EXHIBIT 1.1
DATED JUNE ___, 1997
ARIS CORPORATION
2,020,800 SHARES OF COMMON STOCK
________________________
UNDERWRITING AGREEMENT
________________________
ARIS CORPORATION
2,020,800 SHARES
PLUS AN OPTION TO PURCHASE FROM ARIS CORPORATION
UP TO 300,000 ADDITIONAL SHARES TO COVER OVER-ALLOTMENTS
COMMON STOCK
UNDERWRITING AGREEMENT
June ___, 1997
DEUTSCHE XXXXXX XXXXXXXX INC.
XXXXXXXXXX SECURITIES
XXXXX XXXXXXX INC.
As Representatives of the several Underwriters
c/o Deutsche Xxxxxx Xxxxxxxx Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
ARIS Corporation, a Washington corporation (the "Company"), and the
shareholders named in Schedule 1 hereto (the "Selling Shareholders"), hereby
confirm their agreement with the several underwriters named in Schedule 2 hereto
(the "Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacities, the "Representatives"), as set forth below.
If you are the only Underwriters, all references herein to the Representatives
shall be deemed to be references to the Underwriters.
SECTION 1. UNDERWRITING.
Subject to the terms and conditions contained herein:
(a) The Company proposes to issue and sell to the several Underwriters
and the Selling Shareholders severally propose to sell to the several
Underwriters an aggregate of 2,020,800 shares of common stock, without par value
per share (the "Common Stock"), of the Company (the "Firm Shares"), of which
2,000,000 shares are to be issued and sold by the
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Company and 20,800 shares are to be sold by the Selling Shareholders. The
Company also proposes to issue and sell to the several Underwriters not more
than 300,000 additional shares of Common Stock (the "Option Shares" and,
together with the Firm Shares, the "Shares") if requested by the Representatives
as provided in Section 2(b) hereof.
(b) Upon your authorization of the release of the Firm Shares, the
Underwriters propose to make a public offering (the "Offering") of the Firm
Shares upon the terms set forth in the Prospectus (as defined below) as soon
after the Registration Statement (as defined below) and this Agreement have
become effective as in the Representatives' sole judgment is advisable. As used
in this Agreement, the term "Original Registration Statement" means the
registration statement (File No. 333-25409) initially filed with the Securities
and Exchange Commission (the "Commission") relating to the Shares, as amended at
the time when it was or is declared effective, including all financial schedules
and exhibits thereto and including any information omitted therefrom pursuant to
Rule 430A under the Securities Act of 1933, as amended (the "Securities Act"),
and included in the Prospectus; the term "Rule 462(b) Registration Statement"
means any registration statement filed with the Commission pursuant to Rule
462(b) under the Securities Act (including the Registration Statement and any
Preliminary Prospectus (as defined below) or Prospectus incorporated therein at
the time such Registration Statement becomes effective); the term "Registration
Statement" includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus" means each prospectus
subject to completion filed with the Original Registration Statement or any
amendment thereto (including the prospectus subject to completion, if any,
included in the Original Registration Statement or any amendment thereto at the
time it was or is declared effective); the term "Prospectus" means:
(i) if the Company relies on Rule 434 under the Securities Act,
the Term Sheet (as defined below) relating to the Shares that is first
filed pursuant to Rule 424(b)(7) under the Securities Act, together with
the Preliminary Prospectus identified therein that such Term Sheet
supplements;
(ii) if the Company does not rely on Rule 434 under the
Securities Act, the prospectus first filed with the Commission pursuant to
Rule 424(b) under the Securities Act;
(iii) if the Company does not rely on Rule 434 under the
Securities Act and if no prospectus is required to be filed pursuant to
Rule 424(b) under the Securities Act, the prospectus included in the
Registration Statement; or
(iv) for purposes of the representations and warranties in
Section 5 hereof, if the Prospectus is not in existence, the most recent
Preliminary Prospectus;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434
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under the Securities Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
SECTION 2. PURCHASE AND CLOSING.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell 2,000,000 Firm Shares, and each
Selling Shareholder agrees to sell the number of Firm Shares set forth opposite
such Selling Shareholder's name under the column "Number of Firm Shares to be
Sold" on Schedule 1, and each of the Underwriters, severally and not jointly,
agrees to purchase from the Company and the Selling Shareholders, at a purchase
price of $___ per Share (the "Purchase Price"), the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule 2 hereto. [One or more
certificates in definitive form for the Firm Shares that the several
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Representatives shall
request, upon notice to the Company and the Selling Shareholders at least 48
hours prior to the First Closing Date (as defined below), shall be delivered by
or on behalf of the Company and the Selling Shareholders to the Representatives
for the respective accounts of the Underwriters] or [Firm Shares shall be
registered by Xxxxx Xxxxxx Shareholder Services in the name of the nominee of
the Depository Trust Company ("DTC"), Cede & Co. ("Cede & Co."), and credited to
the accounts of such of its participants as the Representatives shall request,
upon notice to the Company and the Selling Shareholders at least 48 hours prior
to the First Closing Date (as defined below)], with any transfer taxes payable
in connection with the transfer of the Firm Shares to the Underwriters duly
paid, against payment by or on behalf of the Underwriters to, (i) in the case of
Firm Shares issued and sold by the Company, the account of the Company of
$__________ by wire transfer in immediately available funds and, (ii) in the
case of Firm Shares sold by the Selling Shareholders, by certified or bank check
or checks payable to _______________, as custodian for the Selling Shareholders
(the "Custodian"). The Company and the Selling Shareholders will make the
certificate or certificates for the Firm Shares available for checking and
packaging by the Representatives at such place as is designated by the
Representatives at least 24 hours prior to the First Closing Date. Delivery or
registry of and payment for the Firm Shares shall be made at the offices of
Stoel Rives LLP, Xxx Xxxxx Xxxxxx, Xxxxx 0000, 000 Xxxxxxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000-0000 at 9:30 A.M., New York City time, on [_________], 1997 the
third full business day following the date of this Agreement (or the fourth
business day if permitted by Rule 15c6-1(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act)), or at such other place, time or date as
the Representatives and the Company may agree upon. Such time and date of
delivery against payment are herein referred to as the "First Closing Date", and
the implementation of all the actions described in this Section 2(a) is herein
referred to as the "First Closing".
(b) For the purpose of covering any over-allotments in connection with
the distribution and sale of the Firm Shares as contemplated by the Prospectus,
the Company
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hereby grants to the several Underwriters an option to purchase, severally and
not jointly, the Option Shares. The purchase price to be paid for any Option
Shares shall be the same as the Purchase Price for the Firm Shares set forth
above in paragraph (a) of this Section 2. The option granted hereby may be
exercised as to all or any part of the Option Shares from time to time within
thirty days after the date of the Prospectus (or, if such 30th day shall be a
Saturday or Sunday or a holiday, on the next business day thereafter when the
New York Stock Exchange and the Nasdaq Stock Market's National Market (the
"Nasdaq National Market") is open for trading). The Underwriters shall not be
under any obligation to purchase any of the Option Shares prior to the exercise
of such option. The Representatives may from time to time exercise the option
granted hereby by giving notice in writing or by telephone (confirmed in
writing) to the Company setting forth the aggregate number of Option Shares as
to which the several Underwriters are then exercising the option and the date
and time for delivery or registry of and payment for such Option Shares. Any
such date of delivery or registry shall be determined by the Representatives but
shall not be earlier than two business days or later than five business days
after such exercise of the option and, in any event, shall not be earlier than
the First Closing Date. The time and date set forth in such notice, or such
other time or date as the Representatives and the Company may agree upon or as
the Representatives may determine pursuant to this Section 2(b), is herein
called an "Option Closing Date" with respect to such Option Shares, and the
implementation of all the actions described in this Section 2(b) is herein
referred to as the "Option Closing." As used in this Agreement, the term
"Closing Date" means either the First Closing Date or any Option Closing Date,
as applicable, and the term "Closing" means either the First Closing or any
Option Closing, as applicable. If the option is exercised as to all or any
portion of the Option Shares, then either one or more certificates in definitive
form for such Option Shares shall be delivered or, if such Option Shares are to
be held through the Depository Trust Company ("DTC"), such Option Shares shall
be registered and credited, on the related Option Closing Date in the same
manner, and upon the same terms and conditions, set forth in paragraph (a) of
this Section 2, except that reference therein to the Firm Shares and the First
Closing Date shall be deemed, for purposes of this paragraph (b), to refer to
such Option Shares and Option Closing Date, respectively. Upon exercise of the
option as provided herein, the Company shall become obligated to sell to each of
the several Underwriters, and, on the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, each of the Underwriters (severally and not
jointly) shall become obligated to purchase from the Company, the same
percentage of the total number of the Option Shares as to which the several
Underwriters are then exercising the option as such Underwriter is obligated to
purchase of the aggregate number of Firm Shares, as adjusted by the
Representatives in such manner as they deem advisable to avoid fractional
shares.
(c) The Company and each Selling Shareholder hereby acknowledge that
the payment of monies to it pursuant to Section 2(a) hereof (a "Payment") by or
on behalf of the Underwriters of the Purchase Price for any Shares does not
constitute closing of a purchase and sale of the Shares. Only execution and
delivery, by facsimile or otherwise, of a receipt for
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Shares by the Underwriters indicates completion of the closing of a purchase of
the Shares from the Company and the Selling Shareholders. Furthermore, in the
event that the Underwriters make a Payment to the Company or any Selling
Shareholder prior to the completion of the closing of a purchase of Shares, the
Company and each Selling Shareholder hereby acknowledge that until the
Underwriters execute and deliver such receipt for the Shares the Company and
each Selling Shareholder will not be entitled to the Payment and shall return
the Payment to the Underwriters as soon as practicable (by wire transfer of
same-day funds) upon demand. In the event that the closing of a purchase of
Shares is not completed and the Payment is not returned by the Company and each
Selling Shareholder to the Underwriters on the same day the Payment was received
by the Company and each Selling Shareholder, the Company and each Selling
Shareholder agree to pay to the Underwriters in respect of each day the Payment
is not returned by it, in same-day funds, interest on the amount of such Payment
in an amount representing the Underwriters' cost of financing as reasonably
determined by the Representatives.
(d) It is understood that any of you, individually and not as one of
the Representatives, may (but shall not be obligated to) make Payment on behalf
of any Underwriter or Underwriters for any of the Shares to be purchased by such
Underwriter or Underwriters. No such Payment shall relieve such Underwriter or
Underwriters from any of its or their obligations hereunder.
SECTION 3. COVENANTS.
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will:
(x) use its reasonable best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and
any amendments thereto to become effective as promptly as possible after
execution hereof. If required, the Company will file the Prospectus or any
Term Sheet that constitutes a part thereof and any amendment or supplement
thereto with the Commission in the manner and within the time period
required by Rules 434 and 424(b) under the Securities Act. During any time
when a prospectus relating to the Shares is required to be delivered under
the Securities Act, the Company (x) will comply with all requirements
imposed upon it by the Securities Act and the rules and regulations of the
Commission thereunder to the extent necessary to permit the continuance of
sales of or dealings in the Shares in accordance with the provisions hereof
and of the Prospectus, as then amended or supplemented, and (y) will not
file with the Commission the Prospectus, Term Sheet, any amendment or
supplement to such Prospectus or Term Sheet, any amendment to the
Registration Statement (including the amendment referred to in the second
sentence of Section 5(a)(i)) or any Rule 462(b) Registration Statement
unless the Representatives
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previously have been advised of, and furnished with a copy within a
reasonable period of time prior to, the proposed filing and the
Representatives shall have given their consent to such filing. The Company
will prepare and file with the Commission, in accordance with the rules and
regulations of the Commission, promptly upon request by the Representatives
or counsel for the Underwriters, any amendments to the Registration
Statement or amendments or supplements to the Prospectus that may be
necessary or advisable in connection with the distribution of the Shares by
the several Underwriters. The Company will advise the Representatives,
promptly after receiving notice thereof, of the time when the Registration
Statement or any amendment thereto has been filed or declared effective or
the Prospectus or Term Sheet or any amendment or supplement thereto has
been filed and will provide evidence satisfactory to the Representatives of
each such filing or effectiveness.
(y) without charge, provide (x) to the Representatives and to
counsel for the Underwriters, an executed and a conformed copy of the
Original Registration Statement and each amendment thereto or any Rule
462(b) Registration Statement (in each case including exhibits thereto),
(y) to each other Underwriter, a conformed copy of the Original
Registration Statement and each amendment thereto or any Rule 462(b)
Registration Statement (in each case without exhibits thereto), and (z) so
long as a prospectus relating to the Shares is required to be delivered
under the Securities Act, as many copies of each Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request. Without limiting the application of
clause (z) of the preceding sentence, the Company, not later than (I) 9:00
A.M., New York City time, on the business day following the date of
determination of the public offering price, if such determination occurred
at or prior to 12:00 noon, New York City time, on such date or (II) 6:00
P.M., New York City time, on the business day following the date of
determination of the public offering price, if such determination occurred
after 12:00 noon, New York City time, on such date, will deliver to the
Underwriters, without charge, as many copies of the Prospectus and any
amendment or supplement thereto as the Representatives may reasonably
request for purposes of confirming orders that are expected to settle on
the First Closing Date. The Company will provide or cause to be provided to
each of the Representatives, and to each Underwriter that so requests in
writing, a copy of each report on Form SR filed by the Company as required
by Rule 463 under the Securities Act.
(z) advise the Representatives, promptly after receiving notice
or obtaining knowledge thereof, of (w) the issuance by the Commission of
any stop order suspending the effectiveness of the Original Registration
Statement or any amendment thereto or any Rule 462(b) Registration
Statement or any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, (x)
the suspension of the qualification of the Shares for offering or sale in
any jurisdiction, (y) the institution, threatening or contemplation of any
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proceeding for any such purpose, or (z) any request made by the Commission
for amending the Original Registration Statement or any Rule 462(b)
Registration Statement, for amending or supplementing the Prospectus or for
additional information. The Company will use its best efforts to prevent
the issuance of any such stop order and, if any such stop order is issued,
to obtain the withdrawal thereof as promptly as possible.
(ii) The Company will arrange for the qualification of the Shares for
offering and sale in each jurisdiction as the Representatives shall
designate including, but not limited to, pursuant to applicable state
securities ("Blue Sky") laws of certain states of the United States of
America or other U.S. jurisdictions, and the Company shall maintain such
qualifications in effect for so long as may be necessary in order to
complete the placement of the Shares; provided, however, that the Company
-----------------
shall not be obliged to file any general consent to service of process or
to qualify as a foreign corporation or as a securities dealer in any
jurisdiction or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject.
(iii) If, at any time prior to the final date when a prospectus
relating to the Shares is required to be delivered under the Securities
Act, any event occurs as a result of which the Prospectus, as then amended
or supplemented, would include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if for any other reason it shall be necessary at any time to
amend or supplement the Registration Statement or the Prospectus to comply
with the Securities Act or the rules or regulations of the Commission
thereunder or applicable law, the Company will promptly notify the
Representatives thereof and will promptly, at its own expense but subject
to the second sentence of Section 3(a)(i) hereof: (x) prepare and file
with the Commission an amendment or supplement to the Registration
Statement or Prospectus which will correct such statement or omission or
effect such compliance; and (y) supply any amended or supplemented
Prospectus to the Underwriters in such quantities as the Underwriters may
reasonably request.
(iv) The Company will make generally available to the Company's
security holders and to the Representatives as soon as practicable an
earnings statement that satisfies the provisions of Section 11(a) of the
Securities Act, including Rule 158 thereunder.
(v) The Company will apply the net proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus.
(vi) The Company will not, and will not allow any subsidiary to,
publicly announce any intention to, and will not itself, and will not allow
any subsidiary to,
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without the prior written consent of the Representatives, on behalf of the
Underwriters, (x) offer, pledge, sell, offer to sell, contract to sell,
sell any option or contract to purchase, purchase any option to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, Common Stock, or (y)
enter into any swap or other agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the shares of Common Stock
or securities convertible into, or exercisable or exchangeable for, shares
of Common Stock (whether any such transaction described in clause (x) or
(y) above is to be settled by delivery of shares of Common Stock or such
other securities, in cash or otherwise), for a period beginning from the
date hereof and continuing to and including the date 180 days after the
Closing, except pursuant to this Agreement and other than with respect to
shares of Common Stock issued pursuant to the exercise of any stock options
granted under the Company's stock option plans which are disclosed in the
Prospectus.
(vii) Neither the Company nor any of its affiliates, nor any person
acting on behalf of any of them will, directly or indirectly, (i) take any
action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares or (ii) (x) sell, bid for, purchase, or pay
anyone any compensation for soliciting purchases of, the Shares or (y) pay
or agree to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(viii) The Company will obtain the agreements described in Section
7(i) hereof prior to the First Closing Date and will (i) enforce the terms
of each such agreement, and (ii) issue stop transfer instructions to the
transfer agent for the Common Stock with respect to any transactions that
would constitute a breach of or default under any such agreement.
(ix) If at any time during the 25-day period after the Registration
Statement becomes effective or during the period prior to any Closing Date,
any rumor, publication or event relating to or affecting the Company shall
occur as a result of which in the Representatives' sole judgment the market
price of the Shares has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after
notice from the Representatives advising the Company to the effect set
forth above, forthwith prepare, consult with the Representatives concerning
the substance of, and disseminate a press release or other public statement
reasonably satisfactory to the Representatives, responding to or commenting
on such rumor, publication or event.
(x) If the Company elects to rely on Rule 462(b), the Company shall
both
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file the Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with
Rule 111 promulgated under the Securities Act by the earlier of (i) 10:00
P.M. New York City time on the date of this Agreement and (ii) the time
confirmations are sent or given, as specified by Rule 462(b)(2) under the
Securities Act.
(xi) The Company will cause the Shares to be duly included for
quotation on the Nasdaq National Market prior to the First Closing Date.
The Company will ensure that the Shares remain included for quotation on
the Nasdaq National Market following the First Closing Date.
(b) Each Selling Shareholder agrees that:
(i) It will not, and no person acting on behalf of such Selling
Shareholder will, directly or indirectly, (x) take any action designed to
cause or to result in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares
or (y)(I) sell, bid for, purchase, or pay anyone any compensation for
soliciting purchases of, the Shares or (II) pay or agree to pay any person
any compensation for soliciting another to purchase any other securities of
the Company (except for the sale of Shares by the Selling Shareholders
under this Agreement).
(ii) It will not publicly announce any intention to, and will not
itself, without the prior written consent of the Representatives on behalf
of the Underwriters, (x) offer, pledge, sell, offer to sell, contract to
sell, sell any option or contract to purchase, purchase any option to sell,
grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any of the shares of Common Stock or
any securities convertible into, or exercisable or exchangeable for, Common
Stock, or (y) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the
shares of Common Stock or any securities convertible into, or exercisable
or exchangeable for, shares of Common Stock (whether any such transaction
described in clause (x) and (y) above is to be settled by delivery of
shares of Common Stock or such other securities, in cash or otherwise), in
each case, beneficially owned (within the meaning of Rule 13d-3 under the
Exchange Act) or otherwise controlled by such person on the date hereof or
hereafter acquired, for a period beginning from the date hereof and
continuing to and including the date 180 days after the Closing.
SECTION 4. EXPENSES.
(a) The Company and each of the Selling Shareholders covenant and
agree to pay all costs and expenses incurred incident to the performance of the
obligations of the Company
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and the Selling Shareholders under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 10 hereof, including: (i) fees and expenses of the Company
in connection with the preparation, issuance and delivery of this Agreement to
the Underwriters; (ii) the fees and expenses of counsel to the Company and
counsel to the Selling Shareholders, accountants to the Company and its
subsidiaries and any other experts or advisors retained by the Company or the
Selling Shareholders; (iii) fees and expenses incurred in connection with the
registration of the Shares under the Securities Act and the preparation and
filing of the Registration Statement, the Prospectus and all amendments and
supplements thereto; (iv) the printing and distribution of the Prospectus and
any Preliminary Prospectus and the printing and production of all other
documents connected with the Offering (including this Agreement and any other
related agreements); (v) expenses related to the qualification of the Shares
under the state securities or Blue Sky laws, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of any Blue Sky memoranda; (vi)
the filing fees and expenses, if any, incurred with respect to any filing with
the National Association of Securities Dealers, Inc; (vii) all expenses arising
from the quoting of the Shares on the Nasdaq National Market; and (viii) all
arrangements relating to the preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Shares, including transfers
agent's and registrar's fees.
(b) The Selling Shareholders shall bear and pay all costs and expenses
incurred incident to the performance of their respective obligations under this
Agreement, whether or not the transactions contemplated herein are consummated
or this Agreement is terminated pursuant to Section 9 hereof, including: (i)
any stamp duties, capital duties and stock transfer taxes, if any, payable upon
the sale of the Shares of such Selling Shareholders to the Underwriters and (ii)
the fees and disbursements of their respective counsel, accountants and other
advisors.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
(a) As a condition of the obligation of the Underwriters to underwrite
and pay for the Shares, the Company represents and warrants to, and agrees with,
each of the several Underwriters as follows:
Registration Statement and Prospectus
(i) The Original Registration Statement, including the Preliminary
Prospectus, has been filed by the Company with the Commission under the
Securities Act, and one or more amendments to such Registration Statement
may have been so filed. After the execution of this Agreement, the Company
will file with the Commission either (x) if such Registration Statement, as
it may have been amended, has been declared by the Commission to be
effective under the Securities Act, either (I)
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if the Company relies on Rule 434 under the Securities Act, a Term Sheet
relating to the Shares that shall identify the Preliminary Prospectus that
it supplements containing such information as is required or permitted by
Rules 434, 430A and 424(b) under the Securities Act or (II) if the Company
does not rely on Rule 434 under the Securities Act, a prospectus in the
form most recently included in an amendment to such Registration Statement
(or, if no such amendment shall have been filed, in such Registration
Statement), with such changes or insertions as are required by Rule 430A
under the Securities Act or permitted by Rule 424(b) under the Securities
Act, and in the case of either clause (I) or (II) of this sentence, as have
been provided to and approved by the Representatives prior to the execution
of this Agreement, or (y) if such Registration Statement, as it may have
been amended, has not been declared by the Commission to be effective under
the Securities Act, an amendment to such Registration Statement, including
a form of prospectus, a copy of which amendment has been furnished to and
approved by the Representatives prior to the execution of this Agreement.
The Company also may file a Rule 462(b) Registration Statement with the
Commission for the purpose of registering certain additional Shares, which
registration shall be effective upon filing with the Commission.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When any Preliminary
Prospectus was filed with the Commission, it (x) contained all statements
required to be stated therein in accordance with, and complied in all
material respects with the requirements of, the Securities Act and the
rules and regulations of the Commission thereunder and (y) did not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was or is declared
effective, it (I) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Securities Act and the
rules and regulations of the Commission thereunder and (II) did not or will
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
statements therein not misleading. When the Prospectus or any Term Sheet
that is a part thereof or any amendment or supplement to the Prospectus is
filed with the Commission pursuant to Rule 424(b) (or, if the Prospectus or
such amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing the Prospectus
or such amendment or supplement to the Prospectus was or is declared
effective) and on the Closing Date, the Prospectus, as amended or
supplemented at any such time, (A) contained or will contain all statements
required to be stated therein in accordance with, and complied or will
comply in all material respects with the requirements of, the Securities
Act and the rules and regulations of the Commission thereunder and (B) did
not or will not include any untrue statement of a material fact or omit to
state any
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material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (ii) do not apply to statements or
omissions made in any Preliminary Prospectus, the Registration Statement or
any amendment thereto or the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein.
(iii) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective, (x) the
Company will file a Rule 462(b) Registration Statement in compliance with,
and that is effective upon filing pursuant to, Rule 462(b) and (y) the
Company has given irrevocable instructions for transmission of the
applicable filing fee in connection with the filing of the Rule 462(b)
Registration Statement, in compliance with Rule 111 under the Securities
Act, or the Commission has received payment of such filing fee.
(iv) If the Company has elected to rely on Rule 434 under the
Securities Act, the Prospectus is not "materially different", as such term
is used in Rule 434, from the prospectus included in the Registration
Statement at the time of its effectiveness or an effective post-effective
amendment thereto (including such information that is permitted to be
omitted pursuant to Rule 430A under the Securities Act);
(v) The Company has not distributed and, prior to the later of (x)
any Closing Date and (y) the completion of the distribution of the Shares,
will not distribute any offering material in connection with the Offering
other than the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto.
(vi) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (x) the Company and
its subsidiaries, taken as a whole, have not incurred any material
liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (y) the
Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind
on its capital stock; and (z) there has not been any material change in the
capital stock, short-term or long-term debt of the Company and its
subsidiaries, taken as a whole, except in each case as described in or
contemplated by the Prospectus.
The Shares
(vii) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus. All of the issued shares of
capital stock of the Company
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have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all applicable federal
and state securities laws and were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase such
securities. The Shares have been duly authorized by all necessary corporate
action of the Company and, after payment therefor in accordance herewith,
will be validly issued, fully paid and nonassessable at the Closing Date.
No holders of outstanding shares of capital stock of the Company are
entitled as such to any preemptive or other rights to subscribe for any of
the Shares, and no holder of securities of the Company has any right which
has not been fully exercised or waived to require the Company to register
the offer or sale of any securities owned by such holder under the
Securities Act in the Offering contemplated by this Agreement.
(viii) Except as described in or contemplated by the Prospectus,
there are no outstanding (x) securities or obligations of the Company or
any of its subsidiaries convertible into or exchangeable for any capital
stock of the Company or any such subsidiary, (y) warrants, rights or
options to subscribe for or purchase from the Company or any such
subsidiary any such capital stock or any such convertible or exchangeable
securities or obligations, or (z) obligations of the Company or any such
subsidiary to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or
options.
(ix) Except for the shares of capital stock of each of the
subsidiaries owned by the Company and such subsidiaries, neither the
Company nor any such subsidiary owns any shares of stock or any other
equity securities of any corporation or has any equity interest in any
firm, partnership, association or other entity, except as described in or
contemplated by the Prospectus.
Listing
(x) All of the Shares have been duly authorized and accepted for
quotation on the Nasdaq National Market, subject to official notice of
issuance.
Market Manipulation
(xi) Neither the Company nor any of its affiliates, nor any person
acting on behalf of any of them has, directly or indirectly, (x) taken any
action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares, or (y) since the filing of the Original
Registration Statement (I) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Shares or (II) paid or agreed
to pay to any person any compensation for soliciting another to purchase
any other securities of the Company.
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Corporate Power and Authority
(xii) The Company has been duly incorporated and is validly existing
as a corporation under the law of the State of Washington with full power
and authority to own, lease and operate its properties and assets and
conduct its business as described in the Prospectus; the Company is duly
qualified to transact business in each jurisdiction in which its ownership,
leasing or operation of its properties or assets or the conduct of its
business requires such qualification, except where the failure to be so
qualified does not amount to a material liability or disability to the
Company and its subsidiaries, taken as a whole, and has full power and
authority to execute and perform its obligations under this Agreement; each
subsidiary of the Company is a corporation duly incorporated and validly
existing as a corporation under the laws of its jurisdiction of
incorporation and is duly qualified to transact business in each
jurisdiction in which its ownership, leasing or operation of its properties
or assets or the conduct of its business requires such qualification,
except where the failure to be so qualified does not amount to a material
liability or disability to the Company and its subsidiaries, taken as a
whole, and each has full power and authority to own, lease and operate its
properties and assets and conduct its business as described in the
Registration Statement and the Prospectus; all of the issued and
outstanding shares of capital stock of each of the Company's subsidiaries
have been duly authorized and are fully paid and nonassessable and are
owned beneficially by the Company free and clear of any security interests,
liens, encumbrances or claims.
(xiii) The execution and delivery of this Agreement and the issue and
sale of the Shares have been duly authorized by all necessary corporate
action of the Company, and this Agreement has been duly executed and
delivered by the Company and is the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except (x) as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles and (y) except to the extent that rights to indemnity or
contribution under this Agreement may be limited by federal and state
securities laws or the public policy underlying such laws.
(xiv) The issuance, offering and sale of the Shares to the
Underwriters by the Company pursuant to this Agreement, the compliance by
the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (x)
require the consent, approval, authorization, registration or qualification
of or with any governmental authority, except (1) if the Company has
elected to rely on Rule 462(b) and the Rule 462(b) Registration Statement
is not effective, the registration of certain Shares pursuant to the Rule
462(b) Registration Statement that will be effective upon filing in
compliance with Rule 462(b) and (2) such as have been obtained or made or
such as may be required by the state securities or
-14-
Blue Sky laws of the various states of the United States of America or
other U.S. jurisdictions in connection with the offer and sale of the
Shares by the Underwriters, or (y) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the Company or
any of its subsidiaries, or any statute or any judgment, decree, order,
rule or regulation of any court or other governmental authority or any
arbitrator applicable to the Company or any of its subsidiaries.
(xv) The Company is not, and will conduct its operations in a manner
so that it continues not to be, an "investment company" and, after giving
effect to the Offering and the application of the proceeds therefrom, will
not be an "investment company", as such term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
Title, Licenses and Consents
(xvi) The Company and each of its subsidiaries have good and
marketable title to all personal property owned by each of them, in each
case free and clear of any security interests, liens, encumbrances,
equities, claims and other defects, except such as do not materially and
adversely affect the value of such property and do not interfere with the
use made or proposed to be made of such property by the Company or such
subsidiary, and any real property and buildings held under lease by the
Company or any such subsidiary are held under valid, existing and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company or such subsidiary, in each case except as
described in or contemplated by the Prospectus.
(xvii) The Company and its subsidiaries own or possess or can acquire
on reasonable terms all material licenses, patents, patent applications,
trademarks, service marks, trade names, know-how, copyrights, trade secrets
and proprietary or other confidential information necessary to operate the
business now operated by them, and neither the Company nor any such
subsidiary has received any notice of infringement of or conflict with
asserted rights of any third party with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially adverse effect on or
constitute a materially adverse change in, or constitute a development
involving a prospective materially adverse effect on or change in, the
condition (financial or otherwise), earnings, properties, business affairs
or business prospects, Shareholders' equity, net worth or results of
operations of the Company or any of its subsidiaries, taken as a whole,
except as described in or
-15-
contemplated by the Prospectus.
(xviii) The Company and its subsidiaries possess all material
consents, licenses, certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially adverse effect on or
constitute a materially adverse change in, the condition (financial or
otherwise), earnings, properties, business affairs or business prospects,
net worth or results of operations of the Company or any of its
subsidiaries, taken as a whole, except as described in or contemplated by
the Prospectus.
Financial Statements
(xix) Price Waterhouse LLP, who have certified certain financial
statements of (x) SofTeach Corporation ("SoftTeach") and (y) the Company
and its consolidated subsidiaries and delivered their report with respect
to the audited financial statements and schedules of SofTeach and the
Company and its consolidated subsidiaries included in the Registration
Statement and the Prospectus, are independent public accountants as
required by the Securities Act and the applicable rules and regulations
thereunder.
(xx) The financial statements of SofTeach and the consolidated
financial statements and schedules of the Company and its consolidated
subsidiaries including, without limitation, the interim financial
statements and proforma financial statements of the Company, included in
the Registration Statement and the Prospectus were prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied
throughout the periods involved (except as otherwise noted therein) and
they present fairly the financial condition of SofTeach and the Company,
respectively, as at the dates at which they were prepared and the results
of operations of SofTeach and the Company, respectively, in respect of the
periods for which they were prepared.
Internal Accounting Controls
(xxi) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (w) transactions are executed in accordance with management's general
or specific authorizations; (x) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (y) access to assets is permitted only in
accordance with management's general or specific authorization; and (z) the
recorded accountability for assets is compared with the existing assets at
-16-
reasonable intervals and appropriate action is taken with respect to any
differences.
Litigation
(xxii) No legal or governmental proceedings are pending, nor has the
Company received any written notice that such proceedings are threatened,
to which the Company or any of its subsidiaries is a party or to which the
property of the Company or any of its subsidiaries is subject that are
required to be described in the Registration Statement or the Prospectus
and are not described therein; and no statutes, regulations, contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described therein or filed as required.
Dividends and Distributions
(xxiii) No subsidiary of the Company is currently prohibited under
any contract or agreement, from paying any dividends to the Company, making
any other distribution on such subsidiary's capital stock, repaying to the
Company any loans or advances to such subsidiary from the Company or
transferring any of such subsidiary's property or assets to the Company or
any other subsidiary of the Company, and the Company is not currently
prohibited under any contract or agreement from paying any dividends,
making any other distribution on its capital stock, in each case except as
described in or contemplated by the Prospectus.
Taxes
(xxiv) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not have
a materially adverse effect on the Company and its subsidiaries, taken as a
whole) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of
the foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith or as described in
or contemplated by the Prospectus.
Insurance
(xxv) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in
which they are engaged; neither the Company nor any such subsidiary has
been refused any insurance coverage sought or applied for; and neither the
Company nor any such subsidiary has any reason to believe
-17-
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),
earnings, properties, business affairs or business prospects, net worth or
results of operations of the Company or any of its subsidiaries, taken as a
whole, except as described in or contemplated by the Prospectus.
Pension and Labor
(xxvi) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (x) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(y) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
(xxvii) No labor dispute with the employees or subcontractors of the
Company or any of its subsidiaries exists or is threatened or imminent that
could have a materially adverse effect on or constitute a materially
adverse change in, or constitute a development involving a prospective
materially adverse effect on or change in, the condition (financial or
otherwise), properties, management, business affairs or business prospects,
net worth or results of operations of the Company or any of its
subsidiaries, taken as a whole, except as described in or contemplated by
the Prospectus.
Environmental
(xxviii) Neither the Company nor any of its subsidiaries is in
violation of any federal or state law or regulation relating to
occupational safety and health or to the storage, handling or
transportation of hazardous or toxic materials and the Company and its
subsidiaries have received all permits, licenses or other approvals
required of them under applicable federal and state occupational safety and
health and environmental laws and regulations to conduct their respective
businesses, and the Company and each such subsidiary is in compliance with
all terms and conditions of any such permit, license or approval, except
any such violation of law or regulation,
-18-
failure to receive required permits, licenses or other approvals or failure
to comply with the terms and conditions of such permits, licenses or
approvals which would not, singly or in the aggregate, have a materially
adverse effect on or constitute a materially adverse change in, or
constitute a development involving a prospective materially adverse effect
on or change in, the condition (financial or otherwise), properties,
business affairs or business prospects, net worth or results of operations
of the Company or any of its subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus.
Other Agreements
(xxix) No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective properties is
bound.
Absence of Materially Adverse Change
(xxx) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the Company
nor any of its subsidiaries has sustained any material loss or interference
with their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding, and there has
been no materially adverse change (including, without limitation, a change
in management or control), or development involving a prospective
materially adverse change, in the condition (financial or otherwise),
management, property, business affairs or business prospects, Shareholders'
equity, net worth or results of operations of the Company or any of its
subsidiaries, taken as a whole, other than as described in or contemplated
by the Prospectus.
(xxxi) No receiver or liquidator (or similar person) has been
appointed in respect of the Company or any subsidiary of the Company or in
respect of any part of the assets of the Company or any subsidiary of the
Company; no resolution, order of any court, regulatory body, governmental
body or otherwise, or petition or application for an order, has been
passed, made or presented for the winding up of the Company or any
subsidiary of the Company or for the protection of the Company or any such
subsidiary from its creditors; and the Company has not, and no subsidiary
of the Company has, stopped or suspended payments of its debts, become
unable to pay its debts or otherwise become insolvent.
-19-
(b) As a further condition of the obligation of the Underwriters to
underwrite and pay for the Shares, each of the Selling Shareholders represents
and warrants to each of the Underwriters that:
Power and Authority
(i) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder and constitutes a valid and
binding obligation upon such Selling Shareholder.
(ii) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement, the Custody Agreement signed by such Selling Shareholder and
Xxxxx Xxxxxx Shareholder Services, as Custodian, relating to the deposit of
the Shares to be sold by such Selling Shareholder (the "Custody
Agreement"), and the Power of Attorney, appointing certain individuals as
such Selling Shareholder's attorneys-in-fact to the extent set forth
therein, relating to the transactions contemplated hereby and by the
Registration Statement (the "Power of Attorney"), will not contravene any
provision of applicable law, or the certificate or articles of
incorporation or bylaws of such Selling Shareholder (if such Selling
Shareholder is a corporation), the partnership agreement of such Selling
Shareholder (if such Selling Shareholder is a partnership) or any agreement
or other instrument binding upon such Selling Shareholder or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over such Selling Shareholder, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by such Selling Shareholder of its
obligations under this Agreement or the Custody Agreement or Power of
Attorney of such Selling Shareholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Shares.
Consents, Title and Delivery
(iii) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Shareholder of this Agreement,
the Custody Agreement and the Power of Attorney of such Selling Shareholder
or the sale and delivery of the Shares to be sold by such Selling
Shareholder, have been obtained.
(iv) Such Selling Shareholder has, and at each Closing will have,
good and marketable title to the Shares to be sold by such Selling
Shareholder, free and clear of all liens, encumbrances, equities or claims,
and the legal right and power, and all authorization and approval required
by law, to enter into this Agreement, the Custody Agreement and the Power
of Attorney and to sell, transfer and deliver the Shares to be
-20-
sold by such Selling Shareholder.
(v) The Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by such Selling Shareholder and are
valid and binding agreements of such Selling Shareholder.
(vi) Delivery of the certificates for the Shares to be sold by such
Selling Shareholder pursuant to this Agreement will pass valid and
marketable title to such Shares free and clear of any security interests,
claims, liens and other encumbrances.
Registration Statement and Prospectus
(vii) All information furnished by or on behalf of such Selling
Shareholder for use in the Registration Statement and the Prospectus is,
and at each Closing will be, true, correct, and complete, and does not, and
at such Closing will not, contain any untrue statement of a material fact
or omit to state any material fact necessary to make such information not
misleading, and all information furnished in writing by or on behalf of
such Selling Shareholder for use in the Prospectus is, and at Closing will
be, true, correct, and complete, and does not, and at Closing will not,
contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading in the
light of the circumstances under which they were made.
(viii) To the best knowledge of such Selling Shareholder, but without
independent verification of information not relating to such Selling
Shareholder, (x) each part of the Registration Statement, when such part
became effective, did not contain and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (y)
the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this subsection (ix) do not apply to statements or omissions made in the
Registration Statement or the Prospectus based upon information furnished
to the Company in writing by any Underwriter through you expressly for use
therein.
(ix) The sale by such Selling Shareholder of Shares pursuant hereto
is not prompted by any adverse information concerning the Company or its
subsidiaries that is not set forth in the Registration Statement or the
Prospectus.
(x) Neither such Selling Shareholder nor any person acting on behalf
of it
-21-
has, directly or indirectly, (x) taken any action designed to cause or to
result in, or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Shares or (y) since
the filing of the Original Registration Statement (I) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Shares or (II) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company (except
for the sale of Shares by the Selling Shareholders under this Agreement).
(xi) Such Selling Shareholder has not distributed and, prior to the
later of (x) any Closing Date and (y) the completion of the distribution of
the Shares, will not distribute any offering material in connection with
the Offering other than the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto.
The Shares
(xii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Shareholder has delivered to the Custodian a
properly completed and executed U.S. Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof).
(xiii) Certificates in negotiable form, endorsed in blank or
accompanied by blank stock powers duly executed with signatures
appropriately guaranteed, representing all of the Shares to be sold by such
Selling Shareholder hereunder have been placed in custody pursuant to the
Custody Agreement.
(xiv) The Shares represented by the certificates held in custody for
such Selling Shareholder under the Custody Agreement are, as a result of
the obligations of such Selling Shareholder under this Agreement, subject
to the interests of the Underwriters hereunder to the extent of such
obligations. The arrangements made by such Selling Shareholder for such
custody, and the appointment by such Selling Shareholder of the attorneys-
in-fact by the Power of Attorney, are to that extent irrevocable. The
obligations of the Selling Shareholders hereunder shall not be terminated
by operation of law, whether by the death or incapacity of any individual
Selling Shareholder or, in the case of an estate or trust, by the death or
incapacity of any executor or trustee or the termination of such estate or
trust, or in the case of a partnership or corporation, by the dissolution
of such partnership or corporation, or by the occurrence of any other
event. If any individual Selling Shareholder or any such executor or
trustee should die or become incapacitated, or if any such estate or trust
-22-
should be terminated, or if any such partnership or corporation should be
dissolved, or if any other such event should occur, before the delivery of
the Shares hereunder, certificates representing the Shares shall be
delivered by or on behalf of the Selling Shareholders in accordance with
the terms and conditions of this Agreement and of the Custody Agreement.
Actions taken by the attorneys-in-fact of the Selling Shareholders pursuant
to the Powers of Attorney shall be as valid as if such death, incapacity,
termination, dissolution or other event had not occurred, regardless of
whether or not the Custodian, the attorneys-in-fact of the Selling
Shareholders, or any of them, shall have received notice of such death,
incapacity, termination, dissolution or other event.
Lock-up Agreement
(xv) During the period beginning from the date hereof and continuing
to and including the date 180 days after the Closing, each Selling
Shareholder agrees not to offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder, any securities of the Company
that are substantially similar to the Shares, including but not limited to
any securities that are convertible into or exchangeable for, or that
represent the right to receive, Common Stock or any such substantially
similar securities, without the prior written consent of the
Representatives; provided, however, that this Agreement shall not supersede
any separate agreement executed by the Selling Shareholder and delivered to
Deutsche Xxxxxx Xxxxxxxx Inc. with respect to the securities of the
Company.
(c) The above representations and warranties shall be deemed to be
repeated at each Closing, and all references therein to the Shares and the
Closing Date shall be deemed to refer to the Firm Shares or the Option Shares
and the First Closing Date or the applicable Option Closing Date, each as
applicable.
SECTION 6. INDEMNITY.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company in Section 5 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any
amendment thereto, any
-23-
Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto a
material fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other costs or expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
-----------------
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein; and provided further,
----------------
that the Company will not be liable to any Underwriter or any person controlling
such Underwriter with respect to any such untrue statement or omission made in
any Preliminary Prospectus that is corrected in the Prospectus (or any amendment
or supplement thereto) if the person asserting any such loss, claim, damage or
liability purchased Shares from such Underwriter but was not sent or given a
copy of the Prospectus (as amended or supplemented) in any case where such
delivery of the Prospectus (as amended or supplemented) was required by the
Securities Act, unless such failure to deliver the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company with Section 3
hereof. The indemnity provided for in this Section 6 shall be in addition to
any liability which the Company may otherwise have. The Company will not,
without the prior written consent of the Representatives, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not any such Representatives or any person who controls
such Representatives is a party to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of all of the Underwriters and such controlling persons from all liability
arising out of such claim, action, suit or proceeding.
(b) Each of the Selling Shareholders agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
-24-
(i) any untrue statement or alleged untrue statement made by such
Selling Shareholder in Section 5 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or
(iii) the omission or alleged omission to state in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto a material fact required
to be stated therein or necessary to make the statements therein not
misleading,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other costs or expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
-----------------
Selling Shareholders will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein; and provided further,
----------------
that the Selling Shareholders will not be liable to any Underwriter or any
person controlling such Underwriter with respect to any such untrue statement or
omission made in any Preliminary Prospectus that is corrected in the Prospectus
(or any amendment or supplement thereto) if the person asserting any such loss,
claim, damage or liability purchased Shares from such Underwriter but was not
sent or given a copy of the Prospectus (as amended or supplemented) in any case
where such delivery of the Prospectus (as amended or supplemented) was required
by the Securities Act, unless such failure to deliver the Prospectus (as amended
or supplemented) was a result of noncompliance by the Company with Section 3
hereof. In no event, however, shall the liability of any Selling Shareholder
for indemnification hereunder exceed the aggregate public offering price of the
Shares sold by such Selling Shareholder. The indemnity provided for in this
Section 6 shall be in addition to any liability which the Selling Shareholders
may otherwise have. Each Selling Shareholder agrees it will not, without the
prior written consent of the Representatives, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any such Representatives or any person who controls any such
Representatives is a party to such claim, action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional release of all
of the Underwriters and such controlling persons from all liability
-25-
arising out of such claim, action, suit or proceeding.
(c) Each Underwriter, severally and not jointly, will indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company and
each Selling Shareholder within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which the Company or any such director, officer or controlling
person or the Selling Shareholders may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto or (ii) the omission or the alleged
omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto 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 reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company or any such director,
officer or controlling person or any Selling Shareholder in connection with
investigating or defending any such loss, claim, damage, liability or any action
in respect thereof. The remedies provided for in this Section 6 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to paragraphs (a), (b) or (c) of this Section 6, such person
(for purposes of this paragraph (d), the "indemnified party") shall, promptly
after receipt by such party of notice of the commencement of such action, notify
the person against whom such indemnity may be sought (for purposes of this
paragraph (d), the "indemnifying party"), but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 6. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, upon notice to the
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party; provided, however, that 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 one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
-26-
indemnifying party shall not have the right to direct the defense of such action
on behalf of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense of any
such action and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 6 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated in writing by the Representatives in the case of paragraph (a) or (b)
of this Section 6, or designated in writing by the Company or by the majority in
interest of the Selling Shareholders, as the case may be, in the case of
paragraph (c) of this Section 6, in each case representing the respective
indemnified parties under such paragraphs who are parties to such action or
actions), or (ii) the indemnifying party does not promptly retain counsel
satisfactory to the indemnified party, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. All fees and expenses reimbursed pursuant to this
paragraph (d) shall be reimbursed as they are incurred. After such notice from
the indemnifying party to such indemnified party, the indemnifying party will
not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the consent of the indemnifying
party.
(e) In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 6 is unavailable or insufficient, for any
reason, to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof), each indemnifying party,
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other from the Offering or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Selling Shareholders on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the Offering (before deducting expenses) received by the Company and the
Selling Shareholders bear to the total underwriting discounts and commissions
received by the
-27-
Underwriters. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Shareholders or the
Underwriters, the parties' relative intents, knowledge, access to information
and opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company, the
Selling Shareholders and the Underwriters agree that it would not be equitable
if the amount of such contribution were determined by pro rata or per capita
-------- ----------
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to above in this paragraph.
Notwithstanding any other provision of this paragraph (e), no Underwriter shall
be obligated to make contributions hereunder that in the aggregate exceed the
total public offering price of the Shares purchased by such Underwriter under
this Agreement, less the aggregate amount of any damages that such Underwriter
has otherwise been required to pay in respect of the same or any substantially
similar claim, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the provisions
of the Deutsche Xxxxxx Xxxxxxxx Inc. Master Agreement Among Underwriters. For
purposes of this paragraph (e), each person, if any, who controls an Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company or any
Selling Shareholder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company.
SECTION 7. CONDITIONS PRECEDENT.
The obligations of the several Underwriters to purchase and pay for the
Shares shall be subject, in the Representatives' sole discretion, to the
accuracy of the representations and warranties of the Company and the Selling
Shareholders contained herein as of the date hereof and as of each Closing Date,
as if made on and as of each Closing Date, to the accuracy of the statements of
the Company's officers and the Statements of the Selling Shareholders made
pursuant to the provisions hereof, to the performance by the Company and the
Selling Shareholders of their respective covenants and agreements hereunder and
to the following additional conditions:
(a) (i) If the Original Registration Statement or any amendment thereto
filed prior to the First Closing Date has not been declared effective as of the
time of execution hereof, then the Original Registration Statement or such
amendment shall have been declared effective not
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later than 6:00 P.M. New York City time on the date of determination of the
public offering price, if such determination occurred at or prior to 4:30 P.M.
New York City time on such date, or 12:00 Noon New York City time on the
business day following the day on which the public offering price was
determined, if such determination occurred after 4:30 P.M. New York City time on
such date, and (ii) if the Company has elected to rely upon Rule 462(b), the
Rule 462(b) Registration Statement shall have been declared effective not later
than the time confirmations are sent or given as specified by Rule 462(b)(2), or
such later time and date as shall have been consented to by the Representatives;
if required, the Prospectus or any Term Sheet that constitutes a part thereof
and any amendment or supplement thereto shall have been filed with the
Commission in the manner and within the time period required by Rules 434 and
424(b) under the Securities Act; no stop order suspending the effectiveness of
the Registration Statement or any amendment thereto shall have been issued, and
no proceedings for that purpose shall have been instituted or threatened or, to
the knowledge of the Company or the Representatives, shall be contemplated by
the Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representatives shall have received a legal opinion from Xxx
Xxxxxxxxxx Xxxxxx Law Group, P.L.L.C., counsel for the Company, dated the
Closing Date, with respect to the matters set forth in Exhibit A hereto.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials, and as to matters involving the
application of laws of any jurisdiction other than the State of Washington or
the United States, on the opinion of other counsel reasonably satisfactory to
counsel for the Underwriters.
References to the Registration Statement and the Prospectus in the opinion
required by this paragraph (b) shall include any amendment or supplement thereto
at the date of such opinion. The opinions of issuer's counsel described herein
shall be rendered to the Underwriters at the request of the Company and shall so
state therein.
(c) The Representatives shall have received a legal opinion from Xxx
Xxxxxxxxxx Xxxxxx Law Group P.L.L.C., counsel for the Selling Shareholders,
dated the Closing Date, with respect to the matters set forth in Exhibit B
hereto.
In rendering such opinion, such counsel may rely, as to matters of fact, to
the extent such counsel deems proper, on certificates of the Selling
Shareholders, and as to matters involving the application of laws of any
jurisdiction other than the State of Washington or the United States, on the
opinion of other counsel reasonably satisfactory to counsel for the
Underwriters.
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(d) The Representatives shall have received a legal opinion from Xxxxx
Xxxxx LLP, counsel for the Underwriters, dated the Closing Date, covering the
issuance and sale of the Shares, the Registration Statement and the Prospectus,
and such other related matters as the Representatives may reasonably require,
and the Company shall have furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(e) The Representatives shall have received from Price Waterhouse LLP a
letter or letters dated, respectively, the date hereof and the Closing Date, in
form and substance satisfactory to the Representatives, to the effect that:
(i) they are independent accountants with respect to the Company and
its consolidated subsidiaries within the meaning of the Securities Act and
the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial statements
and schedules and pro forma financial statements of the Company and the
audited financial statements of SofTeach examined by them, each of which is
included in the Registration Statement and the Prospectus, comply in form
in all material respects with the applicable accounting requirements of the
Securities Act and the related published rules and regulations;
(iii) on the basis of their limited review in accordance with
standards established by the American Institute of Certified Public
Accountants of any interim unaudited consolidated condensed financial
statements of the Company and its consolidated subsidiaries as indicated in
their report included in the Registration Statement and the Prospectus, a
reading of the unaudited amounts for total revenue, consulting revenue,
training revenue, software revenue, cost of sales: consulting and training,
cost of sales: software, income from operations, selling, general and
administrative expense [other to come] and total and per share amounts of
net income for each of the years ended December 31, 1993 and 1994 and each
of the quarters ended March 31, 1996 and 1997 and of the unaudited
consolidated financial statements of the Company and its consolidated
subsidiaries for the periods from which such amounts are derived, carrying
out certain specified procedures (which do not constitute an examination
made in accordance with generally accepted auditing standards) that would
not necessarily reveal matters of significance with respect to the comments
set forth in this paragraph (iii), a reading of the minute books of the
shareholders, the board of directors and any committees thereof of the
Company and each of its consolidated subsidiaries, and inquiries of certain
officials of the Company and its consolidated subsidiaries who have
responsibility for financial and accounting matters, nothing came to their
attention that caused them to believe that:
-30-
(x) the unaudited consolidated condensed financial statements of
the Company and its consolidated subsidiaries included in the
Registration Statement and the Prospectus do not comply as to form in
all material respects with the applicable accounting requirements of
the Securities Act and the related published rules and regulations
thereunder or are not in conformity with GAAP applied on a basis
substantially consistent with that of the audited consolidated
financial statements included in the Registration Statement and the
Prospectus;
(y) the unaudited amounts for total revenue, consulting revenue,
training revenue, software revenue, cost of sales: consulting and
training, cost of sales software, income from operations, selling,
general and administrative expense [other to come] and total and per
share amounts of net income included in the Registration Statement and
the Prospectus do not agree with the amounts set forth in any
unaudited consolidated financial statements for those same periods or
are not in conformity with GAAP accounting principles applied on a
basis substantially consistent with that of the corresponding amounts
in the audited consolidated financial statements included in the
Registration Statement and the Prospectus; and
(z) at a specific date not more than five business days prior to
the date of such letter, there were any changes in the capital stock
or long-term debt of the Company and its consolidated subsidiaries or
any decreases in net current assets or Shareholders' equity of the
Company and its consolidated subsidiaries, in each case compared with
amounts shown on the March 31, 1997 consolidated balance sheet
included in the Registration Statement and the Prospectus, or for the
period from April 1, 1997 to such specified date there were any
decreases, as compared with [if no appropriate comparative period
exists, dollar amounts for each item], in total revenue, consulting
revenue, training revenue, software revenue, cost of sales: consulting
and training, cost of sales: software, income from operations,
selling, general and administrative expense [other to come] or total
or per share amounts of net income of the Company and its consolidated
subsidiaries, except in all instances for changes, decreases or
increases set forth in such letter.
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting records
of the Company and its consolidated subsidiaries and are included in the
Registration Statement and the Prospectus under the captions "Dilution,"
"Capitalization," "Management's Discussion and Analysis of Results of
Operations," "Business," "Management" [other headings to come] and in
Exhibit 11 to the Registration Statement, and have compared such amounts,
percentages and financial information with such records of the Company and
its consolidated
-31-
subsidiaries and with information derived from such records and have found
them to be in agreement, excluding any questions of legal interpretation;
and
(v) on the basis of a reading of the unaudited pro forma consolidated
condensed financial statements included in the Registration Statement and
the Prospectus, carrying out certain specified procedures that would not
necessarily reveal matters of significance with respect to the comments set
forth in this paragraph e, inquiries of certain officials of the Company
and its consolidated subsidiaries and officials of each of Oxford,
SofTeach, SQLSoft Corporation and Noetix, Inc. who have responsibility for
financial and accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in the
unaudited pro forma consolidated condensed financial statements, nothing
came to their attention that caused them to believe that the unaudited pro
forma consolidated condensed financial statements do not comply in form in
all material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
statements.
In the event that the letter referred to above set forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (I) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (II) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement, as amended as of the date
hereof. References to the Registration Statement and the Prospectus in this
paragraph (f) with respect to letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(f) The Company shall have furnished or caused to be furnished to the
Underwriters at the Closing a certificate of its Chairman of the Board and
President and its Chief Financial Officer satisfactory to the Underwriters to
the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Closing Date;
the Registration Statement, as amended as of the Closing Date, does not
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading, and
the Prospectus, as amended or supplemented as of the Closing Date, does not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and
the Company has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
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(ii) no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and no proceedings for
that purpose have been instituted or threatened or, to the best of the
Company's knowledge, are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the Company
nor any of its subsidiaries has sustained any material loss or interference
with their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding, and there has
not been any materially adverse change (including, without limitation, a
change in management or control), or development involving a prospective
materially adverse change, in the condition (financial or otherwise),
management, earnings, properties, business affairs or business prospects,
Shareholders' equity, net worth or results of operations of the Company or
any of its subsidiaries, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or supplement
thereto).
(g) The Underwriters shall have received on each Closing Date a
certificate satisfactory to the Underwriters dated such Closing Date and signed
by the Selling Shareholders (or by their attorney-in-fact on their behalf), to
the effect that each Selling Shareholder has carefully examined the Registration
Statement, the Prospectus and this Agreement and that the representations and
warranties of the Selling Shareholders in this Agreement are true and correct on
and as of such Closing Date with the same effect as if made on such Closing Date
and that each Selling Shareholder has performed all covenants and agreements and
satisfied all conditions contained in this Agreement that are required to be
performed or satisfied by it at or prior to such Closing Date.
(h) The Representatives shall have received from each affiliate of the
Company, each person who is a director or officer of the Company and each
shareholder of the Company that owns more than 10,000 shares of Common Stock a
lock-up agreement dated on or before the date of this Agreement in the form
previously provided to the Company by the Representatives.
(i) Prior to the commencement of the Offering, the Company shall have made
an application for quotation of the Shares on the Nasdaq National Market and the
Shares shall have been included for trading on the Nasdaq National Market,
subject to official notice of issuance.
(j) On or before the Closing Date, the Representatives and counsel for the
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Underwriters shall have received such further certificates, documents or other
information as they may have reasonably requested from the Company and the
Selling Shareholders.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
satisfactory in all material respects to the Representatives and counsel for the
Underwriters. The Company and the Selling Shareholders shall furnish to the
Representatives such conformed copies of such opinions, certificates, letters
and documents in such quantities as the Representatives and counsel for the
Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase and pay
for any Shares shall be subject, in their discretion, to each of the foregoing
conditions to purchase the Shares, except that all references therein to the
Shares and the Closing Date shall be deemed to refer to the Firm Shares or the
Option Shares and the First Closing Date or the related Option Closing Date,
each as applicable.
SECTION 8. DEFAULT OF UNDERWRITERS.
If, at the First Closing, any one or more of the Underwriters shall fail or
refuse to purchase Shares that it has or they have agreed to purchase hereunder
on such date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is ten
percent or less of the aggregate number of the Shares to be purchased on such
date, the other Underwriters may make arrangements satisfactory to the
Representatives for the purchase of such Shares by other persons (who may
include one or more of the non-defaulting Underwriters, including the
Representatives), but if no such arrangements are made by the First Closing
Date, the other Underwriters shall be obligated severally in the proportions
that the number of Firm Shares set forth opposite their respective names in
Schedule 2 hereto bears to the aggregate number of Firm Shares set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as the Representatives may specify, to purchase the Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date. If, at the First Closing, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than ten
per cent of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Firm Shares are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter or the Company. In any such case either the
Representatives or the Company shall have the right to postpone the applicable
Closing, but in no event for longer than seven days, in order that the necessary
arrangements may be made and the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents may be effected. If,
at any Option Closing, any Underwriter or Underwriters shall fail or refuse to
purchase Option Shares, the non-defaulting Underwriters shall have the option to
(a)
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terminate their obligation hereunder to purchase Option Shares or (b)
purchase not less than the number of Option Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 8. Any action taken under
this Section 8 shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
SECTION 9. TERMINATION.
This Agreement shall be subject to termination in the sole discretion of
the Representatives by notice to the Company given prior to any Closing Date in
the event that the Company shall have failed, refused or been unable to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to any Closing Date,
(a) trading in securities generally on the New York Stock Exchange or the Nasdaq
National Market shall have been suspended or materially limited or minimum or
maximum prices shall have been established by or on, as the case may be, the
Commission or the New York Stock Exchange or the Nasdaq National Market; (b)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market; (c) a general moratorium on
commercial banking activities shall have been declared by Federal, New York
State or Washington State authorities; (d) there shall have occurred (i) an
outbreak or escalation of hostilities between the United States and any foreign
power, (ii) an outbreak or escalation of any other insurrection or armed
conflict involving the United States, or (iii) any other calamity or crisis or
materially adverse change in general economic, political or financial conditions
having an effect on the U.S. financial markets that, in the sole judgment of the
Representatives, makes it impractical or inadvisable to proceed with the public
offering or the delivery of the Shares as contemplated by the Registration
Statement, as amended as of the date hereof; or (e) the Company or any of its
subsidiaries shall have, in the sole judgment of the Representatives, sustained
any material loss or interference with their respective businesses or properties
from fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental proceeding,
or there shall have been any materially adverse change (including, without
limitation, a change in senior management or control), or constitute a
development involving a prospective materially adverse change, in the condition
(financial or otherwise), management, earnings, properties, business affairs or
business prospects, Shareholders' equity, net worth or results of operations of
the Company or any of its subsidiaries, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or supplement
thereto), and such event singly or together with any other event makes it, in
the sole judgment of the Representatives, impracticable to market the Shares on
the terms and in the manner contemplated in the Prospectus. Termination of this
Agreement pursuant to this Section 9 shall be without liability of any party to
any other party except for the liability of the Company and the Selling
Shareholders in relation to expenses as provided in Sections 4 and 10 hereof,
the indemnity provided in Section 6 hereof and any liability arising before or
in relation to such termination.
-35-
SECTION 10. REIMBURSEMENT OF EXPENSES.
If the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section 7 hereof
is not satisfied or because of any termination pursuant to Section 9 hereof
(other than by reason of a default by any of the Underwriters), the Company
shall reimburse the Underwriters, severally upon demand, for all out-of-pocket
expenses (including the reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Shares.
SECTION 11. INFORMATION SUPPLIED BY UNDERWRITERS.
The statements set forth in the last paragraphs on the front cover page and
on the inside front cover page and the statements set forth under the heading
"Underwriting" in any Preliminary Prospectus or the Prospectus (to the extent
such statements relate to the Underwriters) constitute the only information
furnished by any Underwriter through the Representatives to the Company for the
purposes of Section 5(a)(ii) and Section 6 hereof.
SECTION 12. NOTICES.
In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by the Representatives. Any notice or notification in any form to be
given under this Agreement may be delivered in person or sent by telex,
facsimile or telephone (subject in the case of a communication by telephone to
confirmation by telex or facsimile) addressed to:
In the case of the Company:
--------------------------
ARIS Corporation
0000 Xxxx Xxxx Xxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
In the case of the Underwriters:
-------------------------------
Deutsche Xxxxxx Xxxxxxxx Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile:
Telex:
-36-
Attention:
In the case of the Selling Shareholders, any such notice shall be addressed
to the Selling Shareholders at the addresses set forth in Schedule 1 hereto.
Any such notice shall take effect, in the case of delivery, at the time of
delivery and, in the case of telex or facsimile, at the time of dispatch.
SECTION 13. MISCELLANEOUS.
(a) Time shall be of the essence of this Agreement.
(b) The headings herein are inserted for convenience of reference only
and are not intended to be part of, or to affect, the meaning or interpretation
of this Agreement.
(c) For purposes of this Agreement, (i) "business day" means any day on
which the New York Stock Exchange and the Nasdaq National Market are open for
trading, and (ii) "subsidiary" has the meaning set forth in Rule 405 under the
Securities Act.
(d) This Agreement may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same Agreement and any party
may enter into this Agreement by executing a counterpart.
(e) This Agreement shall inure to the benefit of and shall be binding
upon the several Underwriters, the Company, the Selling Shareholders and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person, except that (i)
the indemnities of the Company and the Selling Shareholders contained in Section
6 hereof shall also be for the benefit of any person or persons who control any
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act and (ii) the indemnities of the Underwriters contained in
Section 6 hereof shall also be for the benefit of the directors of the Company,
the officers of the Company who have signed the Registration Statement, each
Selling Shareholder and any person or persons who control the Company or such
Selling Shareholder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act. No purchaser of Shares from any Underwriter
shall be deemed a successor because of such purchase.
(f) The respective representations, warranties, agreements, covenants,
indemnities and other statements of the Company, its officers, the Selling
Shareholders and the several
-37-
Underwriters set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, any Selling Shareholder or any Underwriter or any
controlling person referred to in Section 6 hereof and (ii) delivery of and
payment for the Shares. The respective agreements, covenants, indemnities and
other statements set forth in Sections 4, 6 and 10 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
SECTION 14. SEVERABILITY.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 15. GOVERNING LAW.
The validity and interpretation of this Agreement, and the terms and
conditions set forth herein, shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to any provisions
relating to conflicts of laws.
If the foregoing is in accordance with your understanding, please sign and
return to us [ten] counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, each of the
Selling Shareholders and the Company. It is understood that your acceptance of
this letter on behalf of each of the Underwriters is pursuant to the authority
set forth in the Deutsche Xxxxxx Xxxxxxxx Inc. Master Agreement Among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
ARIS CORPORATION
By_______________________________
[SELLING SHAREHOLDER]
-38-
By_______________________________
Attorney-in-fact
[SELLING SHAREHOLDER]
By_______________________________
Attorney-in-fact
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
DEUTSCHE XXXXXX XXXXXXXX INC.
XXXXXXXXXX SECURITIES
XXXXX XXXXXXX INC.
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule 2 hereto.
By: DEUTSCHE XXXXXX XXXXXXXX INC.
By___________________________
Name:
Title:
By: XXXXXXXXXX SECURITIES
By___________________________
Name:
Title:
By: XXXXX XXXXXXX INC.
By___________________________
-39-
Name:
Title:
-40-
SCHEDULE 1
The Selling Shareholders
Number of Firm
Selling Shareholder Shares to be Sold
------------------- -----------------
Xxx X.X. Xxxxxxxxxx 13,300
[address]
Xxxx Xxxxxxx-Xxxxx 7,500
[address]
--------------------
Total..................................... 20,800
-41-
SCHEDULE 2
The Underwriters
Underwriter Underwriting Commitment
----------- -----------------------
[name] [number of Xxxx Xxxxxx]
_________________________________
Total................................... [aggregate number of Firm Shares]
-42-
EXHIBIT A
(i) The Registration Statement is effective under the Securities
Act; any required filing of the Prospectus, or any Term Sheet that
constitutes a part thereof, pursuant to Rules 434 and 424(b) has been made
in the manner and within the time period required by Rules 434 and 424(b);
and, to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto has
been issued and no proceedings for that purpose are pending or threatened
by the Commission;
(ii) the Original Registration Statement and each amendment thereto,
any Rule 462(b) Registration Statement and the Prospectus (in each case,
other than the financial statements and other financial information
contained therein, as to which such counsel need express no opinion) comply
as to form in all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the Commission thereunder;
(iii) such counsel has no reason to believe that (in each case, other
than the financial statements and other financial information contained
therein, as to which such counsel need express no opinion) (x) the
Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading or (y) the Prospectus, as of its date or the date of such
opinion, included or includes any untrue statement of a material fact or
omitted or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(iv) if the Company elects to rely on Rule 434 under the Securities
Act, the Prospectus is not "materially different", as such term is used in
Rule 434, from the prospectus included in the Registration Statement at the
time of its effectiveness or an effective post-effective amendment thereto
(including such information that is permitted to be omitted pursuant to
Rule 430A under the Securities Act);
(v) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the issued shares of
capital stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable, have been issued in compliance with
all applicable federal and state securities laws and were not issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities; the Shares have been duly authorized
by all necessary corporate action of the Company and, when issued and
delivered to and paid for by the Underwriters pursuant to the Underwriting
Agreement, will be validly issued, fully paid and nonassessable; no holders
of outstanding shares of capital stock of the Company are entitled as such
to any preemptive or other rights to subscribe for any of
the Shares; and no holder of securities of the Company has any right which
has not been fully exercised or waived to require the Company to register
the offer or sale of any securities owned by such holder under the
Securities Act in the Offering contemplated by the Underwriting Agreement;
(vi) all of the Shares have been duly authorized and accepted for
quotation and trading on the Nasdaq National Market, subject to official
notice of issuance;
(vii) the Company and each of its subsidiaries have been duly
organized and are validly existing as corporations in good standing under
the laws of their respective jurisdictions of incorporation and are duly
qualified to transact business as foreign corporations and are in good
standing under the laws of all other jurisdictions where the ownership,
leasing or operation of their respective properties or assets or the
conduct of their respective businesses requires such qualification, except
where the failure to be so qualified does not amount to a material
liability or disability to the Company and its subsidiaries, taken as a
whole; the Company and each of its subsidiaries have full power and
authority to own, lease and operate their respective properties and assets
and conduct their respective businesses as described in the Registration
Statement and the Prospectus, and the Company has corporate power to enter
into the Underwriting Agreement and to carry out all the terms and
provisions hereof to be carried out by it; all of the issued and
outstanding shares of capital stock of each of the Company's subsidiaries
have been duly authorized and validly issued, are fully paid and
nonassessable and are owned beneficially by the Company free and clear of
any perfected security interests or, to the best knowledge of such counsel,
any other security interests, liens, encumbrances, equities or claims;
(viii) the statements set forth under the heading "Description of
Capital Stock" in the Prospectus, insofar as such statements purport to
summarize certain provisions of the capital stock of the Company, provide a
fair summary of such provisions; and the statements set forth under the
headings "Shares Eligible for Future Sale" and "Legal Proceedings" in the
Prospectus, insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, have been reviewed
by such counsel and fairly present the information called for with respect
to such legal matters, documents and proceedings in all material respects
as required by the Securities Act and the rules and regulations thereunder;
(ix) the execution and delivery of the Underwriting Agreement have
been duly authorized by all necessary corporate action of the Company and
the Underwriting Agreement has been duly executed and delivered by the
Company;
(x) the issuance, offering and sale of the Shares to the
Underwriters by the Company pursuant to the Underwriting Agreement, the
compliance by the Company with the other provisions of the Underwriting
Agreement and the consummation of the
other transactions herein contemplated do not (x) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained or made (and
specified in such opinion) or such as may be required by the securities or
Blue Sky laws of the various states of the United States of America and
other U.S. jurisdictions in connection with the offer and sale of the
Shares by the Underwriters, or (y) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, lease or other agreement or
instrument, known to such counsel, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or any of their respective properties are bound, or the charter documents
or by-laws of the Company or any of its subsidiaries, or any statute or any
judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator known to such counsel and
applicable to the Company or its subsidiaries;
(xi) the Company is not an "investment company" and, after giving
effect to the Offering and the application of the proceeds therefrom, will
not be an "investment company", as such term is defined in the 1940 Act;
and
(xii) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which the property of the Company or any of
its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not described therein or
any statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described
therein or filed as required.
EXHIBIT B
(i) The Underwriting Agreement has been duly authorized, executed
and delivered by or on behalf of each of the Selling Shareholders;
(ii) the execution and delivery by each Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, the
Underwriting Agreement, the Custody Agreement and the Power of Attorney of
such Selling Shareholder will not contravene any provision of applicable
law, or the certificate or articles of incorporation or bylaws of such
Selling Shareholder (if such Selling Shareholder is a corporation), or the
partnership agreement of such Selling Shareholder (if such Selling
Shareholder is a partnership) or any agreement or other instrument binding
upon such Selling Shareholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such Selling
Shareholder, and no consent, approval, authorization or order of or
qualification with any governmental body or agency is required for the
performance by such Selling Shareholder of its obligations under the
Underwriting Agreement, the Custody Agreement or the Power of Attorney of
such Selling Shareholder, except such as may be required by the securities
or Blue Sky laws of the various states in connection with offer and sale of
the Shares;
(iii) each of the Selling Shareholders has the legal right and power,
and all authorization and approval required by law or contract, to enter
into and perform its obligations under the Underwriting Agreement, the
Custody Agreement and the Power of Attorney of such Selling Shareholder and
to sell, transfer and deliver the Shares to be sold by such Selling
Shareholder; and each of the Selling Shareholders has good and marketable
title to the Shares to be sold by such Selling Shareholder, and such sale,
transfer and delivery is not subject to any right of first refusal or other
contractual restriction and each of the certificates evidencing such Shares
is in proper legal form;
(iv) each of the Custody Agreement and the Power of Attorney of each
Selling Shareholder has been duly authorized, executed and delivered by
such Selling Shareholder and is a valid, binding and enforceable agreement
of such Selling Shareholder; and
(v) delivery of the certificates for the Shares to be sold by each
Selling Shareholder pursuant to the Underwriting Agreement will pass valid
and marketable title to such Shares free and clear of any security
interests, claims, liens, equities, encumbrances or other defects.
