was furnished
to the Company by and on behalf of the Underwriters for use in connection with
the preparation of the Registration Statement and the Prospectus and is true and
correct in all material respects.
SECTION 5
PURCHASE, SALE AND DELIVERY OF COMMON SHARES
--------------------------------------------
On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the Underwriters 1,000,000 Firm Common Shares and
each Selling Shareholder agrees to sell to the Underwriters that number of Firm
Common Shares as is set forth opposite the name of such Selling Shareholder on
SCHEDULE B. Each Underwriter agrees, severally and not jointly, to purchase
from the Company and the Selling Shareholders the number of Firm Common Shares
set forth opposite the name of such Underwriter in SCHEDULE A hereto. The
purchase price per share to be paid by the several Underwriters to the Company
and the Selling Shareholders shall be $____ per share.
-7-
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Xxxxxxxxxx
Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such other
place as may be agreed upon by the Company and the Underwriters) at such time
and date, not later than the third (or, if the Firm Common Shares are priced as
contemplated by Rule 15c6-1(c) of the Exchange Act after 4:30 p.m. Washington,
D.C. time, the fourth) full business day following the first date that any of
the Common Shares are released by you for sale to the public, as you shall
designate by at least 48 hours' prior notice to the Company and the Selling
Shareholders (or at such other time and date, not later than one week after
such third or fourth, as the case may be, full business day as may be agreed
upon by the Company and the Underwriters) (the "First Closing Date"); provided,
however, that if the Prospectus is at any time prior to the First Closing Date
recirculated to the public, the First Closing Date shall occur upon the later of
the third or fourth, as the case may be, full business day following the first
date that any of the Common Shares are released by you for sale to the public or
the date that is 48 hours after the date that the Prospectus has been so
recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company and the Selling Shareholders to you, for the respective
accounts of the Underwriters against payment by you, for the accounts of the
several Underwriters, of the purchase price therefor by wire transfer of federal
funds to an account designated in writing by the Company and the Agent. The
certificates for the Firm Common Shares shall be registered in such names and
denominations as you shall have requested at least two full business days prior
to the First Closing Date, and shall be made available for checking and
packaging on the business day preceding the First Closing Date at a location in
New York, New York, as may be designated by you. Time shall be of the essence,
and delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth,
certain Selling Shareholders, severally and not jointly, hereby grant options
to the several Underwriters to purchase, severally and not jointly, up to an
aggregate of 450,000 Optional Common Shares in the respective amounts set forth
opposite the name of each such Selling Shareholder in SCHEDULE B hereto; in each
case at the purchase price per share to be paid for the Firm Common Shares, for
use solely in covering any over-allotments made by you for the account of the
Underwriters in the sale and distribution of the Firm Common Shares. In the
event that the Underwriters elect to purchase less than all of the Optional
Common Shares, the number of Optional Common Shares to be purchased from each
such Selling Shareholder shall be determined by multiplying the aggregate number
of Optional Common Shares to be purchased by a fraction, the numerator of which
is the total number of Optional Common Shares set forth opposite the name of
such Selling Shareholder in SCHEDULE B hereto and the denominator of which is
450,000. The option granted hereunder may be exercised at any time (but not
more than once) within 30 days after the first date that any of the Common
Shares are released by you for sale to the public, upon notice by you to the
Company and the Selling Shareholders setting forth the aggregate number of
Optional Common Shares as to which the Underwriters are exercising the option,
the names and denominations in which the certificates for such shares are to be
registered and the time and place at which such certificates will be delivered.
Such time of delivery (which may not be earlier than the First Closing Date),
being herein referred to as the "Second Closing Date," shall be determined by
you, but if at any time other than the First Closing Date shall not be earlier
than three full business days after delivery of such notice of exercise. The
number of Optional Common Shares to be purchased by each Underwriter shall be
determined by multiplying the number of Optional Common Shares to be sold by the
Selling Shareholders pursuant to such notice of exercise by a fraction, the
numerator of which is the number of Firm Common Shares to be purchased by such
Underwriter as set forth opposite its name in SCHEDULE A and the denominator of
which is 3,000,000 (subject to such adjustments to eliminate any fractional
share purchases as you in your discretion may make). Certificates for the
Optional Common Shares will be made available for checking and packaging on the
business day preceding the Second Closing Date at a location in New York, New
York, as may be designated by you. The manner of payment and delivery of the
Optional Common Shares shall be the same as for the Firm Common Shares purchased
from the Selling Shareholders as specified in the two preceding paragraphs. At
any time before lapse of the option, you may cancel such option by giving
written notice of such cancellation to the Company and the Selling Shareholders.
If the option is cancelled or expires unexercised in whole or in part, the
Company will deregister under the Act the number of Optional Common Shares as to
which the option has not been exercised.
You have advised the Company and the Selling Shareholders that each
Underwriter has authorized you to accept delivery of its Common Shares, to make
payment and to give receipt therefor. You may (but shall not be obligated to)
make payment for any Common Shares to be purchased by any Underwriter whose
funds shall not have been received by you by 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.
-8-
Subject to the terms and conditions hereof, the Underwriters propose to
make a public offering of their respective portions of the Common Shares as soon
after the effective date of the Registration Statement as in the judgment of the
Underwriters is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the Prospectus.
SECTION 6
COVENANTS OF THE COMPANY
------------------------
The Company covenants and agrees that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A of the Rules and Regulations, or the filing of the
Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations,
the Company will file the Prospectus, properly completed, pursuant to the
applicable paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of such timely
filing. The Company will promptly advise you in writing (i) of the receipt of
any comments of the Commission, (ii) of any request of the Commission for
amendment of or supplement to the Registration Statement (either before or after
it becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have become
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose. If the Commission shall enter any such
stop order at any time, the Company will use its best efforts to obtain the
lifting of such order at the earliest possible moment. The Company will not
file any amendment or supplement to the Registration Statement (either before or
after it becomes effective), any Preliminary Prospectus or the Prospectus of
which you have not been furnished with a copy a reasonable time prior to such
filing or to which you reasonably object or which is not in compliance with the
Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly upon
your request, a registration statement pursuant to Rule 462(b) of the Rules and
Regulations related to the Common Shares and any amendments or supplements to
the Registration Statement or the Prospectus which in your judgment may be
necessary or advisable to enable the several Underwriters to continue the
distribution of the Common Shares and will use its best efforts to cause the
same to become effective as promptly as possible. The Company will fully and
completely comply with the provisions of Rule 430A of the Rules and Regulations
with respect to information omitted from the Registration Statement in reliance
upon such Rule.
(c) The Company will immediately notify you in writing if, at any time
prior to the earliest of (i) the Second Closing Date on which all remaining
Optional Common Shares are purchased, (ii) the cancellation of the options to
purchase the Optional Common Shares as provided herein, and (iii) of the
expiration of the options to purchase the Optional Common Shares as provided
herein, any representation or warranty of the Company set forth herein shall not
be true and accurate in all material respects or, without limiting the
foregoing, if there shall have been any material adverse change, or a
development involving a material adverse change, in the condition (financial or
otherwise), properties, business, results of operations or prospects of the
Company.
(d) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the Common
Shares is required to be delivered under the Act any event occurs, as a result
of which the Prospectus, including any amendments or supplements, would include
an untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or if it is necessary at any time to amend the Prospectus, including
any amendments or supplements, to comply with the Act or the Rules and
Regulations, the Company will promptly advise you thereof and will promptly
prepare and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an amendment or
supplement which will effect such compliance and will use its best efforts to
cause the same to become effective as soon as possible; and, in case any
Underwriter is required to deliver a prospectus after such nine-month period,
the Company upon request, but at the expense of such Underwriter, will promptly
prepare such amendment or amendments to the Registration Statement and such
Prospectus or Prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act.
-9-
(e) As soon as practicable, but not later than 45 days after the end of
the first quarter ending after one year following the "effective date of the
Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security holders
an earnings statement (which need not be audited) covering a period of 12
consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of
Section 11(a) of the Act.
(f) During such period as a prospectus is required by law to be delivered
in connection with sales by an Underwriter or dealer, the Company, at its
expense, but only for the nine-month period referred to in Section 10(a) (3) of
the Act, will furnish to you and the Selling Shareholders or mail to your order
copies of the Registration Statement, the Prospectus, the Preliminary Prospectus
and all amendments and supplements to any such documents in each case as soon as
available and in such quantities as you and the Selling Shareholders may
request, for the purposes contemplated by the Act.
(g) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions from
the application of) the Blue Sky laws of such jurisdictions as you designate,
will comply with such laws and will continue such qualifications, registrations
and exemptions in effect so long as reasonably required for the distribution of
the Common Shares. The Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise you promptly of the
suspension of the qualification or registration of (or any such exemption
relating to) the Common Shares for offering, sale or trading in any jurisdiction
or any initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any order suspending such qualification, registration
or exemption, the Company, with your cooperation, will use its best efforts to
obtain the withdrawal thereof.
(h) During the period of five years hereafter, the Company will furnish to
the Underwriters: (i) as soon as practicable after the end of each fiscal year,
copies of the Annual Report of the Company containing the balance sheet of the
Company as of the close of such fiscal year and statements of operations,
shareholders' equity and cash flows for the year then ended and the opinion
thereon of the Company's independent public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement, Annual
Report on Form 10-K or Form 10-KSB, Quarterly Report on Form 10-Q or Form
10-QSB, Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of its Common Stock.
(i) Until October 20, 1997, without the prior written consent of
Xxxxxxxxxx Securities (which consent may be withheld at the sole discretion of
Xxxxxxxxxx Securities), the Company will not, other than pursuant to the
Company's stock option or stock purchase plans disclosed in the Prospectus,
issue, offer, sell, grant options to purchase or otherwise dispose of any of the
Company's equity securities or any other securities convertible into or
exchangeable with its Common Stock or other equity security.
(j) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(k) The Company will use its best efforts to maintain the inclusion of the
Common Stock on the Nasdaq National Market (or on a national securities
exchange) for a period of five years after the effective date of the
Registration Statement.
(l) The Company will maintain a transfer agent and registrar for its
Common Stock.
You, on behalf of the Underwriters, may, in your sole discretion, waive in
writing the performance by the Company of any one or more of the foregoing
covenants or extend the time for their performance.
-10-
SECTION 7
PAYMENT OF EXPENSES
Whether or not the transactions contemplated hereunder are consummated or
this Agreement becomes effective or is terminated, the Company and, unless
otherwise paid by the Company, the Selling Shareholders agree to pay in such
proportions as they may agree upon among themselves all costs, fees and expenses
incurred in connection with the performance of their obligations hereunder and
in connection with the transactions contemplated hereby, including without
limiting the generality of the foregoing, (i) all expenses incident to the
issuance and delivery of the Common Shares (including all printing and engraving
costs), (ii) all fees and expenses of the registrar and transfer agent of the
Common Stock, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Common Shares to the Underwriters,
(iv) all fees and expenses of the Company's counsel and the Company's
independent accountants, (v) all costs and expenses incurred in connection with
the printing, filing, shipping and distribution of the Registration Statement,
each Preliminary Prospectus and the Prospectus (including all exhibits and
financial statements) and all amendments and supplements provided for herein,
any registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations related to the Common Shares, this Agreement, the Agreement Among
Underwriters, the Selected Dealers Agreement, the Underwriters' Questionnaire,
the Underwriters' Power of Attorney and the Blue Sky memorandum, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the state or Canadian Blue Sky laws and in obtaining the
clearance of the underwriting arrangements with the National Association of
Securities Dealers, Inc. and (vii) all other fees, costs and expenses referred
to in Item 25 of the Registration Statement. The Underwriters may deem the
Company to be the primary obligor with respect to all costs, fees and expenses
to be paid by the Company and by the Selling Shareholders. Except as provided
in this Section 7, Section 9 and Section 11 hereof, the Underwriters shall pay
all of their own expenses, including the fees and disbursements of their counsel
(excluding those relating to qualification, registration or exemption under the
Blue Sky laws and the Blue Sky memorandum referred to above). This Section 7
shall not affect any agreements relating to the payment of expenses between the
Company and the Selling Shareholders to the extent that such agreements do not
impair the obligation of the Company and the Selling Shareholders hereunder to
the several Underwriters.
The Selling Shareholders will pay (directly or by reimbursement) all fees
and expenses incident to the performance of their obligations under this
Agreement which are not otherwise specifically provided for herein, including
but not limited to (i) any fees and expenses of counsel for such Selling
Shareholders; (ii) any fees and expenses of the Agent; and (iii) all expenses
and taxes incident to the sale and delivery of the Common Shares to be sold by
such Selling Shareholders to the Underwriters hereunder.
SECTION 8
CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS
The obligations of the several Underwriters to purchase and pay for the
Firm Common Shares on the First Closing Date and the Optional Common Shares on
the Second Closing Date shall be subject to the accuracy of the representations
and warranties on the part of the Company and the Selling Shareholders herein
set forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Shareholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Shareholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later than
5:00 p.m.(or, in the case of a registration statement filed pursuant to
Rule 462(b) of the Rules and Regulations relating to the Common Shares, not
later than 10:00 p.m.), Washington, D.C. time, on the date of this Agreement, or
at such later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and Regulations;
and prior to such Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company, the Selling Shareholders or you, shall be contemplated by the
Commission; and any request of
-11-
the Commission for inclusion of additional information in the Registration
Statement, or otherwise, shall have been complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i) there
shall not have been any change in the capital stock other than pursuant to the
exercise of outstanding options and warrants disclosed in the Prospectus of the
Company or any material change in the indebtedness of the Company, (ii) except
as set forth or contemplated by the Registration Statement or the Prospectus, no
material verbal or written agreement or other transaction shall have been
entered into by the Company, which is not in the ordinary course of business,
(iii) no loss or damage (whether or not insured) to the property of the Company
shall have been sustained which materially and adversely affects the condition
(financial or otherwise), business, results of operations or prospects of the
Company, (iv) no legal or governmental action, suit or proceeding affecting the
Company which is material to the Company or which affects or may affect the
transactions contemplated by this Agreement shall have been instituted or
threatened and (v) there shall not have been any material change in the
condition (financial or otherwise), business, management, results of operations
or prospects of the Company which makes it impractical or inadvisable in the
judgment of the Underwriters to proceed with the public offering or purchase the
Common Shares as contemplated hereby.
(c) There shall have been furnished to you on each Closing Date, in form
and substance satisfactory to you, except as otherwise expressly provided below:
(i) An opinion of Xxxxx Xxxxxx Xxxxxxxx LLP, counsel for the Company,
addressed to the Underwriters and dated the First Closing Date, or the Second
Closing Date, as the case may be, to the effect that:
(1) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Washington
and, to such counsel's knowledge, is duly qualified to do business as
a foreign corporation and is in good standing in all other
jurisdictions where the ownership or leasing of properties or the
conduct of its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the Company, has full corporate power and
authority to own its properties and conduct its business as described
in the Registration Statement and to such counsel's knowledge has no
subsidiaries other than as listed in Exhibit 21 to the Registration
Statement;
(2) The authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus; all necessary and proper corporate proceedings have been
taken in order to validly authorize the authorized Common Stock; all
outstanding shares of Common Stock (including the Optional Common
Shares) have been duly and validly issued, are fully paid and
nonassessable, have been issued in compliance with the registration
and qualification provisions of federal and state securities laws, to
such counsel's knowledge were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase any
securities and conform to the description thereof in the Prospectus;
without limiting the foregoing, to such counsel's knowledge there are
no preemptive or other rights to subscribe for or purchase any of the
Common Shares to be sold by the Company or the Selling Shareholders
hereunder;
(3) The certificates evidencing the Common Shares to be
delivered hereunder are in due and proper form under Washington law,
and when duly countersigned by the Company's transfer agent and
registrar, and delivered to you or upon your order against payment of
the agreed consideration therefor in accordance with the provisions of
this Agreement, the Common Shares represented thereby will be duly
authorized and validly issued, fully paid and nonassessable, will not
have been issued in violation of or subject to any preemptive rights
or other rights to subscribe for or purchase securities and will
conform in all respects to the description thereof contained in the
Prospectus;
(4) Except as disclosed in or specifically contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no
outstanding options, warrants or other rights calling for the issuance
of, and no commitments, plans or arrangements to issue, any shares of
capital stock of the Company or any security convertible into or
exchangeable for capital stock of the Company;
-12-
(5) (a) The Registration Statement has become effective under
the Act, and, to such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement or preventing the use
of the Prospectus has been issued and, to such counsel's knowledge, no
proceedings for that purpose have been instituted or are pending or
contemplated by the Commission; any required filing of the Prospectus
and any supplement thereto pursuant to Rule 424(b) of the Rules and
Regulations has been made in the manner and within the time period
required by such Rule 424(b);
(b) The Registration Statement, the Prospectus and each
amendment or supplement thereto (except for the financial statements
and schedules included therein as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations.
(c) To such counsel's knowledge, there are no franchises,
leases, contracts, agreements or documents of a character required to
be disclosed in the Registration Statement or Prospectus or to be
filed as exhibits to the Registration Statement which are not
disclosed or filed, as required; and
(d) To such counsel's knowledge, there are no legal or
governmental actions, suits or proceedings pending or threatened
against the Company which are required to be described in the
Prospectus which are not described as required.
(6) The Company has the corporate power and authority to enter
into this Agreement and to sell and deliver the Common Shares to be
sold by it to the several Underwriters; this Agreement has been duly
and validly authorized by all necessary corporate action by the
Company, has been duly and validly executed and delivered by and on
behalf of the Company, and is a valid and binding agreement of the
Company in accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and except as to those provisions relating to indemnity or
contribution for liabilities arising under the Act as to which no
opinion need be expressed; and no approval, authorization, order,
consent, registration, filing, qualification, license or permit of or
with any court, regulatory, administrative or other governmental body
is required for the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions
contemplated by this Agreement, except such as have been obtained and
are in full force and effect under the Act and such as may be required
under applicable Blue Sky laws in connection with the purchase and
distribution of the Common Shares by the Underwriters and the
clearance of such offering with the NASD;
(7) The execution and delivery of this Agreement by the Company
and the performance by the Company of its obligations set forth herein
will not conflict with, result in the breach of, or constitute, either
by itself or upon notice or the passage of time or both, a default
under, any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument known to such counsel
to which the Company is a party or by which the Company or any of its
property or assets may be bound or affected which is material to the
Company or its property or assets (each, a "Material Contract"), or
violate any of the provisions of the articles of incorporation or
bylaws, or other organizational documents, of the Company or, to such
counsel's knowledge, violate any statute, judgment, decree, order,
rule or regulation of any court or governmental body having
jurisdiction over the Company or any of its property;
(8) The Company is not in violation of its articles of
incorporation or bylaws, or other organizational documents, or to such
counsel's knowledge, in breach of or default with respect to any
provision of any Material Contract, except where such default would
not materially adversely affect the Company;
(9) To such counsel's knowledge, no holders of securities of the
Company have rights which have not been waived to the registration of
shares of Common Stock or other securities, because of the filing of
the Registration Statement by the Company or the offering contemplated
hereby;
-13-
(10) The statements in the Registration Statement and Prospectus
under the headings "Management," "Certain Transactions," "Description
of Capital Stock" and "Shares Eligible for Future Sale" and in the
Registration Statement in Items 24 and 26, insofar as they are
descriptions of contracts, agreements or other legal documents or
refer to statements of law or legal conclusions, are accurate and
complete in all material respects and fairly present the information
contained therein.
(11) The Company has satisfied the conditions for use of Form
SB-2, as set forth in the General Instructions thereto, with respect
to the Registration Statement.
(12) No transfer taxes are required to be paid in connection with
the sale and delivery of the Common Shares to the Underwriters
hereunder.
In rendering such opinion, such counsel may rely as to matters of
fact, on certificates of officers of the Company and of governmental officials,
in which case their opinion is to state that they are so doing and that the
Underwriters are justified in relying on such opinions or certificates and
copies of said opinions or certificates are to be attached to the opinion. Such
counsel shall also include a statement to the effect that nothing has come to
such counsel's attention that would lead such counsel to believe that either at
the effective date of the Registration Statement or at the applicable Closing
Date the Registration Statement or the Prospectus, or any such amendment or
supplement, contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading;
(ii) An opinion of Xxxxx Xxxxxx Xxxxxxxx LLP, counsel for each
of Xxxxx X. Xxxxx and Xxxxxxxxxxx X. Xxxxxxxx (each, an "Executive Selling
Shareholder"), addressed to the underwriters and dated the First Closing Date,
to the effect that:
(1) To such counsel's knowledge, this Agreement and the
Shareholders Agreement have been duly executed and delivered by or on
behalf of such Executive Selling Shareholder; the Agent has been duly
and validly authorized to act as the custodian of the Common Shares
to be sold by such Executive Selling Shareholder; and the performance
of this Agreement and the Shareholders Agreement and the consummation
of the transactions herein contemplated by such Executive Selling
Shareholder will not result in a breach of, or constitute a default
under, any material indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise, license
or other agreement or instrument, known to such counsel to which such
Executive Selling Shareholder is a party or by which such Executive
Selling Shareholder or any of his properties may be bound, or violate
any statute, judgment, decree, order, rule or regulation known to
such counsel of any court or governmental body having jurisdiction
over such Executive Selling Shareholder or any of his properties;
and to such counsel's knowledge, no approval, authorization, order
or consent of any court, regulatory body, administrative agency or
other governmental body is required for the execution and delivery
of this Agreement or the Shareholders Agreement by such Executive
Selling Shareholder or the consummation by such Executive Selling
Shareholder of the transactions contemplated by this Agreement,
except such as have been obtained and are in full force and effect
under the Act and such as may be required under the rules of the
NASD and applicable Blue Sky laws;
(2) To such counsel's knowledge, such Executive Selling
Shareholder has full right, power and authority to enter into
this Agreement and the Shareholders Agreement and to sell, transfer
and deliver the Common Shares to be sold on such Closing Date by
such Executive Selling Shareholder hereunder, and good and marketable
title to such Common Shares so sold, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests,
voting trusts, or other defects of title whatsoever, has been
transferred to the Underwriters (whom counsel may assume to be
bona fide purchasers) who have purchased such Common Shares
hereunder; and
(3) To such counsel's knowledge, this Agreement and the
Shareholders Agreement are valid and binding agreements of such
Executive Selling Shareholder in accordance with their terms
except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and except with
respect to those provisions relating to indemnities or contributions
for liabilities under the Act, as to which no opinion need
be expressed.
-14-
In rendering such opinion, such counsel may rely as to matters of
fact, on certificates of Xxxxx X. Xxxxx and of Xxxxxxxxxxx X. Xxxxxxxx, as
the case may be, and of governmental officials, in which case their opinion
is to state that they are so doing and that the Underwriters are justified in
relying on such certificates and copies of said certificates are to be
attached to the opinion.
(iii) An opinion of Xxxxxxxxxxx O'Xxxxxx Xxxxxxx & Kindness PLLC
addressed to the Underwriters and dated the First Closing Date, or the Second
Closing Date, as the case may be, with respect to certain intellectual property
matters, such opinion to be in form and substance satisfactory to counsel for
the Underwriters, and to the effect that:
(1) To such counsel's knowledge, the Company owns all patents,
patent applications, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by it or
necessary for the conduct of its business, and such counsel is not
aware of any claim to the contrary or any challenge by any other
person to the rights of the Company with respect to the foregoing;
(2) Such counsel is not aware of any legal actions, claims or
proceedings pending or threatened against the Company alleging that
the Company is infringing or otherwise violating any patents or trade
secrets owned by others;
(3) Such counsel has reviewed the descriptions of the Company's
patent application under the captions "Risk Factors--Limited
Protection of Proprietary Rights; Risk of Third Party Infringements"
and "Business--Proprietary Technology" in the Registration Statement
and Prospectus, and, to the extent they constitute matters of law or
legal conclusions, these descriptions are accurate in all material
respects and fairly and completely present the patent application of
the Company;
(4) To such counsel's knowledge, for each patent or patent
application filed by the Company or described in the Prospectus as
being owned by it or necessary for the conduct of its business, the
Company has obtained a written assignment of all rights and title
therein to the Company from all inventors and owners of such patent or
patent application and has properly recorded such written assignment
with the appropriate patent office or governmental agency;
(5) To such counsel's knowledge, for each copyrightable product
described in the Prospectus, the Company was vested with original
title to all copyrights for such product and no written assignments
for such copyrights are required to perfect Company's rights and title
thereto; and
(6) To such counsel's knowledge after review of the file history
and patent attorney's file for the patent application described in the
Prospectus as being owned by the Company or necessary for the conduct
of its business, such counsel is aware of nothing that causes such
counsel to believe that, as of the date of the Registration Statement
became effective and as of the date of such opinion, the description
of patents and patent applications under the captions "Risk
Factors--Limited Protection of Proprietary Rights; Risk of Third Party
Infringements" and "Business--Proprietary Technology" in the
Registration Statement and Prospectus contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made therein, in light of the circumstances under which
they were made, not misleading, including without limitation, any
undisclosed material issue with respect to the subsequent validity or
enforceability of such patent or patent application.
(iv) An opinion of Xxxxxxx, Xxxxxxx & Xxxx, counsel for Selling
Stockholders Advent VII, L.P., Advent Atlantic & Pacific II L.P., Advent New
York L.P. and TA Venture Investors Limited Partnership (the "TA Selling
Shareholders"), addressed to the Underwriters and dated the First Closing Date,
or the Second Closing Date, as the case may be, to the effect that:
(1) To the best of such counsel's knowledge, this Agreement and
the Shareholders Agreement have been duly authorized, executed and
delivered by or on behalf of each of the TA Selling Shareholders; the
Agent has been duly and validly authorized to act as the custodian of
the Common Shares to be sold by each such TA Selling Shareholder; and
the performance of this Agreement and the Shareholders Agreement and
the consummation of the transactions herein contemplated by the TA
Selling
-15-
Shareholders will not result in a breach of, or constitute a default
under, any indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other agreement
or instrument to which any of the TA Selling Shareholders is a party
or by which any of the TA Selling Shareholders or any of their
properties may be bound, or violate any statute, judgment, decree,
order, rule or regulation known to such counsel of any court or
governmental body having jurisdiction over any of the TA Selling
Shareholders or any of their properties; and to the best of such
counsel's knowledge, no approval, authorization, order or consent of
any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of this
Agreement or the Shareholders Agreement or the consummation by the TA
Selling Shareholders of the transactions contemplated by this
Agreement, except such as have been obtained and are in full force and
effect under the Act and such as may be required under the rules of
the NASD and applicable Blue Sky laws;
(2) To the best of such counsel's knowledge, the TA Selling
Shareholders have full right, power and authority to enter into this
Agreement and the Shareholders Agreement and to sell, transfer and
deliver the Common Shares to be sold on such Closing Date by such TA
Selling Shareholders hereunder and good and marketable title to such
Common Shares so sold, free and clear of all liens, encumbrances,
equities, claims, restrictions, security interests, voting trusts, or
other defects of title whatsoever, has been transferred to the
Underwriters (whom counsel may assume to be bona fide purchasers) who
have purchased such Common Shares hereunder;
(3) To the best of such counsel's knowledge, this Agreement and
the Shareholders Agreement are valid and binding agreements of each of
the TA Selling Shareholders in accordance with their terms except as
enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and except with respect to those
provisions relating to indemnities or contributions for liabilities
under the Act, as to which no opinion need be expressed;
In rendering such opinion, such counsel may rely as to matters of
fact, on certificates of officers of the TA Selling Shareholders and of
governmental officials, in which case their opinion is to state that they are so
doing and that the Underwriters are justified in relying on such certificates
and copies of said certificates are to be attached to the opinion.
(v) An opinion of Xxxxxxxx & Xxxx L.L.P., counsel for Selling
Shareholder Britannia Holdings Limited ("Britannia"), addressed to the
Underwriters and dated the First Closing Date, or the Second Closing Date, as
the case may be, to the effect that:
(1) To the best of such counsel's knowledge, this Agreement and
the Shareholders Agreement have been duly authorized, executed and
delivered by or on behalf of Britannia; the Agent has been duly and
validly authorized to act as the custodian of the Common Shares to be
sold by Britannia; and the performance of this Agreement and the
Shareholders Agreement and the consummation of the transactions herein
contemplated by Britannia will not result in a breach of, or
constitute a default under, any indenture, mortgage, deed of trust,
trust (constructive or other), loan agreement, lease, franchise,
license or other agreement or instrument to which Britannia is a party
or by which Britannia or any of its properties may be bound, or
violate any statute, judgment, decree, order, rule or regulation known
to such counsel of any court or governmental body having jurisdiction
over Britannia or any of its properties; and to the best of such
counsel's knowledge, no approval, authorization, order or consent of
any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of this
Agreement or the Shareholders Agreement or the consummation by
Britannia of the transactions contemplated by this Agreement, except
such as have been obtained and are in full force and effect under the
Act and such as may be required under the rules of the NASD and
applicable Blue Sky laws;
(2) To the best of such counsel's knowledge, Britannia has full
right, power and authority to enter into this Agreement and the
Shareholders Agreement and to sell, transfer and deliver the Common
Shares to be sold on such Closing Date by Britannia hereunder and good
and marketable title to such Common Shares so sold, free and clear of
all liens, encumbrances, equities, claims, restrictions, security
-16-
interests, voting trusts, or other defects of title whatsoever, has
been transferred to the Underwriters (whom counsel may assume to be
bona fide purchasers) who have purchased such Common Shares hereunder;
(3) To the best of such counsel's knowledge, this Agreement and
the Shareholders Agreement are valid and binding agreements of
Britannia in accordance with their terms except as enforceability may
be limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and except with respect to those provisions relating to
indemnities or contributions for liabilities under the Act, as to
which no opinion need be expressed;
In rendering such opinion, such counsel may rely as to matters of
fact, on certificates of officers of Britannia and of governmental officials, in
which case their opinion is to state that they are so doing and that the
Underwriters are justified in relying on such certificates and copies of said
certificates are to be attached to the opinion.
(vi) Such opinion or opinions of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
P.C., counsel for the Underwriters, dated the First Closing Date or the Second
Closing Date, as the case may be, with respect to the incorporation of the
Company, the sufficiency of all corporate proceedings and other legal matters
relating to this Agreement, the validity of the Common Shares, the Registration
Statement and the Prospectus and other related matters as you may reasonably
require, and the Company and the Selling Shareholders shall have furnished to
such counsel such documents and shall have exhibited to them such papers and
records as they may reasonably request for the purpose of enabling them to pass
upon such matters. In connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company and governmental
officials and the opinions of counsel to the Company and the Selling
Shareholders.
(vii) A certificate of the Company executed by both the President
and Chief Executive Officer and the Chief Financial Officer of the Company,
dated the First Closing Date or the Second Closing Date, as the case may be, to
the effect that:
(1) The representations and warranties of the Company set forth
in Section 2 of this Agreement are true and correct as of the date of
this Agreement and as of the First Closing Date or the Second Closing
Date, as the case may be, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied on or prior to such Closing Date;
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus
filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the best of the
knowledge of the respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated under the Act;
(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus; in
his opinion and to the best of his knowledge, the Registration
Statement and the Prospectus and any amendments or supplements thereto
contain all statements required to be stated therein regarding the
Company; and neither the Registration Statement nor the Prospectus nor
any amendment or supplement thereto includes any untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading;
(4) Since the initial date on which the Registration Statement
was filed, no agreement, written or oral, transaction or event has
occurred which in his opinion, after consultation with counsel, should
have been set forth in an amendment to the Registration Statement or
in a supplement to or amendment of any prospectus which has not been
disclosed in such a supplement or amendment;
(5) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been
any material adverse change or a development involving a material
adverse change in the condition (financial or otherwise), business,
properties, results of operations, management or prospects of the
Company; and no legal or governmental action, suit or proceeding is
-17-
pending or threatened against the Company which is material to the
Company, whether or not arising from transactions in the ordinary
course of business, or which may adversely affect the transactions
contemplated by this Agreement; since such dates the Company has not
entered into any verbal or written agreement or other transaction
which is not in the ordinary course of business or incurred any
material liability or obligation, direct, contingent or indirect, made
any change in its capital stock, made any material change in its
short-term debt or funded debt or repurchased or otherwise acquired
any of the Company's capital stock; and the Company has not declared
or paid any dividend, or made any other distribution, upon its
outstanding capital stock payable to shareholders of record on a date
prior to the First Closing Date or Second Closing Date; and
(6) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, the Company has not
sustained a material loss or damage by strike, fire, flood, windstorm,
accident or other calamity (whether or not insured).
(viii) On the First Closing Date and the Second Closing Date a
certificate, dated such Closing Date and addressed to you, signed by or on
behalf of each of the Selling Shareholders to the effect that the
representations and warranties of such Selling Shareholder in this Agreement are
true and correct, as if made at and as of such Closing Date, and such Selling
Shareholder has complied with all the agreements and satisfied all the
conditions on his part to be performed or satisfied prior to such Closing Date.
(ix) On the date before this Agreement is executed and also on the
First Closing Date and the Second Closing Date, a letter addressed to you from
Coopers & Xxxxxxx L.L.P., independent accountants, the first one to be dated the
day before the date of this Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a Second Closing) to be dated
the Second Closing Date, in form and substance satisfactory to you.
(x) On or before the First Closing Date, letters from each of the
Selling Shareholders, each holder of the Company's Common Stock listed on
SCHEDULE C and each director and executive officer of the Company, in form and
substance satisfactory to you, confirming that until October 20, 1997, such
person or entity will not directly or indirectly sell or offer to sell or
otherwise dispose of any shares of Common Stock or any right to acquire any such
shares without the prior written consent of Xxxxxxxxxx Securities, which consent
may be withheld at the sole discretion of Xxxxxxxxxx Securities, except in
accordance with the terms of the lock-up agreement.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel for the Underwriters. The
Company shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any certificate
signed by any officer of the Company and delivered to the Underwriters or to
counsel for the Underwriters shall be deemed to be a representation and warranty
by the Company to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification by you to the Company without
liability on the part of any Underwriter or the Company or the Selling
Shareholders except for the expenses to be paid or reimbursed by the Company and
by the Selling Shareholders pursuant to Sections 7 and 9 hereof and except to
the extent provided in Section 11 hereof.
SECTION 9
REIMBURSEMENT OF UNDERWRITERS' EXPENSES
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to Section 8, or if the sale to the Underwriters of
the Common Shares at the First Closing is not consummated because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse you and the other Underwriters upon demand for all out-of-pocket
expenses that shall have been reasonably incurred by you and them in connection
with the proposed purchase and the sale of the Common Shares,
-18-
including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, telegraph charges and telephone charges
relating directly to the offering contemplated by the Prospectus. Any such
termination shall be without liability of any party to any other party except
that the provisions of this Section, Section 7 and Section 11 shall at all times
be effective and shall apply.
SECTION 10
EFFECTIVENESS OF REGISTRATION STATEMENT
You, the Company and the Selling Shareholders will use your, its and their
best efforts to cause the Registration Statement to become effective, to prevent
the issuance of any stop order suspending the effectiveness of the Registration
Statement and, if such stop order be issued, to obtain as soon as possible the
lifting thereof.
SECTION 11
INDEMNIFICATION
(a) The Company and each Selling Shareholder, severally and not jointly,
agree to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the Act against any
losses, claims, damages, liabilities or expenses, joint or several, to which
such Underwriter or such controlling person may become subject, under the
Act, the Exchange Act or other federal or state statutory law or regulation,
or at common law or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of the Company), insofar
as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state in any of them a material fact required
to be stated therein or necessary to make the statements in any of them not
misleading, or arise out of or are based in whole or in part, in the case of
the Company, on any inaccuracy in any representation or warranty of the
Company or any failure of the Company to perform its obligations hereunder or
under law, or in the case of any Selling Shareholder, on any inaccuracy in
any representation or warranty of such Selling Shareholder contained herein
or any failure of such Selling Shareholder to perform its obligations
hereunder or under law; and will reimburse each Underwriter and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Underwriter or such controlling person in
connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action; provided,
however, that neither the Company nor the Selling Shareholders will be liable
in any such case to the extent that any such loss, claim, damage, liability
or expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 4 hereof; provided further that
the indemnity agreement provided in this Section 11(a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any loss, claim, charge, liability or litigation
based upon any untrue statement or alleged untrue statement of material fact
or omission or alleged omission to state therein a material fact purchased
Common Shares, if a copy of the Prospectus in which such untrue statement or
alleged untrue statement or omission or alleged omission was corrected has
not been sent or given to such person within the time required by the Act and
the Rules and Regulations thereunder unless such failure is the result of
noncompliance by the Company with Section 6(e) hereof; and provided further
that, under this paragraph 11(a), the liability (i) of each of the Selling
Shareholders other than the TA Selling Shareholder shall not exceed the net
proceeds received by each such Selling Shareholder upon the sale of the
Common Shares by such Selling Shareholder to the Underwriters, and (ii) of
each TA Selling Shareholder shall not exceed the lesser of (A) the aggregate
proceeds received by such TA Selling Shareholder upon the sale of the Common
Shares by such TA Selling Shareholder to the Underwriters and (B) that
proportion of aggregate losses, claims, damages, liabilities or expenses
indemnified against as is equal to the proportion of the total number of
Common Shares hereunder being sold by such TA Selling Shareholder to the
total number of Common Shares being sold by the Company and all Selling
Shareholders. No TA Selling Shareholder shall be required to provide
-19-
indemnification hereunder until the Underwriter or controlling person seeking
indemnification shall have first made a written demand for payment on the
Company with respect to any such loss, claim, damage, liability or expense and
the Company shall have either rejected such demand or failed to make such
requested payment within sixty (60) days after receipt thereof. In the event
that the Company rejects any such demand or fails to make any such requested
payment, the Underwriter or controlling person seeking indemnification agrees to
concurrently make demand for indemnification against all Selling Shareholders;
provided that such Underwriter or controlling person shall have sole discretion
as to whether to take any further action against any Selling Shareholder and no
failure by an Underwriter or controlling person to take further action against a
Selling Shareholder shall prejudice such Underwriter's or controlling person's
rights with respect to other Selling Shareholders. The Company and the Selling
Shareholders may agree, as among themselves and without limiting the rights of
the Underwriters under this Agreement, as to their respective amounts of such
liability for which they shall each be responsible. In addition to their other
obligations under this Section 11(a), the Company and the Selling Shareholders
agree that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, or any inaccuracy
in the representations and warranties of the Company or the Selling Shareholders
herein or failure to perform its obligations hereunder, all as described in this
Section 11(a), they will reimburse in the manner set forth above each
Underwriter and each such controlling person on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the obligation of the Company or the Selling Shareholders to
reimburse each Underwriter and each such controlling person for such expenses
and the possibility that such payments might later be held to have been improper
by a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Underwriter and
each such controlling person shall promptly return it to the Company or the
Selling Shareholders, as appropriate, together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by Bank of
America NT&SA, San Francisco, California (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Underwriter or a controlling
person within thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which the Company and the Selling
Shareholders may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, the Selling Shareholders and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of the Act, against any
losses, claims, damages, liabilities or expenses to which the Company, or any
such director, officer, Selling Shareholder or controlling person may become
subject, under the Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 4 hereof; and will reimburse the
Company, or any such director, officer, Selling Shareholder or controlling
person for any legal and other expense reasonably incurred by the Company, or
any such director, officer, Selling Shareholder or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action. In addition to its other
obligations under this Section 11(b), each Underwriter severally agrees that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section 11(b)
which relates to information furnished to the Company pursuant to Section 4
hereof, it will reimburse the Company (and, to the extent applicable, each
officer, director, controlling person or Selling Shareholders) on a quarterly
basis for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Underwriters' obligation to reimburse
the Company (and, to the extent applicable, each officer, director, controlling
person or Selling Shareholders) for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, the Company (and, to the extent applicable, each
officer, director, controlling person or Selling
-20-
Shareholder) shall promptly return it to the Underwriters together with
interest, compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments which are not made to the Company (and, to the
extent applicable, any officer, director, controlling person or Selling
Shareholder), within thirty (30) days of a request for reimbursement, shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section or to the
extent it is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence or (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of commencement of
the action, in each of which cases the fees and expenses of counsel shall be at
the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 11 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders, on the one hand, and the Underwriters, on
the other hand, from the offering of the Common Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Shareholders, on the one hand, and the Underwriters, on the other hand,
in connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The respective relative benefits received by the Company and the
Selling Shareholders, on the one hand, and the Underwriters, on the other hand,
shall be deemed to be in the same proportion, in the case of the Company and the
Selling Shareholders, as the total price paid to the Company and the Selling
Shareholders for the Common Shares sold by them to the Underwriters (net of
underwriting commissions but before deducting expenses), and in the case of the
Underwriters as the underwriting commissions received by them bears to the total
of such amounts paid to the Company and the Selling Shareholders and received by
the Underwriters as underwriting commissions. The relative fault of the Company
and the Selling Shareholders, on the one hand, and the Underwriters, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Company,
the Selling Shareholders or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in subparagraph (c) of
this Section 11, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in subparagraph (c) of this Section 11 with respect to
notice of commencement of any action shall apply if a claim for contribution is
to be made under this subparagraph (d); provided, however, that no additional
notice shall
-21-
be required with respect to any action for which notice has been given under
subparagraph (c) for purposes of indemnification. The Company, the Selling
Shareholders and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this subparagraph 11(d) were determined solely by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 11, no Underwriter
shall be required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. No person guilty
of fraudulent misrepresentation (within the meaning of Section 10(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 11 are several in proportion to their respective
underwriting commitments and not joint. The Selling Shareholders' obligations
to contribute pursuant to this Section 11 are several in proportion to the
number of Common Shares sold and not joint.
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 11(a) and 11(b) hereof,
including the amounts of any requested reimbursement payments and the method of
determining such amounts, shall be settled by arbitration conducted under the
provisions of the Constitution and Rules of the Board of Governors of the New
York Stock Exchange, Inc. or pursuant to the Code of Arbitration Procedure of
the NASD. Any such arbitration must be commenced by service of a written demand
for arbitration or written notice of intention to arbitrate, therein electing
the arbitration tribunal. In the event that the party demanding arbitration does
not make such designation of an arbitration tribunal in such demand or notice,
then the party responding to said demand or notice is authorized to do so. Such
an arbitration would be limited to the operation of the interim reimbursement
provisions contained in Sections 11(a) and 11(b) hereof and would not resolve
the ultimate propriety or enforceability of the obligation to reimburse expenses
which is created by the provisions of such Sections 11(a) and 11(b) hereof.
SECTION 12
DEFAULT OF UNDERWRITERS
-----------------------
It shall be a condition to this Agreement and the obligation of the Company
and the Selling Shareholders to sell and deliver the Common Shares hereunder,
and of each Underwriter to purchase the Common Shares in the manner as described
herein, that, except as hereinafter in this paragraph provided, each of the
Underwriters shall purchase and pay for all the Common Shares agreed to be
purchased by such Underwriter hereunder upon tender to the Underwriters of all
such shares in accordance with the terms hereof. If any Underwriter or
Underwriters default in their obligations to purchase Common Shares hereunder on
either the First or Second Closing Date and the aggregate number of Common
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase on such Closing Date does not exceed 10% of the total number of Common
Shares which the Underwriters are obligated to purchase on such Closing Date,
the non-defaulting Underwriters shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Common Shares which such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of Common
Shares with respect to which such default occurs is more than the above
percentage and arrangements satisfactory to the Underwriters and the Company for
the purchase of such Common Shares by other persons ore not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company or the Selling Shareholders
except for the expenses to be paid by the Company and the Selling Shareholders
pursuant to Section 7 hereof and except to the extent provided in Section 11
hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Underwriters or the Company shall have the right to postpone the First or Second
Closing Date, as the case may be, for not more than five business days in order
that the necessary changes in the Registration Statement, Prospectus and any
other documents, as well as any other arrangements, may be effected. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
-22-
SECTION 13
EFFECTIVE DATE
--------------
This Agreement shall become effective immediately as to Sections 7, 9, 11,
14 and 16 and, as to all other provisions, (i) if at the time of execution of
this Agreement the Registration Statement has not become effective, at 2:00
P.M., California time, on the first full business day following the
effectiveness of the Registration Statement, or (ii) if at the time of execution
of this Agreement the Registration Statement has been declared effective, at
2:00 P.M., California time, on the first full business day following the date of
execution of this Agreement; but this Agreement shall nevertheless become
effective at such earlier time after the Registration Statement becomes
effective as you may determine on and by notice to the Company or by release of
any of the Common Shares for sale to the public. For the purposes of this
Section 13, the Common Shares shall be deemed to have been so released upon the
release for publication of any newspaper advertisement relating to the Common
Shares or upon the release by you of telegrams (i) advising Underwriters that
the Common Shares are released for public offering, or (ii) offering the Common
Shares for sale to securities dealers, whichever may occur first.
SECTION 14
TERMINATION
-----------
Without limiting the right to terminate this Agreement pursuant to any
other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you and
the Selling Shareholders or by you by notice to the Company and the Selling
Shareholders at any time prior to the time this Agreement shall become effective
as to all its provisions, and any such termination shall be without liability on
the part of the Company or the Selling Shareholders to any Underwriter (except
for the expenses to be paid or reimbursed by the Company and the Selling
Shareholders pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof) or of any Underwriter to the Company or the
Selling Shareholders (except to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on either such
Exchange or in the over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or California
authorities, (ii) if an outbreak of major hostilities or other national or
international calamity or any change in political, financial or economic
conditions shall have occurred or shall have accelerated or escalated to such an
extent, as, in the judgment of the Underwriters, to affect adversely the
marketability of the Common Shares, (iii) if any adverse event shall have
occurred or shall exist which makes untrue or incorrect in a material respect
any statement or information contained in the Registration Statement or
Prospectus or which is not reflected in the Registration Statement or Prospectus
but should be reflected therein in order to make the statements or information
contained therein not misleading in any material respect, or (iv) if there shall
be any action, suit or proceeding pending or threatened, or there shall have
been any development or prospective development involving particularly the
business or properties or securities of the Company or the transactions
contemplated by this Agreement, which, in the judgment of the Underwriters, may
materially and adversely affect the Company's business or earnings and makes it
impracticable or inadvisable to offer or sell the Common Shares. Any termination
pursuant to this subsection (b) shall be without liability on the part of any
Underwriter to the Company or the Selling Shareholders or on the part of the
Company or the Selling Shareholders to any Underwriter (except for expenses to
be paid or reimbursed by the Company and the Selling Shareholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11 hereof).
(c) This Agreement shall also terminate at 5:00 P.M., California Time, on
the tenth full business day after the Registration Statement shall have become
effective if the initial public offering price of the Common Shares shall not
then as yet have been determined as provided in Section 5 hereof. Any
termination pursuant to this subsection (c) shall be without liability on the
part of any Underwriter to the Company or the Selling Shareholders or on the
part of the Company or the
-23-
Selling Shareholders to any Underwriter (except for expenses to be paid or
reimbursed by the Company and the Selling Shareholders pursuant to Sections 7
and 9 hereof and except to the extent provided in Section 11 hereof).
SECTION 15
FAILURE OF THE SELLING SHAREHOLDERS TO SELL AND DELIVER
-------------------------------------------------------
If one or more of the Selling Shareholders shall fail to sell and deliver
to the Underwriters the Common Shares to be sold and delivered by such Selling
Shareholders at the First Closing Date or the Second Closing Date under the
terms of this Agreement, then the Underwriters may at their option, by written
notice from you to the Company and the Selling Shareholders, purchase the shares
which the other Selling Shareholders have agreed to sell and deliver in
accordance with the terms hereof. In the event of a failure by one or more of
the Selling Shareholders to sell and deliver as referred to in this Section,
either you or the Company shall have the right to postpone the First Closing
Date or the Second Closing Date, as the case may be, for a period not exceeding
seven business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected.
SECTION 16
REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY
---------------------------------------------------
The respective indemnities, agreements, representations, warranties and
other statements of the Company, of its officers, of the Selling Shareholders
and of the several Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Shareholders, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
SECTION 17
NOTICES
-------
All communications hereunder shall be in writing and, if sent to the
Underwriters shall be mailed, delivered or telegraphed and confirmed to you at
000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xx. Xxxxx
XxXxxx, with a copy to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., 000 Xxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.; and
if sent to the Company or the Selling Shareholders shall be mailed, delivered or
telegraphed and confirmed to the Company at 00000 000xx Xxxxxx X.X.,
Xxxxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xx. Xxxxx X. Xxxxx, with a copy to
Xxxxx Xxxxxx Xxxxxxxx LLP, 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxxxx, Esq. The Company, the Selling Shareholders or
you may change the address for receipt of communications hereunder by giving
notice to the others.
SECTION 18
SUCCESSORS
----------
This Agreement will inure to the benefit of and be binding upon the parties
hereto, including any substitute Underwriters pursuant to Section 12 hereof, and
to the benefit of the officers and directors and controlling persons referred to
in Section 11, and in each case their respective successors, personal
representatives and assigns, and no other person will have any right or
obligation hereunder. No such assignment shall relieve any party of its
obligations hereunder. The term "successors" shall not include any purchaser of
the Common Shares as such from any of the Underwriters merely by reason of such
purchase.
-24-
SECTION 19
PARTIAL UNENFORCEABILITY
------------------------
The invalidity or unenforceability of any Section, paragraph or provision
of this Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
SECTION 20
APPLICABLE LAW
--------------
This Agreement shall be governed by and construed in accordance with the
internal laws (and not the laws pertaining to conflicts of laws) of the State of
California.
SECTION 21
GENERAL
-------
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in several counterparts, each one of
which shall be an original, and all of which shall constitute one and the same
document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Shareholders and you.
Any person executing and delivering this Agreement as Attorney-in-fact for
the Selling Shareholders represents by so doing that he has been duly appointed
as Attorney-in-fact by such Selling Shareholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-fact to take
such action. Any action taken under this Agreement by any of the
Attorneys-in-fact will be binding on all the Selling Shareholders.
-25-
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company, the Selling Shareholders and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
APEX PC SOLUTIONS, INC.
_______________________________________
Xxxxx X. Xxxxx,
President and Chief Executive Officer
SELLING SHAREHOLDERS
By: ___________________________________
(Attorney-in-fact)
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
XXXXXXXXXX SECURITIES
XXXX XXXXXXXX INCORPORATED
XXXXX & COMPANY
By: XXXXXXXXXX SECURITIES
By: _____________________________________
Xxxxxxx X. Xxxxx, Managing Director
-26-
SCHEDULE A
Number of
Number of Firm Optional
Common Shares Common Shares
Name of Underwriter to be Purchased to be Purchased
---------------------------------------- --------------- ----------------
Xxxxxxxxxx Securities . . . . . . . . . .
Xxxx Xxxxxxxx Incorporated . . . . . . .
Xxxxx & Company . . . . . . . . . . . . .
_________
TOTAL . . . . .
---------
---------
A-1
SCHEDULE B
Number of Number of
Firm Common Optional Common
Shares to be Shares to be
Sold
Sold by Selling by Selling
Name of Selling Shareholder Shareholders Shareholders
------------------------------------- ----------------
-----------------
Xxxxx X. Xxxxx . . . . . . .
Xxxxxxxxxxx X. Xxxxxxxx. . .
Britannia Holdings Limited .
Advent VII L.P. . . . . . .
Advent Atlantic & Pacific II
L.P. . . . . . . . . . . . .
Advent New York L.P. . . . .
TA Venture Investors Limited ________ ________
Partnership . . . . . . . .
TOTAL . . . . .
--------
--------
B-1
SCHEDULE C
Number of
Common
Name of Shareholder Shares Held
------------------------------------ -----------
Xxxx Family Trust dated 8/18/93 . . .
Xxxx Xxxxxxx. . . . . . . . . . . . .
Xxxx Xxxxx. . . . . . . . . . . . . .
Xxxxx XxXxxxxx. . . . . . . . . . . .
Xxxxx Xxxxxxx . . . . . . . . . . . .
Xxxxx Xxxxx . . . . . . . . . . . . .
C-1
