EXHIBIT 1.1
DRAFT
QUALIX GROUP, INC.
2,900,000
COMMON STOCK
UNDERWRITING AGREEMENT
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___, 1997
XXXXXXXXX & XXXXX LLC
XXXXX XXXXXX INC.
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Qualix Group, Inc., a Delaware corporation (herein called the
Company), proposes to issue and sell 2,000,000 shares of its authorized but
unissued Common Stock, $0.001 par value (herein called the "Common Stock"),
and the stockholders of the Company named in Schedule II hereto (herein
collectively called the "Selling Security holders") propose to sell an
aggregate of 900,000 shares of Common Stock of the Company herein called the
"Underwritten Stock"). The Company proposes to grant to the Underwriters (as
hereinafter defined) an option to purchase up to 435,000 additional shares of
Common Stock (herein called the "Option Stock" and with the Underwritten Stock
herein collectively called the "Stock"). The Common Stock is more fully
described in the Registration Statement and the Prospectus hereinafter
mentioned.
The Company and the Selling Security holders severally hereby confirm
the agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the "Underwriters", which term shall also include any
underwriter purchasing Stock pursuant to Section 4(b) hereof). You represent
and warrant that you have been authorized by each of the other Underwriters to
enter into this Agreement on its behalf and to act for it in the manner herein
provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities and
Exchange Commission (herein called the "Commission") a registration statement on
Form S-1 (No. 333-_____), including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (herein called the
"Securities Act") of the Stock. Copies of such registration statement and of
each amendment thereto, if any, including the related preliminary prospectus
(meeting the requirements of Rule 430A of the rules and regulations of the
Commission) heretofore filed by the Company with the Commission have been
delivered to you.
The term Registration Statement as used in this agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock
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/1/ Plus an option to purchase from the Company/Selling Security holders up to
435,000 additional shares to cover over-allotments.
(herein called a Rule 462(b) registration statement), and, in the event of any
amendment thereto after the effective date of such registration statement
(herein called the "Effective Date"), shall also mean (from and after the
effectiveness of such amendment) such registration statement as so amended
(including any Rule 462(b) registration statement). The term Prospectus as
used in this Agreement shall mean the prospectus relating to the Stock first
filed with the Commission pursuant to Rule 424(b) and Rule 430A (or if no such
filing is required, as included in the Registration Statement) and, in the
event of any supplement or amendment to such prospectus after the Effective
Date, shall also mean (from and after the filing with the Commission of such
supplement or the effectiveness of such amendment) such prospectus as so
supplemented or amended. The term Preliminary Prospectus as used in this
Agreement shall mean each preliminary prospectus included in such registration
statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company hereby represents and warrants as follows:
(i) Each of the Company and its subsidiary has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has full corporate power
and authority to own or lease its properties and conduct its business as
described in the Registration Statement and the Prospectus and as being
conducted, and is duly qualified as a foreign corporation and in good standing
in all jurisdictions in which the character of the property owned or leased or
the nature of the business transacted by it makes qualification necessary
(except where the failure to be so qualified would not have a material adverse
effect on the business, properties, financial condition or results of
operations of the Company and its subsidiary, taken as a whole).
(ii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been any
materially adverse change in the business, properties, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business,
other than as set forth in the Registration Statement and the Prospectus, and
since such dates, except in the ordinary course of business, neither the
Company nor its subsidiary has not entered into any material transaction not
referred to in the Registration Statement and the Prospectus.
(iii) The Commission has not issued an order preventing or
suspending the use of any Preliminary Prospectus relating to the proposed
offering of stock nor instituted proceedings for that purpose. The
Registration Statement and the Prospectus comply, and on the Closing Date (as
hereinafter defined) and any later date on which Option Stock is to be
purchased, the Prospectus will comply, in all material respects, with the
provisions of the Securities Act and the Securities Exchange Act of 1934, as
amended (herein called the "Exchange Act") and the rules and regulations of
the Commission thereunder; on the Effective Date, the Registration Statement
did not contain any untrue statement of a material fact and did not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and, on the Effective Date the
Prospectus did not and, on the Closing Date and any later date on which Option
Stock is to be purchased, will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
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warranties in this subparagraph (iii) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made in reliance
upon and in conformity with information herein or otherwise furnished in
writing to the Company by or on behalf of the Underwriters for use in the
Registration Statement or the Prospectus. There is no contract or document
required to be described in the Registration Statement or the Prospectus, or
required to be filed as an exhibit to the Registration Statement, which is not
described or filed as required.
2.
(iv) The outstanding shares of Common Stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable; the Stock is duly and validly authorized, is (or, in the case
of shares of the Stock to be sold by the Company, will be, when issued and
sold to the Underwriters as provided herein) duly and validly issued, fully
paid and nonassessable and conforms to the description thereof in the
Prospectus; and no preemptive rights of shareholders exist with respect to any
of the Stock or the issue and sale thereof. No further approval or authority
of the stockholders or the Board of Directors of the Company will be required
for the transfer and sale of the Stock to be sold by the Selling Security
holders or the issuance and sale of the Stock as contemplated herein. Except
as described in the Registration Statement and Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any share of capital stock of the
Company or any security convertible into or exchangeable or exercisable for
capital stock of the Company.
(v) The Stock conforms with the statements concerning it
in the Registration Statement and Prospectus.
(vi) Except as described in the Registration Statement and
Prospectus, the Company is not under any obligation, contractual or otherwise,
to register under the Securities Act any of its securities in connec tion with
this offering or in the future.
(vii) This Agreement has been duly authorized and validly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that rights to indemnification hereunder may
be limited by Federal or State securities laws, and subject to laws of general
application relating to bankruptcy, insolvency and relief of debtors and rules
of law governing specific performance, injunctive relief or other equitable
remedies.
(viii) The Company and its subsidiary is not in violation of
any law, ordinance, governmental rule or regulation or court decree to which
it may be subject which violation would have a material adverse effect on the
business or condition of the Company. The Company and its subsidiary is not in
default under any agreement, lease, contract, indenture or other instrument or
obligation to which it is a party or by which it or any of its properties is
bound and which default would have a material adverse effect on the business
or financial condition of the Company. The consummation of the transactions
herein contemplated and the fulfillment of the terms hereof will not conflict
with or result in a material breach of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage, deed of trust or
other agreement or instrument to which the Company is a party, or any order,
rule or regulation applicable to the Company of any court or of any regulatory
body or administrative agency or other governmental body having jurisdiction,
or violate or result in any breach of any of the terms or provisions of the
Charter or bylaws of the Company.
(ix) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative
or other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated (except such additional steps as may be
required by the National Association of Securities Dealers, Inc. (the "NASD")
or may be necessary under State securities or blue sky laws in connection with
the purchase and distribution of the Stock by the Underwriters) has been
obtained or made and is in full force and effect.
(x) The consolidated financial statements of the Company,
together with related notes and schedules as set forth in the Registration
Statement, present fairly the financial position and the results of operations
of the Company, at the indicated dates and for the indicated periods. Such
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied throughout the periods involved,
and all adjustments necessary for a fair presentation of results for such
periods have been made. The summary financial and statistical data included in
the Registration Statement present fairly the information shown therein and
have been compiled on a basis consistent with the financial statements
presented therein. The Company does not have any material contingent
obligations which are not disclosed in the financial statements or elsewhere
in the Registration Statement and Prospectus.
3.
(xi) Deloitte & Touche LLP who have certified certain of
the financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Securities
Act and the rules and regulations of the Commission.
(xii) The Company is not an "investment company" or an
entity "controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended.
(xiii) The Company is 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 it is engaged; the
Company has not been refused any insurance coverage sought or applied for; and
the Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or operations of
the Company except as described in or contemplated by the Prospectus.
(xiv) The Company (I) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (collectively,
"Environmental Laws"), (ii) has received all permits, licenses or other
approvals required under applicable Environmental Laws to conduct business and
(iii) is in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect on the
Company.
(xv) The Company has good and marketable title to all of
the properties and assets reflected in the financial statements (or as
described in the Registration Statement and Prospectus) hereinabove described,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind except
those reflected in such financial statements (or as described in the
Registration Statement and Prospectus) or which are not material in amount.
The Company occupies its leased properties under valid and binding leases
conforming to the description thereof set forth in the Registration Statement.
(xvi) The Company has all necessary consents,
authorizations, approvals, orders, certificates and permits of and from, and
has made all declarations and filings with, all federal, state, local and
other governmental authorities, all self-regulatory organizations and all
courts and other tribunals, to own, lease, license and use its properties and
assets and to conduct its business in the manner described in the Prospectus,
except to the extent that the failure to obtain or file would not have a
material adverse effect on the Company.
(xvii) Except as described in the Prospectus, the Company
owns or possesses or can acquire on reasonable terms all material licenses or
other rights to use all patents, copyrights, trademarks, service marks, trade
names, mask work rights, technology and know-how necessary to conduct its
business in the manner described in the Prospectus and the Company has not
received any notice of infringement or conflict with (and the Company does not
know of any infringement or conflict with) asserted rights of others with
respect to any patents, copyrights, trademarks, service marks, trade names,
mask work rights, technology or know-how which could result in any material
adverse effect upon the Company; and except as disclosed in the Prospectus,
the discoveries, inventions, products or processes of the Company referred to
in the Prospectus do not, to the best knowledge of the Company, infringe or
conflict with any right or patent of any third party, or any discovery,
invention, product or process which is the subject of a patent application
filed by any third party, known to the Company which could have a material
adverse effect on the Company.
(xviii) The Company has filed all Federal, State and foreign
income tax returns which have been required to be filed and have paid all
taxes indicated by said returns and all assessments received by them to the
extent that such taxes have become due or has received extensions thereon,
except for claims disputed in good faith.
4.
(xix) No offering, sale or other disposition of any Common
Stock of the Company will be made for a period of 180 days after the Effective
Date, directly or indirectly by the Company otherwise than here under or with
the prior written consent of Xxxxxxxxx & Xxxxx LLC, except that the Company
may issue and sell Common Stock pursuant to the stock option plans and stock
purchase plan described in the Registration Statement, but not exceeding the
number of shares reserved thereunder as of the date hereof.
(xx) The Company has obtained the agreement of each of its
directors and officers, and beneficial owners of more than ____% of the
outstanding shares of Common Stock, and beneficial owners of more than ___% of
the outstanding options to purchase Common Stock, not to offer to sell,
contract to sell or otherwise sell, dispose of, loan, pledge or grant any
rights with respect to any shares of Common Stock, any options or warrants to
purchase any shares of Common Stock or any securities convertible into or
exchangeable for shares of Common Stock (otherwise than as a bona fide gift or
as a distribution to limited partners or shareholders, provided the donee or
distributees thereof agree to be bound by the Lock-Up Agreement) or with the
prior written consent of Xxxxxxxxx & Xxxxx, LLC, until 180 days after the
effective date of the Registration Statement. The Company has provided to
counsel for the Underwriters true, accurate and complete copies of all of the
agreements pursuant to which its officers, directors and security holders have
agreed not to offer, sell, contract to sell, grant any option to purchase, or
otherwise dispose of, directly or indirectly, their shares of the Company's
Common Stock, or securities convertible into or exchangeable for Common Stock
or warrants or other rights to purchase Common Stock (the "Lock-Up
Agreements") presently in effect. The Company hereby represents and warrants
that it will not release any of its officers, directors or security holders
from any Lock-Up Agreements currently existing or hereafter effected without
the prior written consent of Xxxxxxxxx & Xxxxx LLC.
(xix) The Company (I) has notified each shareholder who is a
party to the ____________________________________________________________
that pursuant to such Agreement the shareholder has agreed not to sell or
otherwise transfer or dispose of any Common Stock for a period of 180 days
after the effective date of the initial public offering, (ii) has notified
each shareholder who is a party to an __________________________________ that
pursuant to such agreement the shareholder has agreed not to sell or otherwise
transfer or dispose of any Common Stock for a period of 180 days after the
effective date of the initial Public Offering, and (iii) has imposed a stop-
transfer instruction with the Company's transfer agent in order to enforce the
foregoing lock-up provisions.
(xxii) As of the date the Registration Statement becomes
effective, the Common Stock will be authorized for listing on the Nasdaq
National Market upon official notice of issuance. There is no action or
proceeding pending or, to the knowledge of the Company, threatened against the
Company before any court or administrative agency which might result in any
material adverse change in the business or condition of the Company, except as
set forth in the Registration Statement and Prospectus.
3. REPRESENTATIONS AND WARRANTIES OF SELLING SECURITY HOLDERS.
(a) Each of the Selling Security holders hereby, severally and
not jointly, represents and warrants as follows:
(i) Such Selling Securityholder has good title to all
the shares of Stock to be sold by such Selling Securityholder hereunder, free
and clear of all liens, encumbrances, equities, security interests and claims
whatsoever, with full right and authority to deliver the same hereunder,
subject, in the case of each Selling Securityholder, to the rights of
__________, as Custodian (herein called the "Custodian"), and that upon the
delivery of and payment for such shares of the Stock hereunder, the several
Underwriters will receive good title thereto, free and clear of all liens,
encumbrances, equities, security interests and claims whatsoever.
(ii) Certificates in negotiable form for the shares of
the Stock to be sold by such Selling Securityholder have been placed in
custody under a Custody Agreement for delivery under this Agreement with the
Custodian; such Selling Securityholder specifically agrees that the shares of
the Stock represented by the certificates so held in custody for such Selling
Securityholder are subject to the interests of the several Underwriters
5.
and the Company, that the arrangements made by such Selling Securityholder for
such custody, including the Power of Attorney provided for in such Custody
Agreement, are to that extent irrevocable, and that the obligations of such
Selling Securityholder shall not be terminated by any act of such Selling
Securityholder or by operation of law, whether by the death or incapacity of
such Selling Securityholder (or, in the case of a Selling Securityholder that
is not an individual, the dissolution or liquidation of such Selling
Securityholder) or the occurrence of any other event; if any such death,
incapacity, dissolution, liquidation or other such event should occur before
the delivery of such shares of the Stock hereunder, certificates for such
shares of the Stock shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such death, incapacity,
dissolution, liquidation or other event had not occurred, regardless of
whether the Custodian shall have received notice of such death, incapacity,
dissolution, liquidation or other event.
(iii) All authorizations, approvals, consents and orders
necessary for the execution and delivery by such Selling Securityholder of the
Power of Attorney and the Custody Agreement, the execution and delivery by or
on behalf of such Selling Securityholder of this Agreement and the sale and
delivery of the Selling Secur ityholder Shares under this Agreement (other
than, at the time of the execution hereof (if the Registration Statement has
not yet been declared effective by the Commission), the issuance of the order
of the Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state or other
securities or Blue Sky laws) have been obtained and are in full force and
effect; such Selling Securityholder, if other than a natural person, has been
duly organized and is validly existing and in good standing under the laws of
the jurisdiction of its organization as the type of entity that it purports to
be; and such Selling Securityholder has full right, power and authority to
enter into and perform its obligations under this Agreement and such Power of
Attorney and Custody Agreement, and to sell, assign, transfer and deliver the
Shares to be sold by such Selling Securityholder under this Agreement.
(iv) Such Selling Securityholder will not, for a period
of 180 days after the effective date of the Registration Statement, sell or
otherwise transfer or dispose of any Common Stock (or other securities) of the
Company held by such Selling Securityholder (other than those included in the
registration), otherwise than hereunder or with the prior written consent of
the Representatives. Such Selling Securityholder agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent against
the transfer of shares of Common Stock held by such Selling Securityholder
except in compliance with the foregoing restrictions.
(v) This Agreement has been duly authorized by such
Selling Securityholder that is not a natural person and has been duly executed
and delivered by or on behalf of such Selling Securityholder and is a valid
and binding agreement of such Selling Securityholder, enforceable in
accordance with its terms, except as the indemnification and contribution
provisions hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles; and the performance of this
Agreement and the consummation of the transactions herein contemplated will
not result in a breach of or default under any material bond, debenture, note
or other evidence of indebtedness, or any material contract, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which such Selling Securityholder is a party or by which such
Selling Securityholder or any Selling Securityholder Stock hereunder may be
bound or, result in any violation of any law, order, rule, regulation, writ,
injunction or decree of any court or governmental agency or body or, if such
Selling Securityholder is other than a natural person, result in any violation
of any provisions of the charter, bylaws or other organizational documents of
such Selling Securityholder.
(vi) Such Selling Securityholder has not taken and
will not take, directly or indirectly, any action designed to, or which might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Shares.
(vii) Such Selling Securityholder has not distributed
and will not distribute any prospectus or other offering material in
connection with the offering and sale of the Shares, other than internal
distribution of the Preliminary Prospectus and the Prospectus in compliance
with the requirements of the Securities Act.
6.
(viii) All information furnished by or on behalf of such
Selling Securityholder relating to such Selling Securityholder and the Selling
Securityholder Stock that is contained in the representations and warranties
of such Selling Securityholder in such Selling Securityholder's Power of
Attorney and all such information set forth in the Registration Statement and
the Prospectus is, and on the Closing Date will be, true, correct and
complete, and does not, and on the Closing Date, will not, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make such statements not misleading insofar as
it relates to such Selling Securityholder.
(ix) Such Selling Securityholder does not have, or has
waived prior to the date hereof, any preemptive right, co-sale right or right
of first refusal or other similar right to purchase any of the Shares that are
to be sold by the Company or any of the other Selling Security holders to the
Underwriters pursuant to this Agreement; and such Selling Securityholder does
not own any warrants, options or similar rights to acquire, and does not have
any right or arrangement to acquire, any capital stock, rights, warrants,
options or other securities from the Company, other than those described in
the Registration Statement and the Prospectus.
(x) Such Selling Securityholder has reviewed the
Registration Statement and Prospectus and, although such Selling
Securityholder has not independently verified the accuracy or completeness of
all the information contained therein, nothing has come to the attention of
such Selling Securityholder that would lead such Selling Securityholder to
believe that on the Effective Date, the Registration Statement contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and, on the Effective Date the Prospectus contained
and, on the Closing Date [and any later date on which Option Stock is to be
purchased], contains any untrue statement of a material fact or omitted or
omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
4. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell 2,000,000 shares of the Underwritten Stock to the several
Underwriters, each Selling Securityholder agrees to sell to the several
Underwriters the number of shares of the Underwritten Stock set forth in
Schedule II opposite the name of such Selling Securityholder, and each of the
Underwriters agrees to purchase from the Company and the Selling Security
holders the respective aggregate number of shares of Underwritten Stock set
forth opposite its name in Schedule I. The price at which such shares of
Underwritten Stock shall be sold by the Company and the Selling Security
holders and purchased by the several Underwriters shall be $___ per share. The
obligation of each Underwriter to the Company and each of the Selling Security
holders shall be to purchase from the Company and the Selling Security holders
that number of shares of the Underwritten Stock which represents the same
proportion of the total number of shares of the Underwritten Stock to be sold
by each of the Company and the Selling Security holders pursuant to this
Agreement as the number of shares of the Underwritten Stock set forth opposite
the name of such Underwriter in Schedule I hereto represents of the total
number of shares of the Underwritten Stock to be purchased by all Underwriters
pursuant to this Agreement, as adjusted by you in such manner as you deem
advisable to avoid fractional shares. In making this Agreement, each
Underwriter is contracting severally and not jointly; except as provided in
paragraphs (b) and (c) of this Section 4, the agreement of each Underwriter is
to purchase only the respective number of shares of the Underwritten Stock
specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall
fail or refuse (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 9 or 10 hereof)
to purchase and pay for the number of shares of the Stock agreed to be
purchased by such Underwriter or Underwriters, the Company or the Selling
Security holders shall immediately give notice thereof to you, and the non-
defaulting Underwriters shall have the right within 24 hours after the receipt
by you of such notice to purchase, or procure one or more other Underwriters
to purchase, in such proportions as may be agreed upon between you and such
purchasing Underwriter or Underwriters and upon the terms herein set forth,
all or any part of the shares of the Stock which such defaulting Underwriter
or Underwriters agreed to purchase. If the non-defaulting Underwriters fail so
to make such arrangements with respect to all such shares and portion, the
number of shares
7.
of the Stock which each non-defaulting Underwriter is otherwise obligated to
purchase under this Agreement shall be automatically increased on a pro rata
basis to absorb the remaining shares and portion which the defaulting
Underwriter or Underwriters agreed to purchase; provided, however, that the
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non-defaulting Underwriters shall not be obligated to purchase the shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase if
the aggregate number of such shares of the Stock exceeds 10% of the total
number of shares of the Stock which all Underwriters agreed to purchase
hereunder. If the total number of shares of the Stock which the defaulting
Underwriter or Underwriters agreed to purchase shall not be purchased or
absorbed in accordance with the two preceding sentences, the Company and the
Selling Security holders shall have the right, within 24 hours next succeeding
the 24-hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to you for purchase of such shares and
portion on the terms herein set forth. In any such case, either you or the
Company and the Selling Security holders shall have the right to postpone the
Closing Date determined as provided in Section 6 hereof for not more than
seven business days after the date originally fixed as the Closing Date
pursuant to said Section 6 in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made. If neither the non-defaulting Underwriters nor the Company and
the Selling Security holders shall make arrangements within the 24-hour
periods stated above for the purchase of all the shares of the Stock which the
defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the part of the Company or the Selling Security holders to any
non-defaulting Underwriter and without any liability on the part of any non-
defaulting Underwriter to the Company or the Selling Security holders. Nothing
in this paragraph (b), and no action taken hereunder, shall relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
(c) On the basis of the representations, warranties and
covenants herein contained, and subject to the terms and conditions herein set
forth, the Company grants an option to the several Underwriters to purchase,
severally and not jointly, up to 435,000 shares in the aggregate of the Option
Stock from the Company at the same price per share as the Underwriters shall
pay for the Underwritten Stock. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Stock by the Underwriters and
may be exercised in whole or in part at any time (but not more than once) on
or before the thirtieth day after the date of this Agreement upon written or
telegraphic notice by you to the Company setting forth the aggregate number of
shares of the Option Stock as to which the several Underwriters are exercising
the option. Delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made as provided in Section 6 hereof. The number of
shares of the Option Stock to be purchased by each Underwriter shall be the
same percentage of the total number of shares of the Option Stock to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Stock, as adjusted by you in such manner as you deem advisable to
avoid fractional shares.
5. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the
Underwriters of the Stock to be purchased by them shall be as set forth in the
Prospectus. The Underwriters may from time to time change the public offering
price after the closing of the initial public offering and increase or
decrease the concessions and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the
front cover page and under "Underwriting" in the Registration Statement, any
Preliminary Prospectus and the Prospectus relating to the Stock filed by the
Company (insofar as such information relates to the Underwriters) constitutes
the only information furnished by the Underwriters to the Company for
inclusion in the Registration Statement, any Preliminary Prospectus, and the
Prospectus, and you on behalf of the respective Underwriters represent and
warrant to the Company that the statements made therein are correct.
6. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the
Underwritten Stock and the Option Stock (if the option granted by Section 4(c)
hereof shall have been exercised not later than 7:00 A.M., San Francisco time,
8.
on the date two business days preceding the Closing Date), and payment
therefor, shall be made at the office of Gunderson, Dettmer, Stough,
Villeneuve, Franklin and Xxxxxxxxx, LLP, at 7:00 a.m., San Francisco time, on
the fourth /2/ business day after the date of this Agreement, or at such time
on such other day, not later than seven full business days after such fourth
business day, as shall be agreed upon in writing by the Company, the Selling
Security holders and you. The date and hour of such delivery and payment
(which may be postponed as provided in Section 4(b) hereof) are herein called
the Closing Date.
(b) If the option granted by Section 4(c) hereof shall be
exercised after 7:00 a.m., San Francisco time, on the date two business days
preceding the Closing Date, delivery of certificates for the shares of Option
Stock, and payment therefor, shall be made at the office of Gunderson,
Dettmer, Stough, Villeneuve, Franklin and Xxxxxxxxx, LLP, at 7:00 a.m., San
Francisco time, on the third business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be
made to the Company or its order, and payment for the Stock purchased from the
Selling Security holders shall be made to the Custodian, for the account of
the Selling Security holders, in each case by one or more certified or
official bank check or checks in same day funds. Such payment shall be made
upon delivery of certificates for the Stock to you for the respective accounts
of the several Underwriters against receipt therefor signed by you.
Certificates for the Stock to be delivered to you shall be registered in such
name or names and shall be in such denominations as you may request at least
one business day before the Closing Date, in the case of Underwritten Stock,
and at least one business day prior to the purchase thereof, in the case of
the Option Stock. Such certificates will be made available to the Underwriters
for inspection, checking and packaging at the offices of Lewco Securities
Corporation, 0 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the business day prior to
the Closing Date or, in the case of the Option Stock, by 3:00 p.m., New York
time, on the business day preceding the date of purchase.
It is understood that you, individually and not on behalf
of the Underwriters, may (but shall not be obligated to) make payment to the
Company and the Selling Security holders for shares to be purchased by any
Underwriter whose check shall not have been received by you on the Closing
Date or any later date on which Option Stock is purchased for the account of
such Underwriter. Any such payment by you shall not relieve such Underwriter
from any of its obligations hereunder.
7. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING
SECURITY HOLDERS. Each of the Company and the Selling Security holders
respectively covenants and agrees as follows:
(a) The Company will (i) prepare and timely file with the
Commission under Rule 424(b) a Prospectus containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A and (ii) not file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been
advised and furnished with a copy or to which you shall have reasonably
objected in writing or which is not in compliance with the Securities Act or
the rules and regulations of the Commission.
(b) The Company will promptly notify each Underwriter in the
event of (i) the request by the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, (ii) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, (iii) the institution or
notice of intended institution of any action or proceeding for that purpose,
(iv) the receipt by the Company of any notification with respect to the
suspension of the qualification of the Stock for sale in any jurisdiction, or
(v) the receipt by it of notice of the initiation or threatening of any
proceeding for such purpose. The Company and the Selling Security holders will
make every reasonable effort to
--------------------------------
/2/ This assumes that the transaction will be priced after the close of market
(4:30 p.m. EDT) and that T+4 will apply to the transaction. If the pricing took
place before or during market hours (which will generally not be the case), the
closing would be three business days after pricing.
9.
prevent the issuance of such a stop order and, if such an order shall at any
time be issued, to obtain the withdrawal thereof at the earliest possible
moment.
(c) The Company will (i) on or before the Closing Date,
deliver to you a signed copy of the Registration Statement as originally filed
and of each amendment thereto filed prior to the time the Registration
Statement becomes effective and, promptly upon the filing thereof, a signed
copy of each post-effective amendment, if any, to the Registration Statement
(together with, in each case, all exhibits thereto unless previously furnished
to you) and will also deliver to you, for distribution to the Underwriters, a
sufficient number of additional conformed copies of each of the foregoing (but
without exhibits) so that one copy of each may be distributed to each
Underwriter, (ii) as promptly as possible deliver to you and send to the
several Underwriters, at such office or offices as you may designate, as many
copies of the Prospectus as you may reasonably request, and (iii) thereafter
from time to time during the period in which a prospectus is required by law
to be delivered by an Underwriter or dealer, likewise send to the Underwriters
as many additional copies of the Prospectus and as many copies of any
supplement to the Prospectus and of any amended prospectus, filed by the
Company with the Commission, as you may reasonably request for the purposes
contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any event relating
to or affecting the Company, or of which the Company shall be advised in
writing by you, shall occur as a result of which it is necessary, in the
opinion of counsel for the Company or of counsel for the Underwriters, to
supplement or amend the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser of the Stock, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus or an amended
prospectus so that the Prospectus as so supplemented or amended will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances existing at the time such Prospectus is delivered to such
purchaser, not misleading. If, after the initial public offering of the Stock
by the Underwriters and during such period, the Underwriters shall propose to
vary the terms of offering thereof by reason of changes in general market
conditions or otherwise, you will advise the Company in writing of the
proposed variation, and, if in the opinion either of counsel for the Company
or of counsel for the Underwriters such proposed variation requires that the
Prospectus be supplemented or amended, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus or an amended
prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the
several Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the
Company will submit to you, for your information, a copy of any post-effective
amendment to the Registration Statement and any supplement to the Prospectus
or any amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you,
in the qualification of the Stock for offer and sale under the securities or
blue sky laws of such jurisdictions as you may designate and, during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, in keeping such qualifications in good standing under
said securities or blue sky laws; provided, however, that the Company shall
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not be obligated to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified. The Company will, from time to time, prepare and file such
statements, reports, and other documents as are or may be required to continue
such qualifications in effect for so long a period as you may reasonably
request for distribution of the Stock.
(g) During a period of five years commencing with the date
hereof, the Company will furnish to you, and to each Underwriter who may so
request in writing, copies of all periodic and special reports furnished to
stockholders of the Company and of all information, documents and reports
filed with the Commission (including the Report on Form SR required by Rule
463 of the Commission under the Securities Act).
10.
(h) Not later than the 45th day following the end of the
fiscal quarter first occurring after the first anniversary of the Effective
Date, the Company will make generally available to its security holders an
earnings statement in accordance with Section 11(a) of the Securities Act and
Rule 158 thereunder.
(i) The Company and the Selling Security holders jointly and
severally agree to pay all costs and expenses incident to the performance of
their obligations under this Agreement, including all costs and expenses
incident to (i) the preparation, printing and filing with the Commission and
the NASD of the Registration Statement, any Preliminary Prospectus and the
Prospectus, (ii) the furnishing to the Underwriters of copies of any
Preliminary Prospectus and of the several documents required by paragraph (c)
of this Section 7 to be so furnished, (iii) the printing of this Agreement and
related documents delivered to the Underwriters, (iv) the preparation,
printing and filing of all supplements and amendments to the Prospectus
referred to in paragraph (d) of this Section 7, (v) the furnishing to you and
the Underwriters of the reports and information referred to in paragraph (g)
of this Section 7 and (vi) the printing and issuance of stock certificates,
including the transfer agent's fees. The Selling Security holders will pay any
transfer taxes incident to the transfer to the Underwriters of the shares the
Stock being sold by the Selling Security holders.
(j) The Company and the Selling Security holders jointly and
severally agree to reimburse you, for the account of the several Underwriters,
for blue sky fees and related disbursements (including counsel fees and
disbursements and cost of printing memoranda for the Underwriters) paid by or
for the account of the Underwriters or their counsel in qualifying the Stock
under state securities or blue sky laws and in the review of the offering by
the NASD.
(k) The provisions of paragraphs (i) and (j) of this Section
are intended to relieve the Underwriters from the payment of the expenses and
costs which the Company and the Selling Security holders hereby agree to pay
and shall not affect any agreement which the Company and the Selling Security
holders may make, or may have made, for the sharing of any such expenses and
costs.
(l) The Company and each of the Selling Security holders
hereby agrees that, without the prior written consent of Xxxxxxxxx & Xxxxx LLC
on behalf of the Underwriters, the Company or such Selling Securityholder, as
the case may be, will not, for a period of 180 days following the commencement
of the public offering of the Stock by the Underwriters, directly or
indirectly, (i) sell, offer, contract to sell, make any short sale, pledge,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or acquire Common
Stock or (ii) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences or ownership of Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Stock to be sold
to the Underwriters pursuant to this Agreement, (B) shares of Common Stock
issued by the Company upon the exercise of options granted under the stock
option plans of the Company (the "Option Plans") or upon the exercise of
warrants outstanding as of the date hereof, all as described in footnote (__)
to the table under the caption "Capitalization" in the Preliminary Prospectus,
and (C) options to purchase Common Stock granted under the Option Plans.
(m) If at any time during the 25-day period after the
Registration Statement becomes effective any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price for the Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates
a supplement to or amendment of the Prospectus), the Company will, after
written notice from you advising the Company to the effect set forth above,
forthwith prepare, consult with you and its counsel concerning the
advisability of, and disseminating a press release or other public statement,
and will prior to any such dissemination, consult with you regarding the
substance of such press release or public statement.
(n) The Company is familiar with the Investment Company Act
of 1940, as amended, and has in the past conducted its affairs, and will in
the future conduct its affairs, in such a manner to ensure that the
11.
Company was not and will not be an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder.
(o) The liability of each Selling Securityholder under such
Selling Securityholder's representations and warranties contained in paragraph
(b) of Section 2 hereof and under the indemnity and reimbursement agreements
contained in the provisions of this Section 8 and Section 12 hereof shall be
limited to an amount equal to the net proceeds from the stock sold by such
Selling Securityholder to the Underwriters. The Company and the Selling
Security holders may agree, as among themselves and without limiting the
rights of the Underwriters under this Agreement, as to the respective amounts
of such liability for which they each shall be responsible.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Selling Security holders jointly and
severally agree to indemnify and hold harmless each Underwriter and each
person (including each partner or officer thereof) who controls any
Underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages or liabilities, joint or several,
to which such indemnified parties or any of them may become subject under the
Securities Act, the Exchange Act, or the common law or otherwise, and the
Company and the Selling Security holders jointly and severally agree to
reimburse each such Underwriter and controlling person for any legal or other
expenses (including, except as otherwise hereinafter provided, reasonable fees
and disbursements of counsel) incurred by the respective indemnified parties
in connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties,
in each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus or
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the
omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that (1) the
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indemnity agreements of the Company and the Selling Security holders contained
in this paragraph (a) shall not apply to any such losses, claims, damages,
liabilities or expenses if such statement or omission was made in reliance
upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of any
Underwriter for use in any Preliminary Prospectus or the Registration
Statement or the Prospectus or any such amendment thereof or supplement
thereto, (2) the indemnity agreement contained in this paragraph (a) with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Stock which is the subject thereof (or
to the benefit of any person controlling such Underwriter) if at or prior to
the written confirmation of the sale of such Stock a copy of the Prospectus
(or the Prospectus as amended or supplemented) was not sent or delivered to
such person and the untrue statement or omission of a material fact contained
in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented) unless the failure is the result of
noncompliance by the Company with paragraph (c) of Section 7 hereof, and (3)
each Selling Securityholder shall only be liable under this paragraph with
respect to (A) information pertaining to such Selling Securityholder furnished
by or on behalf of such Selling Securityholder expressly for use in any
Preliminary Prospectus or the Registration Statement or the Prospectus or any
such amendment thereof or supplement thereto or (B) facts that would
constitute a breach of any representation or warranty of such Selling
Securityholder set forth in Section 2(b) hereof. The indemnity agreements of
the Company and the Selling Security holders contained in this paragraph (a)
and the representations and warranties of the Company and the Selling Security
holders contained in Section 2 hereof shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its officers who signs the Registration
Statement on his own behalf or pursuant to a power of attorney, each of
12.
its directors, each other Underwriter and each person (including each partner
or officer thereof) who controls the Company or any such other Underwriter
within the meaning of Section 15 of the Securities Act, and the Selling
Security holders from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of
them may become subject under the Securities Act, the Exchange Act, or the
common law or otherwise and to reimburse each of them for any legal or other
expenses (including, except as otherwise hereinafter provided, reasonable fees
and disbursements of counsel) incurred by the respective indemnified parties
in connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties,
in each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Prospectus (as amended or
as supplemented if the Company shall have filed with the Commission any
amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, if such statement or omission was made in reliance upon and in
conformity with information furnished as herein stated or otherwise furnished
in writing to the Company by or on behalf of such indemnifying Underwriter for
use in the Registration Statement or the Prospectus or any such amendment
thereof or supplement thereto. The indemnity agreement of each Underwriter
contained in this paragraph (b) shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs
(a) and (b) of this Section 8 agrees that, upon the service of a summons or
other initial legal process upon it in any action or suit instituted against
it or upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in
such paragraphs, it will promptly give written notice (herein called the
"Notice") of such service or notification to the party or parties from whom
indemnification may be sought hereunder. No indemnification provided for in
such paragraphs shall be available to any party who shall fail so to give the
Notice if the party to whom such Notice was not given was unaware of the
action, suit, investigation, inquiry or proceeding to which the Notice would
have related and was prejudiced by the failure to give the Notice, but the
omission so to notify such indemnifying party or parties of any such service
or notification shall not relieve such indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution
or otherwise than on account of such indemnity agreement. Any indemnifying
party shall be entitled at its own expense to participate in the defense of
any action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(herein called the "Notice of Defense") to the indemnified party, to assume
(alone or in conjunction with any other indemnifying party or parties) the
entire defense of such action, suit, investigation, inquiry or proceeding, in
which event such defense shall be conducted, at the expense of the
indemnifying party or parties, by counsel chosen by such indemnifying party or
parties and reasonably satisfactory to the indemnified party or parties;
provided, however, that (i) if the indemnified party or parties reasonably
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determine that there may be a conflict between the positions of the
indemnifying party or parties and of the indemnified party or parties in
conducting the defense of such action, suit, investigation, inquiry or
proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or
parties shall be entitled to conduct the defense to the extent reasonably
determined by such counsel to be necessary to protect the interests of the
indemnified party or parties and (ii) in any event, the indemnified party or
parties shall be entitled to have counsel chosen by such indemnified party or
parties participate in, but not conduct, the defense. If, within a reasonable
time after receipt of the Notice, an indemnifying party gives a Notice of
Defense and the counsel chosen by the indemnifying party or parties is
reasonably satisfactory to the indemnified party or parties, the indemnifying
party or parties will not be liable under paragraphs (a) through (c) of this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear the legal and other expenses incurred in
connection with the conduct of the defense as referred to in
13.
clause (i) of the proviso to the preceding sentence and (B) the indemnifying
party or parties shall bear such other expenses as it or they have authorized
to be incurred by the indemnified party or parties. If, within a reasonable
time after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 8, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in paragraph (a) or (b) of this Section 8 (i) in
such proportion as is appropriate to reflect the relative benefits received by
each indemnifying party from the offering of the Stock or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each
indemnifying party in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, or actions in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Security holders on the one
hand and the Underwriters on the other shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Stock received by the Company and the Selling Security holders and the total
underwriting discount received by the Underwriters, as set forth in the table
on the cover page of the Prospectus, bear to the aggregate public offering
price of the Stock. Relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by each indemnifying party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this
paragraph (d). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities, or actions in respect thereof,
referred to in the first sentence of this paragraph (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigation, preparing to defend or defending
against any action or claim which is the subject of this paragraph (d).
Notwithstanding the provisions of this paragraph (d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Stock purchased by such Underwriter. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this paragraph (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom contribution
may be sought from any obligation it may have hereunder or otherwise (except
as specifically provided in paragraph (c) of this Section 8).
(e) Neither the Company nor the Selling Security holders
will, without the prior written consent of each Underwriter, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or
any person who controls such Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of such Underwriter and each such
controlling person from all liability arising out of such claim, action, suit
or proceeding.
14.
9. TERMINATION. This Agreement may be terminated by you at
any time prior to the Closing Date by giving written notice to the Company and
the Selling Security holders if after the date of this Agreement trading in
the Common Stock shall have been suspended, or if there shall have occurred
(i) the engagement in major hostilities or an escalation of major hostilities
by the United States or the declaration of war or a national emergency by the
United States on or after the date hereof, (ii) any outbreak of hostilities or
other national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, calamity, crisis or
change in economic or political conditions in the financial markets of the
United States would, in the Underwriters' reasonable judgment, make the
offering or delivery of the Stock impracticable, (iii) suspension of trading
in securities generally or a material adverse decline in value of securities
generally on the New York Stock Exchange, the American Stock Exchange, or The
Nasdaq Stock Market, or limitations on prices (other than limitations on hours
or numbers of days of trading) for securities on either such exchange or
system, (iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of, or commencement of any
proceeding or investigation by, any court, legislative body, agency or other
governmental authority which in the Underwriters' reasonable opinion
materially and adversely affects or will materially or adversely affect the
business or operations of the Company, (v) declaration of a banking moratorium
by either federal or New York State authorities or (vi) the taking of any
action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in the Underwriters' reasonable opinion has a
material adverse effect on the securities markets in the United States. If
this Agreement shall be terminated pursuant to this Section 9, there shall be
no liability of the Company or the Selling Security holders to the
Underwriters and no liability of the Underwriters to the Company or the
Selling Security holders; provided, however, that in the event of any such
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termination the Company and the Selling Security holders agree to indemnify
and hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Security holders
under this Agreement, including all costs and expenses referred to in
paragraphs (i) and (j) of Section 7 hereof.
10. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations
of the several Underwriters to purchase and pay for the Stock shall be subject
to the performance by the Company and by the Selling Security holders of all
their respective obligations to be performed hereunder at or prior to the
Closing Date or any later date on which Option Stock is to be purchased, as
the case may be, and to the following further conditions:
(a) The Registration Statement shall have become effective;
and no stop order suspending the effectiveness thereof shall have been issued
and no proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock
hereunder and the validity and form of the certificates representing the
Stock, all corporate proceedings and other legal matters incident to the
foregoing, and the form of the Registration Statement and of the Prospectus
(except as to the financial statements contained therein), shall have been
approved at or prior to the Closing Date by Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP,
counsel for the Underwriters.
(c) You shall have received from Gunderson, Dettmer, Stough,
Villeneuve, Franklin and Xxxxxxxxx, LLP, counsel for the Company and the
Selling Security holders, from Weil, Gotshal, & Xxxxxx, patent counsel for the
Company, opinions, addressed to the Underwriters and dated the Closing Date,
covering the matters set forth in Annex A and Annex B hereto, respectively,
and if Option Stock is purchased at any date after the Closing Date,
additional opinions from each such counsel, addressed to the Underwriters and
dated such later date, confirming that the statements expressed as of the
Closing Date in such opinions remain valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date,
the statements made in the Registration Statement and the Prospectus were true
and correct and neither the Registration Statement nor the Prospectus omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein, respectively, not misleading, (ii) since the
Effective Date, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus which has not been set forth in such
a supplement or amendment, (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has
not
15.
been any material adverse change or any development involving a prospective
material adverse change in or affecting the business, properties, financial
condition or results of operations of the Company and its subsidiaries, taken
as a whole, whether or not arising from transactions in the ordinary course of
business, and, since such dates, except in the ordinary course of business,
neither the Company nor any of its subsidiaries has entered into any material
transaction not referred to in the Registration Statement in the form in which
it originally became effective and the Prospectus contained therein, (iv)
neither the Company nor any of its subsidiaries has any material contingent
obligations which are not disclosed in the Registration Statement and the
Prospectus, (v) there are not any pending or known threatened legal
proceedings to which the Company or any of its subsidiaries is a party or of
which property of the Company or any of its subsidiaries is the subject which
are material and which are not disclosed in the Registration Statement and the
Prospectus, (vi) there are not any franchises, contracts, leases or other
documents which are required to be filed as exhibits to the Registration
Statement which have not been filed as required, (vii) the representations and
warranties of the Company herein are true and correct in all material respects
as of the Closing Date or any later date on which Option Stock is to be
purchased, as the case may be, and (viii) there has not been any material
adverse change in the market for securities in general or in political,
financial or economic conditions from those reasonably foreseeable as to
render it impracticable in your reasonable judgment to make a public offering
of the Stock, or a material adverse change in market levels for securities in
general (or those of companies in particular) or financial or economic
conditions which render it inadvisable to proceed.
(e) You shall have received on the Closing Date and on any
later date on which Option Stock is purchased a certificate, dated the Closing
Date or such later date, as the case may be, and signed by the President and
the Chief Financial Officer of the Company, stating that the respective
signers of said certificate have carefully examined the Registration Statement
in the form in which it originally became effective and the Prospectus
contained therein and any supplements or amendments thereto, and that the
statements included in clauses (i) through (vii) of paragraph (d) of this
Section 10 are true and correct.
(f) You shall have received from Deloitte & Touche, LLP, a
letter or letters, addressed to the Underwriters and dated the Closing Date
and any later date on which Option Stock is purchased, confirming that they
are independent public accountants with respect to the Company within the
meaning of the Securities Act and the applicable published rules and
regulations thereunder and based upon the procedures described in their letter
delivered to you concurrently with the execution of this Agreement (herein
called the Original Letter), but carried out to a date not more than three
business days prior to the Closing Date or such later date on which Option
Stock is purchased (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing
Date or such later date, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter which are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information. The letters shall not disclose any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the business or properties of the Company or any of its subsidiaries
which, in your sole reasonable judgment, makes it impractical or inadvisable
to proceed with the public offering of the Stock or the purchase of the Option
Stock as contemplated by the Prospectus.
(g) You shall have been furnished evidence in usual written
or telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (f) of Section 7 hereof.
(h) Prior to the Closing Date, the Stock to be issued and
sold by the Company shall have been duly authorized for listing by the Nasdaq
National Market upon official notice of issuance.
(i) On or prior to the Closing Date, you shall have received
from all directors, officers, and beneficial holders of more than __% of the
outstanding Common Stock, and beneficial holders of more than __% of the
outstanding options to purchase Common Stock, Lock-up Agreements in form
reasonably satisfactory to Xxxxxxxxx & Xxxxx LLC.
16.
All the agreements, opinions, certificates and letters
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if Xxxxxxx, Phleger & Xxxxxxxx LLP,
counsel for the Underwriters, shall be satisfied that they comply in form and
scope.
In case any of the conditions specified in this Section 10
shall not be fulfilled, this Agreement may be terminated by you by giving
notice to the Company and to the Selling Security holders. Any such
termination shall be without liability of the Company or the Selling Security
holders to the Underwriters and without liability of the Underwriters to the
Company or the Selling Security holders; provided, however, that (i) in the
-------- -------
event of such termination, the Company and the Selling Security holders agree
to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company and the Selling
Security holders under this Agreement, including all costs and expenses
referred to in paragraphs (i) and (j) of Section 9 hereof, and (ii) if this
Agreement is terminated by you because of any refusal, inability or failure on
the part of the Company or the Selling Security holders to perform any
agreement herein, to fulfill any of the conditions herein, or to comply with
any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE
SELLING SECURITY HOLDERS. The obligation of the Company and the Selling
Security holders to deliver the Stock shall be subject to the conditions that
(a) the Registration Statement shall have become effective and (b) no stop
order suspending the effectiveness thereof shall be in effect and no
proceedings therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 11
shall not be fulfilled, this Agreement may be terminated by the Company and
the Selling Security holders by giving notice to you. Any such termination
shall be without liability of the Company and the Selling Security holders to
the Underwriters and without liability of the Underwriters to the Company or
the Selling Security holders; provided, however, that in the event of any such
-------- -------
termination the Company and the Selling Security holders jointly and severally
agree to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company and the
Selling Security holders under this Agreement, including all costs and
expenses referred to in paragraphs (i) and (j) of Section 7 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their
other obligations under Section 8 of this Agreement, the Company and the
Selling Security holders hereby jointly and severally agree to reimburse on a
quarterly basis the Underwriters for all reasonable legal and other expenses
incurred in connection with investigating or defending any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
obligations under this Section 12 and the possibility that such payments might
later be held to be improper; provided, however,that (i) to the extent any
-----------------
such payment is ultimately held to be improper, the persons receiving such
payments shall promptly refund them and (ii) such persons shall provide to the
Company, upon request, reasonable assurances of their ability to effect any
refund, when and if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of the Company, the Selling Security holders and
the several Underwriters and, with respect to the provisions of Section 8
hereof, the several parties (in addition to the Company, the Selling Security
holders and the several Underwriters) indemnified under the provisions of said
Section 8, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give
to any other person, firm or corporation any legal or equitable remedy or
claim under or in respect of this Agreement or any provision herein contained.
The term "successors and assigns" as herein used shall not include any
purchaser, as such purchaser, of any of the Stock from any of the several
Underwriters.
13. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to Xxxxxxxxx &
17.
Xxxxx LLC, Xxx Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, telecopy number
(000) 000-0000; with a copy to Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 2200 Geng
Road, Xxx Xxxxxxxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, attention Xxxxxx X.
Xxxxxxx, Esq., telephone number (000) 000-0000; and if to the Company, shall
be mailed, telegraphed or delivered to it at its office, Qualix Group, Inc.,
0000 Xxxxx Xxxxxxx Xxxxxx #000, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: Chief
Financial Officer, telecopy number __________, with a copy to Gunderson,
Dettmer, Stough, Villeneuve, Franklin and Xxxxxxxxx, LLP, [address] attention
Xxx X. Xxxxxxxxx, telecopy number __________; and if to the Selling Security
holders, shall be mailed, telegraphed or delivered to the Selling Security
holders in care of __________ at __________. All notices given by telegraph
shall be promptly confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or controlling person
thereof, or by or on behalf of the Company or the Selling Security holders or
their respective directors or officers, and (c) delivery and payment for the
Stock under this Agreement; provided, however, that if this Agreement is
-----------------
terminated prior to the Closing Date, the provisions of paragraphs (l) and (m)
of Section 7 hereof shall be of no further force or effect.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
Please sign and return to the Company and to the Selling
Security holders in care of the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement among the
Company, the Selling Security holders and the several Underwriters in
accordance with its terms.
Very truly yours,
QUALIX GROUP, INC.
By
---------------------------------------
Xxxxxxx X. Xxxx
President and Chief Executive Officer
SELLING SECURITY HOLDERS:
[List Names]
By
---------------------------------------
Attorney-in-Fact
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
XXXXXXXXX & XXXXX LLC
XXXXX XXXXXX INC.
By Xxxxxxxxx & Xxxxx LLC
18.
By
---------------------------------------
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
19.
SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES
TO BE
UNDERWRITERS PURCHASED
------------ -----------
Xxxxxxxxx & Xxxxx LLC...................................
Xxxxx Xxxxxx Inc. ......................................
-----------
Total ..................................................
===========
SCHEDULE II
SELLING SECURITY HOLDERS
Number of
Name [and Address] Shares
of Selling Security holders to be Sold
--------------------------- ----------
----------
Total.....................................
==========
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF
GUNDERSON, DETTMER, STOUGH, VILLENEUVE, FRANKLIN AND XXXXXXXXX, LLP,
COUNSEL FOR THE COMPANY
AND THE SELLING SECURITY HOLDERS
(i) Each of the Company and its subsidiary has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, is duly qualified as a
foreign corporation and in good standing in each state of the United States of
America in which or of property and has full corporate power and authority to
own or lease its properties and conduct its business as described in the
Registration Statement;
(ii) the authorized capital stock of the Company consists of
__________ shares of __________ Stock, of which there are outstanding
__________ shares, and __________ shares of Common Stock, $__________ par
value, of which there are outstanding __________ shares (including the
Underwritten Stock plus the number of shares of Option Stock issued on the
date hereof); proper corporate proceedings have been taken validly to
authorize such authorized capital stock; all of the outstanding shares of such
capital stock (including the Underwritten Stock and the shares of Option Stock
issued, if any) have been duly and validly issued and are fully paid and
nonassessable; any Option Stock purchased after the Closing Date, when issued
and delivered to and paid for by the Underwriters as provided in the
Underwriting Agreement, will have been duly and validly issued and be fully
paid and nonassessable; and no preemptive rights of, or rights of refusal in
favor of, stockholders exist with respect to the Stock, or the issue and sale
thereof, pursuant to the Certificate of Incorporation or Bylaws of the Company
and, to the knowledge of such counsel, there are no contractual preemptive
rights that have not been waived, rights of first refusal or rights of co-sale
which exist with respect to the Stock being sold by the Selling Security
holders or the issue and sale of the Stock;
(iii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or suspending or preventing the
use of the Prospectus is in effect and no proceedings for that purpose have
been instituted or are pending or contemplated by the Commission;
(iv) the Registration Statement and the Prospectus (except as
to the financial statements and schedules and other financial and statistical
data contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Securities Act, the Exchange Act and with the rules and regulations of the
Commission thereunder;
(v) such counsel have no reason to believe that the
Registration Statement (except as to the financial statements and schedules
and other financial data contained or incorporated by reference therein, as to
which such counsel need not express any opinion or belief) at the 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 that the Prospectus (except as to the
financial statements and schedules and other financial data contained or
incorporated by reference therein, as to which such counsel need not express
any opinion or belief) as of its date or at the Closing Date (or any later
date on which Option Stock is purchased), contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(vi) the information required to be set forth in the
Registration Statement in answer to Items 9, 10 (insofar as it relates to such
counsel) and 11(c) of Form S-1 is to the best of such counsel's knowledge
accurately and adequately set forth therein in all material respects or no
response is required with respect to such Items and the description of the
Company's stock option plan[s] and the options granted and which may be
granted thereunder set forth [ADD ADDITIONAL STOCK PLANS AND AGREEMENTS AS
NECESSARY] in the Prospectus accurately and
fairly presents the information required to be shown with respect to said
plan[s] and options to the extent required by the Securities Act and the rules
and regulations of the Commission thereunder;
(vii) such counsel do not know of any franchises, contracts,
leases, documents or legal proceedings, pending or threatened, which in the
opinion of such counsel are of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement, which are not described and filed as required;
(viii) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company, and no further approval or authority of
the shareholders or the Board of Directors of the Company is required for the
issuance and sale by the Company of the Stock as contemplated herein;
(ix) the Underwriting Agreement has been duly executed and
delivered by or on behalf of the Selling Security holders and the Custody
Agreement between the Selling Security holders and __________, as Custodian,
and the Power of Attorney referred to in such Custody Agreement have been duly
executed and delivered by the several Selling Security holders;
(x) the execution and delivery of the Underwriting Agreement
and the consummation of the transactions contemplated therein do not and will
not conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, the Certificate of Incorporation or Bylaws of
the Company or any agreement or instrument known to such counsel and which is
set forth on exhibit attached hereto, to which the Company is a party or by
which the Company may be bound or any applicable federal or state law or
regulation or, so far as is known to such counsel, any order, writ, injunction
or decree, of any jurisdiction, court or governmental instrumentality;
(xi) the issue and sale by the Company of the shares of Stock
sold by the Company as contemplated by the Underwriting Agreement will not
conflict with, or result in a breach of, the Certificate of Incorporation or
Bylaws of the Company or any agreement or instrument known to such counsel to
which the Company is a party or any applicable law or regulation, or so far as
is known to such counsel, any order, writ, injunction or decree, of any
jurisdiction, court or governmental instrumentality;
(xii) to such councils knowledge all holders of securities of
the Company having rights to the registration of shares of Common Stock, or
other securities, because of the filing of the Registration Statement by the
Company have waived such rights or such rights have expired by reason of lapse
of time following notification of the Company's intent to file the
Registration Statement;
(xiii) upon delivery and payment in accordance with the terms
of the Underwriting Agreement you will receive good title to the shares of
Stock sold by the Selling Security holders under the Underwriting Agreement,
free and clear of all liens, encumbrances, equities, security interests and
claims, assuming for the purpose of this opinion that the Underwriters
purchased the same in good faith without notice of any adverse claims;
(xiv) no approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery
of this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the National Association of Securities
Dealers, Inc. or as required by State securities and blue sky laws in
connection with the purchase and distribution of the Stock by the
Underwriters, as to which such counsel need express no opinion) except such as
have been obtained or made, specifying the same;
(xv) the Stock issued and sold by the Company is duly
authorized for quotation on the Nasdaq National Market, subject to notice of
issuance;
___________________________________
Counsel rendering the foregoing opinion may rely as to questions of
law not involving the laws of the United States or of the State of California,
upon opinions of local counsel satisfactory in form and scope to counsel for the
Underwriters. Copies of any opinions so relied upon shall be delivered to the
Representatives] and to counsel for the Underwriters and the foregoing opinion
shall also state that counsel knows of no reason the Underwriters are not
entitled to rely upon the opinions of such local counsel.
ANNEX B
MATTERS TO BE COVERED IN THE OPINION OF
PATENT COUNSEL FOR THE COMPANY
Ladies and Gentlemen:
We have acted as counsel to Qualix Group, Inc. (the "Company") in
connection with a litigation styled Qualix Group, Inc., Plaintiff v. Veritas
Software Corp., Defendant, Civ. Action N. C4761679 and a cross-complaint in
the same Action (the "Litigation").
Based on the foregoing, and subject to the qualifications stated herein,
we issue the following opinion.
In our capacity as counsel to the Company, we have examined, among other
things, originals, or copies identified to our satisfaction as being true
copies, of the following:
(a) Sections titled "Risk Factors-Litigation," and "Business-Litigation,"
(the "Litigation Sections") of the Registration Statement on Form S-1 (File
No. 333-___) initially filed by the Company with the Securities and Exchange
Commission (the "Commission") on December __, 1996, for the purpose of
registering the sale of shares of the Company's common stock under the
Securities Act of 1933, as amended (the "Act"); and the final Prospectus in
the form filed with the Commission on ______ 1997, pursuant to Rule 424(b)[1]
or [4] under the Act. Such Registration Statement when it became effective
(including the information deemed to be part of the Registration Statement at
the time it became effective pursuant to Rule 430A of the Rules and
Regulations under the Act), is herein referred to as the "Registration
Statement," and such Prospectus in the form delivered for filing with the
Commission pursuant to Rule 424(b) is herein referred to as the "Prospectus";
(b) Documents relating to the Litigation, including review of the
circumstances of the Litigation with the Company; and
(c) Interviews with interested personnel at the Company regarding the
circumstances of the Litigation.
Although we have not independently verified and are not passing upon the
accuracy, completeness or fairness of the statements contained in the
Litigation Sections, no facts or other information has come to our attention
which lead us to believe that the Litigation Sections of the Registration
Statement, on the effective date of the Registration Statement, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading or that the Litigation Sections of the Prospectus, on
the date thereof or on the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading (it being understood that we express no view with respect to any
other sections of the Registration Statement, the Prospectus, or any other
document).
The opinions expressed herein are limited to the laws of the State of
California and the federal laws of the United States, and we express no
opinion as to the effect on the matters covered by this letter of the laws of
any other jurisdiction.
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. Those opinions may not be
used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency,
quoted, cited or otherwise referred to without our prior written consent.
Very truly yours,
