WSGR DRAFT 11/18/96
7,000,000 Shares
Larscom Incorporated
Class A Common Stock
UNDERWRITING AGREEMENT
____________, 1996
XXXXXXXXXX SECURITIES
XXXXX & COMPANY
PUNK, XXXXXX & XXXXXX, X.X.
As Representatives of the several Underwriters
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
SECTION 1
INTRODUCTORY
Larscom Incorporated, a Delaware corporation (the "Company"), proposes to
issue and sell 5,800,000 shares of its authorized but unissued Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), and Xxxx Xxxxxxx
Inc., a Delaware corporation and the Company's sole stockholder (the "Selling
Stockholder"), proposes to sell 1,200,000 shares of the Company's issued and
outstanding Class A Common Stock, to the several underwriters named in
Schedule A annexed hereto (the "Underwriters"), for whom you are acting as
Representatives. Said aggregate of 7,000,000 shares are herein called the "Firm
Common Shares." In addition, the Company and the Selling Stockholder propose to
grant to the Underwriters options to purchase up to 1,050,000 additional shares
of Class A Common Stock (the "Optional Common Shares"), as provided in Section 5
hereof. The Firm Common Shares and, to the extent such option is exercised, the
Optional Common Shares are hereinafter collectively referred to as the "Common
Shares." The shares of Class A Common Stock and Class B Common Stock, par value
$.01 per share (the "Class B Common Stock"), of the Company to be outstanding
after giving effect to the sales contemplated hereby are hereinafter referred to
as the "Common Stock."
Immediately prior to the closing of the sale of the Firm Common Shares to
the Underwriters, the Company will issue 11,900,000 shares of Class B Common
Stock to the Selling Stockholder in exchange for all of the outstanding shares
of the Company's common stock, par value $1.00 per share (the "Prior Common
Stock"), owned by the Selling Stockholder.
You have advised the Company and the Selling Stockholder that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is advisable.
The Company and the Selling Stockholder hereby confirm their respective
agreements with respect to the purchase of the Common Shares by the Underwriters
as follows:
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SELLING STOCKHOLDER
The Company and the Selling Stockholder, jointly and severally, represent
and warrant to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-14001) with respect
to the Common Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission. The Company has prepared and has filed or proposes to file prior to
the effective date of such registration statement an amendment or amendments to
such registration statement, which amendment or amendments have been or will be
similarly prepared. There have been delivered to you two signed copies of such
registration statement and amendments, together with two copies of each exhibit
filed therewith. Conformed copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested for each of
the Underwriters. The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration statement, a further
amendment thereto, including the form of final prospectus, or (ii) a final
prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations. As filed, such amendment and form of final prospectus, or such
final prospectus, shall include all Rule 430A Information and, except to the
extent that you shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the date and time
that this Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the latest
preliminary prospectus) as the Company shall have previously advised you in
writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement at the time such registration statement becomes effective
and, in the event any post-effective amendment thereto becomes effective prior
to the First Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended; provided, however, that such term shall
also include (i) all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes effective
as provided by Rule 430A of the Rules and Regulations and (ii) a registration
statement, if any, filed pursuant to Rule 462(b) of the Rules and Regulations
relating to the Common Shares. The term "Preliminary Prospectus" shall mean any
preliminary prospectus referred to in the preceding paragraph and any
preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean the prospectus relating to the Common Shares
in the form in which it is first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations or, if no filing pursuant to
Rule 424(b) of the Rules and Regulations is required, shall mean the form of
final prospectus included in the Registration Statement at the time such
registration statement becomes effective. The term "Rule 430A Information"
means information with respect to the Common Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus, and each Preliminary Prospectus has conformed
in all material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including each Closing
Date hereinafter mentioned, the Registration Statement and the Prospectus, and
any amendments or supplements thereto, will contain all material statements and
information required to be included therein by the Act and the Rules and
Regulations and will in all material respects conform to the requirements of the
Act and the Rules and Regulations, and neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, will include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, no representation or warranty contained in this
subsection 2(b) shall be applicable to information contained in or omitted from
any Preliminary Prospectus, the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
specifically for use in the preparation thereof.
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(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity, other than the Company's wholly owned
subsidiary, Larscom Limited, a limited liability company incorporated under the
laws of England and Wales ("Larscom Limited"). The Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation, with full power and authority
(corporate and other) to own and lease their properties and conduct its business
as described in the Prospectus; the Company is in possession of and operating in
compliance with all authorizations, licenses, permits, consents, certificates
and orders material to the conduct of its business, all of which are valid and
in full force and effect; the Company is duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction in which the
ownership or leasing of properties or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to so qualify would
not have a material adverse effect upon the Company; and no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification.
Larscom Limited does not sell, and does not recognize any revenues from the sale
of, the Company's products; furthermore, Larscom Limited does not own any of the
Company's patents, trademarks, trademark registrations, service marks, service
xxxx registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by the Company or
necessary for the conduct of the Company's business.
(d) The Company has an authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been, and the issued and outstanding
shares of Common Stock immediately prior to Closing will be duly authorized and
validly issued, fully paid and nonassessable, issued in compliance with all
federal and state securities laws, not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities, and
in conformance with the description thereof contained in the Prospectus. Prior
to the Offering, all outstanding shares of Common Stock of the Company are owned
by the Selling Stockholder. Except as disclosed in the Prospectus and the
financial statements of the Company, and the related notes thereto, included in
the Prospectus, the Company has, and immediately prior to the Closing will have,
no outstanding options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, set forth in
the Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(e) The Common Shares to be sold by the Company have been duly authorized
and, when issued, delivered and paid for in the manner set forth in this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in or
incorporated by reference in the Prospectus. No preemptive rights or other
rights to subscribe for or purchase exist with respect to the issuance and sale
of the Common Shares by the Company pursuant to this Agreement. No stockholder
of the Company has any right which has not been waived to require the Company to
register the sale of any shares owned by such stockholder under the Act in the
public offering contemplated by this Agreement. No further approval or
authority of the stockholder or the Board of Directors of the Company will be
required for the transfer and sale of the Common Shares to be sold by the
Selling Stockholder or the issuance and sale of the Common Shares to be sold by
the Company as contemplated herein.
(f) The Class A Common Stock has been approved for quotation on the Nasdaq
National Market, subject to official notice of issuance.
(g) The Company has full legal right, power and authority to enter into
this Agreement and to perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company in accordance with its
terms. The making and performance of this Agreement by the Company and the
consummation of the transactions herein contemplated will not violate any
provisions of the certificate of incorporation or bylaws, or other
organizational documents, of the Company, and will not conflict with, result in
the breach or violation of, or constitute, either by itself or upon notice or
the passage of time or both, a default under any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to which
the Company is a party or by which the Company or any of its properties may be
bound or affected, any statute or any authorization, judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative agency or
other governmental body applicable to the Company or any of its properties. No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Agreement or the consummation
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of the transactions contemplated by this Agreement, except for compliance with
the Act, the Blue Sky laws applicable to the public offering of the Common
Shares by the several Underwriters and the clearance of such offering with the
National Association of Securities Dealers, Inc. (the "NASD").
(h) Price Waterhouse LLP, who have expressed their opinion with respect to
the financial statements and schedules filed with the Commission as a part of
the Registration Statement and included in the Prospectus and in the
Registration Statement, are independent accountants as required by the Act and
the Rules and Regulations.
(i) The financial statements and schedules of the Company, and the related
notes thereto, included in the Registration Statement and the Prospectus present
fairly the financial position of the Company as of the respective dates of such
financial statements and schedules, and the results of operations and changes in
financial position of the Company for the respective periods covered thereby.
Such statements, schedules and related notes have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis as
certified by the independent accountants named in subsection 2(h). No other
financial statements or schedules are required to be included in the
Registration Statement or incorporated by reference therein. The selected
financial data set forth in the Prospectus under the captions "Capitalization"
and "Selected Consolidated Financial Data" fairly present the information set
forth therein on the basis stated in the Registration Statement. The Company
has no long-term or short-term indebtedness other than the promissory note in
the amount of $25 million payable to the Selling Stockholder, the credit
facility with the Selling Stockholder pursuant to which the Company currently
has no borrowings and trade payables in the ordinary course of business.
(j) The Company maintains a system of internal accounting control
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The representations and warranties given by the Company and/or its
officers to independent public accountants for the purpose of supporting the
letters referred to in Section 8(c)(vi) are true and correct.
(k) The Company is not (i) in violation or default of any provision of its
certificate of incorporation or bylaws, or other organizational documents, or
(ii) in breach of or default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which it is a party or by which it or
any of its properties are bound, except where a breach or default with respect
to clause (ii) would not have a material adverse effect on the condition
(financial or otherwise), business or results of operations of the Company; and
there does not exist any state of facts which constitutes an event of default on
the part of the Company as defined in such documents or which, with notice or
lapse of time or both, would constitute such an event of default.
(l) There are no contracts or other documents required to be described in
the Registration Statement or to be filed as exhibits to the Registration
Statement or by the Rules and Regulations which have not been accurately and
completely described or filed as required. The contracts so described in the
Prospectus are in full force and effect on the date hereof; and neither the
Company, nor to the best of the Company's knowledge, any other party is in
breach of or default under any of such contracts, except where a breach or
default would not have a material adverse effect on the condition (financial or
otherwise), business or results of operations of the Company.
(m) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings (including those related to
environmental or discrimination matters) pending or, to the best of the
Company's knowledge, threatened to which the Company is or may be a party or of
which property owned or leased by the Company is or may be the subject, which
actions, suits or proceedings could reasonably be expected to, individually or
in the aggregate, prevent or adversely affect the transactions contemplated by
this Agreement or result in a material adverse change in the condition
(financial or otherwise), properties, business or results of operations of the
Company; and no labor disturbance by the employees of the Company exists or is
imminent which could reasonably be expected to affect materially and adversely
such condition, properties, business or results of operations. The Company is
not a party or subject to the provisions of any material injunction, judgment,
decree or order of any court, regulatory body, administrative agency or other
governmental body.
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(n) The statements in the Registration Statement and Prospectus relating
to pricing deficiencies under two of the Company's product supply contracts (No.
GS-00K-91AGS-0567 and GS-00K-94AGS-0451) subject to General Services
Administration ("GSA") regulations are accurate and complete in all material
respects;
(o) The Company has good and marketable title to all the properties and
assets reflected as owned in the financial statements hereinabove described (or
elsewhere in the Prospectus), subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except (i) those, if any, reflected in such financial
statements (or elsewhere in the Prospectus), or (ii) those which are not
material in amount and do not adversely affect the use made and proposed to be
made of such property by the Company. The Company holds its leased properties
under valid and binding leases, with such exceptions as are not materially
significant in relation to the business of the Company. Except as disclosed in
the Prospectus, the Company owns or leases all such properties as are necessary
to its operations as now conducted or as proposed to be conducted.
(p) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA") and with all requirements prescribed by any and all
statutes, orders, government rules and regulations including the Internal
Revenue Code of 1986, as amended, currently in effect with respect to employee
benefit plans; no "reportable event" (as defined in ERISA) nor any event
described in Sections 4062, 4063 or 4041(c) of ERISA has occurred for which the
Company would have any liability; the Company has not incurred and does not
expect to incur material liability under (i) Title IV of ERISA other than
premium payments to the Pension Benefit Guaranty Corporation arising in the
ordinary course or (ii) Section 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any material
liability that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such determination letter. The Company has not incurred any
material liability or penalty under Sections 4975 through 4980 of the Code or
under Title I of ERISA. All contributions, premiums or other payments
(including all employer contributions and employee salary reduction
contributions) which are due have been paid to each "pension plan" and all
contributions, premiums or other payments for any period ending on or before the
Closing Date which are not yet due have been paid to each such "pension plan" or
accrued in accordance with the past custom and practice of the Company. No
suit, action or other litigation (excluding claims for benefits incurred in the
ordinary course of any plan activities) has been brought, or to the knowledge of
the Company is threatened, against or with respect to any Company employee
benefit plan.
(q) Since the respective dates as of which information is given in the
Registration Statement and Prospectus: (i) the Company has not incurred any
material liabilities or obligations, indirect, direct or contingent, or entered
into any material verbal or written agreement or other transaction in any such
case which is not in the ordinary course of business; (ii) the Company has not
sustained any material loss or interference with its business or properties from
fire, flood, windstorm, accident or other calamity, whether or not covered by
insurance; (iii) except as specifically contemplated by the Prospectus, the
Company has not paid or declared any dividends or other distributions with
respect to its capital stock; (iv) the Company is not in default in the payment
of principal or interest on any outstanding debt obligations; (v) there has not
been any change in the capital stock (other than issuance of shares of Class B
Common Stock to the Selling Stockholder in exchange for all of the shares of the
Prior Common Stock and the sale of Common Shares hereunder) or indebtedness
material to the Company (other than in the ordinary course of business); and
(vi) there has not been any material adverse change in the condition (financial
or otherwise), business, properties or results of operations of the Company.
(r) The Company has sufficient trademarks, trade names, patent rights,
mask works, copyrights, licenses, approvals and governmental authorizations to
conduct its business as now conducted; of any trademarks, trade names, patent
rights, mask works, copyrights, licenses, approvals or governmental
authorizations; and, except as disclosed in the Prospectus, the Company has no
knowledge of any material infringement by it of any trademark, trade name
rights, patent rights, mask works, copyrights, licenses, trade secret or other
similar rights of others, and there is no claim being made against the Company
regarding trademark, trade name, patent, mask work, copyright, license, trade
secret or other infringement which could have a material adverse effect on the
condition (financial or otherwise), business or results of operations of the
Company.
(s) The Company is conducting business in compliance with all applicable
laws, rules and regulations of the jurisdictions in which it is conducting
business, including, without limitation, all applicable local, state and federal
environmental
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laws and regulations; except where failure to be so in compliance would not
materially adversely affect the condition (financial or otherwise), business or
results of operations of the Company.
(t) All necessary federal, state and foreign income and franchise tax
returns have been filed, except where the failure to file would not have a
material adverse effect on the condition (financial or otherwise), business or
results of operations of the Company, and all such tax returns are complete and
correct in all material respects, and all taxes shown as due thereon have been
paid. The Company has no knowledge of any tax deficiency which has been or
might be asserted or threatened against the Company which could reasonably be
expected to materially and adversely affect the business, operations or
properties of the Company.
(u) The Company is not, and upon the closing of the offering contemplated
hereby will not be, an "investment company" or a company "controlled by" an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(v) The Company has not distributed and will not distribute prior to the
First Closing Date any offering material in connection with the offering and
sale of the Common Shares other than the Preliminary Prospectus, the Prospectus
and the Registration Statement.
(w) The Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(x) Neither the Company nor, to the best of the Company's knowledge, any
of its employees or agents has at any time during the last five years (i) made
any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
(y) The Company has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Shares.
(z) The Company has caused each of its executive officers and directors as
set forth in the Prospectus to furnish to the Representatives an agreement in
the form attached hereto, pursuant to which each such party has agreed that
during the period of 180 days after the first date that any of the Common Shares
are released by you for sale to the public, without the prior written consent of
Xxxxxxxxxx Securities, such party will not directly or indirectly offer, sell,
contract to sell or otherwise dispose of any shares of the Company's Common
Stock or securities convertible into or exchangeable for, or any rights to
purchase or acquire, the Company's Common Stock (including without limitation,
Common Stock of the Company which may be deemed to be beneficially owned in
accordance with the rules and regulations of the Commission); provided, however,
that bona fide gift transactions may be permitted if the donee agrees in
writing, prior to the consummation of the gift, to be bound by the provisions
applicable to the share in the hands of the donor.
SECTION 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLING STOCKHOLDER
(a) The Selling Stockholder represents and warrants to, and agrees with,
the several Underwriters that:
(i) The Selling Stockholder has full legal right, power and authority
to enter into this Agreement and perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the Selling
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Stockholder and constitutes a valid and binding obligation of the Selling
Stockholder in accordance with its terms. The making and performance of this
Agreement by the Selling Stockholder and the consummation of the transactions
herein contemplated will not violate any provisions of the certificate of
incorporation or bylaws, or other organizational documents, of the Selling
Stockholder, and will not conflict with, result in the breach or violation of,
or constitute, either by itself or upon notice or the passage of time or both, a
default under any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Selling Stockholder is a
party or by which the Selling Stockholder or any of its properties may be bound
or affected, any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or other
governmental body applicable to the Selling Stockholder or any of its
properties. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is required
for the execution and delivery of this Agreement or the consummation by the
Selling Stockholder of the transactions contemplated by this Agreement, except
for compliance with the Act, the Blue Sky laws applicable to the public offering
of the Common Shares by the several Underwriters and the clearance of such
offering with the National Association of Securities Dealers, Inc. (the "NASD").
(ii) The Selling Stockholder has, and on the First Closing Date
and on any Second Closing Date hereinafter mentioned will have, good and
marketable title to the Common Shares proposed to be sold by the Selling
Stockholder hereunder on such Closing Date to sell, assign, transfer and deliver
such Common Shares hereunder, free and clear of all voting trust arrangements,
liens, encumbrances, equities, security interests, restrictions and claims
whatsoever; and upon delivery of and payment for such Common Shares hereunder,
the Underwriters will acquire good and marketable title thereto, free and clear
of all liens, encumbrances, equities, claims, restrictions, security interests,
voting trusts or other defects of title whatsoever.
(iii) The Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Shares.
(iv) The sale of the Common Shares by the Selling Stockholder
pursuant hereto is not prompted by any material adverse information concerning
the Company which is not set forth in the Registration Statement and Prospectus.
(v) Neither the Selling Stockholder nor, to the best of the
Selling Stockholder's knowledge, any of its employees or agents has at any time
during the last five years (i) made any unlawful contribution to any candidate
for foreign office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States of
any jurisdiction thereof.
(b) The Selling Stockholder agrees with the Underwriters not to offer to
sell, sell or contract to sell or otherwise dispose of any shares of Common
Stock or securities convertible into or exchangeable for any shares of Common
Stock, for a period of 240 days after the first date that any of the Common
Shares are released by you for sale to the public, without the prior written
consent of Xxxxxxxxxx Securities, which consent may be withheld at the sole
discretion of Xxxxxxxxxx Securities; provided, however, that the foregoing
agreement shall not prohibit a public offering of the Class A Common Stock
effected through an underwriting group managed by Xxxxxxxxxx Securities and
occurring at least 180 days after the first date that any of the Common Shares
are released by you for sale to the public.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS
The Representatives, on behalf of several Underwriters, represent and
warrant to the Company and to the Selling Stockholder that the information set
forth (i) on the cover page of the Prospectus with respect to price,
underwriting discounts and commissions and terms of offering and (ii) under
"Underwriting" in the Prospectus was furnished to the Company by and on behalf
of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus and is correct in all material
respects. The Representatives represent and warrant that, except as expressly
provided herein, they have
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been authorized by each of the other Underwriters as the Representatives to
enter into this Agreement on its behalf and to act for it in the manner herein
provided.
SECTION 5
PURCHASE, SALE AND DELIVERY OF COMMON SHARES
On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, (i) the
Company agrees to issue and sell to the Underwriters 5,800,000 of the Firm
Common Shares and (ii) the Selling Stockholder agrees to sell to the
Underwriters 1,200,000 of the Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Stockholder the number of Firm Common Shares described below. The purchase
price per share to be paid by the several Underwriters to the Company shall be
$_____ per share.
The obligation of each Underwriter to the Company shall be to purchase from
the Company that number of full shares which (as nearly as practicable, as
determined by you) bears to 5,800,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares. The obligation of each
Underwriter to the Selling Stockholder shall be to purchase from the Selling
Stockholder that number of full shares which (as nearly as practicable, as
determined by you) bears to 1,200,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears the total number of Firm Common Shares.
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Xxxxxxxxxx
Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such other
place as may be agreed upon by the Company and the Underwriters) at such time
and date, not later than the third (or, if the Firm Common Shares are priced as
contemplated by Rule 15c6-1(c) of the Exchange Act, after 4:30 p.m. Washington,
D.C. time, the fourth) full business day following the first date that any of
the Common Shares are released by you for sale to the public, as you shall
designate by at least 48 hours prior notice to the Company (or at such other
time and date, not later than one week after such third or fourth, as the case
may be, full business day as may be agreed upon by the Company and the
Representatives) (the "First Closing Date"); provided, however, that if the
Prospectus is at any time prior to the First Closing Date recirculated to the
public, the First Closing Date shall occur upon the later of the third or
fourth, as the case may be, full business day following the first date that any
of the Common Shares are released by you for sale to the public or the date that
is 48 hours after the date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company and the Selling Stockholder to you, for the respective
accounts of the Underwriters with respect to the Firm Common Shares to be sold
by the Company and the Selling Stockholder against payment by you, for the
accounts of the several Underwriters, of the purchase price therefor by wire
transfer of federal funds to an account designated in writing by the Company and
an account designated in writing by the Selling Stockholder. The certificates
for the Firm Common Shares shall be registered in such names and denominations
as you shall have requested at least two full business days prior to the First
Closing Date, and shall be made available for checking and packaging on the
business day preceding the First Closing Date at a location in New York, New
York, as may be designated by you. Time shall be of the essence, and delivery
at the time and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth,
(i) the Selling Stockholder hereby grants an option to the several Underwriters
to purchase up 700,000 Optional Common Shares and (ii) the Company hereby grants
an option to the several Underwriters to purchase up to 350,000 Optional Common
Shares; in each case at the purchase price per share to be paid for the Firm
Common Shares, for use solely in covering any over-allotments made by you for
the account of the Underwriters in the sale and distribution of the Firm Common
Shares. In the event that the Underwriters elect to purchase less than all of
the Optional Common Shares, the number of Optional Common Shares to be purchased
from the Selling Stockholder and the Company shall be determined by multiplying
the aggregate number of Optional Common Shares to be purchased by a fraction,
the numerator of which is the total number of Optional Common Shares set forth
opposite the name of the Selling Stockholder or the Company in Schedule B hereto
and the denominator of which is 1,050,000. The options granted hereunder may be
exercised at any time (but not more than once) within
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30 days after the first date that any of the Common Shares are released by you
for sale to the public, upon notice by you to the Company and the Selling
Stockholder setting forth the aggregate number of Optional Common Shares as to
which the Underwriters are exercising the option, the names and denominations in
which the certificates for such shares are to be registered and the time and
place at which such certificates will be delivered. Such time of delivery
(which may not be earlier than the First Closing Date), being herein referred to
as the "Second Closing Date," shall be determined by you, but if at any time
other than the First Closing Date shall not be earlier than three full business
days after delivery of such notice of exercise. The number of Optional Common
Shares to be purchased by each Underwriter shall be determined by multiplying
the aggregate number of Optional Common Shares to be sold by the Selling
Stockholder and the Company pursuant to such notice of exercise by a fraction,
the numerator of which is the number of Firm Common Shares to be purchased by
such Underwriter as set forth opposite its name in Schedule A and the
denominator of which is 7,000,000 (subject to such adjustments to eliminate any
fractional share purchases as you in your discretion may make). Certificates
for the Optional Common Shares will be made available for checking and packaging
on the business day preceding the Second Closing Date at a location in New York,
New York, as may be designated by you. The manner of payment for and delivery
of the Optional Common Shares shall be the same as for the Firm Common Shares
purchased from the Selling Stockholder and the Company as specified in the two
preceding paragraphs. At any time before lapse of the options, you may cancel
both such options by giving written notice of such cancellation to the Company
and the Selling Stockholder. If the options are canceled or expire unexercised
in whole or in part, the Company will deregister under the Act the number of
Optional Common Shares as to which the options has not been exercised.
You have advised the Company and the Selling Stockholder that each
Underwriter has authorized you to accept delivery of its Common Shares, to make
payment and to receipt therefor. You may (but shall not be obligated to) make
payment for any Common Shares to be purchased by any Underwriter whose funds
shall not have been received by you by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but any
such payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose to
make a public offering of their respective portions of the Common Shares as soon
after the effective date of the Registration Statement as in the judgment of the
Underwriters is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the Prospectus.
SECTION 6
COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDER
The Company and the Selling Stockholder each covenants and agrees that:
(a) The Company and the Selling Stockholder will each use its best efforts
to cause the Registration Statement and any amendment thereof, if not effective
at the time and date that this Agreement is executed and delivered by the
parties hereto, to become effective. If the Registration Statement has become
or becomes effective pursuant to Rule 430A of the Rules and Regulations, or the
filing of the Prospectus is otherwise required under Rule 424(b) of the Rules
and Regulations, the Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the Rules and Regulations
within the time period prescribed and will provide evidence satisfactory to you
of such timely filing. The Company will promptly advise you in writing (i) of
the receipt of any comments of the Commission, (ii) of any request of the
Commission for amendment of or supplement to the Registration Statement (either
before or after it becomes effective), any Preliminary Prospectus or the
Prospectus or for additional information, (iii) when the Registration Statement
shall have become effective and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose. If the Commission shall enter
any such stop order at any time, the Company will use its best efforts to obtain
the lifting of such order at the earliest possible moment. The Company will not
file any amendment or supplement to the Registration Statement (either before or
after it becomes effective), any Preliminary Prospectus or the Prospectus of
which you have not been furnished with a copy a reasonable time prior to such
filing or to which you reasonably object or which is not in compliance with the
Act and the Rules and Regulations.
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(b) The Company will prepare and file with the Commission, promptly upon
your request, a registration statement pursuant to Rule 462(b) of the Rules and
Regulations related to the Common Shares and any amendments or supplements to
the Registration Statement or the Prospectus which in your judgment may be
necessary or advisable to enable the several Underwriters to continue the
distribution of the Common Shares and will use its best efforts to cause the
same to become effective as promptly as possible. The Company will fully and
completely comply with the provisions of Rule 430A of the Rules and Regulations
with respect to information omitted from the Registration Statement in reliance
upon such Rule.
(c) The Company will immediately notify you in writing if, at any time
prior to the earliest of (i) the Second Closing Date on which all remaining
Optional Common Shares are purchased, (ii) the cancellation of the options to
purchase the Optional Common Shares as provided herein and (iii) the expiration
of the options to purchase the Optional Common Shares as provided herein, any
representation or warranty of the Company set forth herein shall not be true and
accurate in all material respects or, without limiting the foregoing, if there
shall have been any material adverse change, or a development involving a
material adverse change, in the condition (financial or otherwise), properties,
business or results of operations of the Company.
(d) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the Common
Shares is required to be delivered under the Act any event occurs, as a result
of which the Prospectus, including any amendments or supplements, would include
an untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or if it is necessary at any time to amend the Prospectus, including
any amendments or supplements, to comply with the Act or the Rules and
Regulations, the Company will promptly advise you thereof and will promptly
prepare and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an amendment or
supplement which will effect such compliance and will use its best efforts to
cause the same to become effective as soon as possible; and, in case any
Underwriter is required to deliver a prospectus after such nine-month period,
the Company upon request, but at the expense of such Underwriter, will promptly
prepare such amendment or amendments to the Registration Statement and such
Prospectus or Prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act.
(e) As soon as practicable, but not later than 45 days after the end of
the first quarter ending after one year following the "effective date of the
Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security holders
an earnings statement (which need not be audited) covering a period of 12
consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of
Section 11(a) of the Act.
(f) During such period as a prospectus is required by law to be delivered
in connection with sales by an Underwriter or dealer, the Company, at its
expense, but only for the nine-month period referred to in Section 10(a) (3) of
the Act, will furnish to you and the Selling Stockholder or mail to your order
copies of the Registration Statement, the Prospectus, the Preliminary Prospectus
and all amendments and supplements to any such documents in each case as soon as
available and in such quantities as you and the Selling Stockholder may request,
for the purposes contemplated by the Act.
(g) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions from
the application of) the Blue Sky laws of such jurisdictions as you designate,
will comply with such laws and will continue such qualifications, registrations
and exemptions in effect so long as reasonably required for the distribution of
the Common Shares. The Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise you promptly of the
suspension of the qualification or registration of (or any such exemption
relating to) the Common Shares for offering, sale or trading in any jurisdiction
or any initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any order suspending such qualification, registration
or exemption, the Company, with your cooperation, will use its best efforts to
obtain the withdrawal thereof.
(h) During the period of five years hereafter, the Company will furnish to
the Representatives and, upon the request of the Representatives, to each of the
other Underwriters: (i) as soon as practicable after the end of each fiscal
year, copies of the Annual Report of the Company containing the balance sheet of
the Company as of the close of such fiscal year and statements of income,
stockholder's equity and cash flows for the year then ended and the opinion
thereon of the Company's independent public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement, Annual
Report on
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Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other report
filed by the Company with the Commission, the NASD or any securities exchange;
and (iii) as soon as available, copies of any report or communication of the
Company mailed generally to holders of its Common Stock.
(i) During the period of 180 days after the first date that any of the
Common Shares are released by you for sale to the public, without the prior
written consent of Xxxxxxxxxx Securities (which consent may be withheld at the
sole discretion of Xxxxxxxxxx Securities), the Company will not issue, offer,
sell, grant options to purchase or otherwise dispose of any of the Company's
equity securities or any other securities convertible into or exchangeable with
its Common Stock or other equity security, other than pursuant to the Company's
stock plans disclosed in the Prospectus or in connection with the Company's
acquisition of complementary technologies or businesses.
(j) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(k) The Company will use its best efforts to qualify or register its
Class A Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the Blue Sky laws of the State of California
(and thereby permit market making transactions and secondary trading in the
Company's Class A Common Stock in California), will comply with such Blue Sky
laws and will continue such qualifications, registrations and exemptions in
effect for a period of five years after the date hereof.
(l) The Company will maintain a transfer agent and registrar for its Class
A Common Stock.
You, on behalf of the Underwriters, may, in your sole discretion, waive in
writing the performance by the Company of any one or more of the foregoing
covenants or extend the time for their performance.
SECTION 7
PAYMENT OF EXPENSES
Whether or not the transactions contemplated hereunder are consummated or
this Agreement becomes effective or is terminated, the Company and, unless
otherwise paid by the Company, the Selling Stockholder agree to pay in such
proportions as they may agree upon among themselves all costs, fees and expenses
incurred in connection with the performance of their obligations hereunder and
in connection with the transactions contemplated hereby, including without
limiting the generality of the foregoing, (i) all expenses incident to the
issuance and delivery of the Common Shares (including all printing and engraving
costs), (ii) all fees and expenses of the registrar and transfer agent of the
Class A Common Stock, (iii) all necessary issue, transfer and other stamp taxes
in connection with the issuance and sale of the Common Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel and the
Company's independent accountants, (v) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
the Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all amendments and
supplements provided for herein, any registration statement filed pursuant to
Rule 462(b) of the Rules and Regulations related to the Common Shares, this
Agreement, the Agreement Among Underwriters, the Selected Dealers Agreement, the
Underwriters' Questionnaire, the Underwriters' Power of Attorney and the Blue
Sky memorandum, (vi) all filing fees, attorneys' fees and expenses incurred by
the Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Common Shares for offer and sale under state Blue Sky and foreign
securities laws, (vii) all filing fees of the National Association of Securities
Dealers, Inc. and (viii) all other fees, costs and expenses referred to in Item
13 of the Registration Statement. The Underwriters may deem the Company to be
the primary obligor with respect to all costs, fees and expenses to be paid by
the Company and by the Selling Stockholder. Except as provided in this
Section 7, Section 9 and Section 11 hereof, the Underwriters shall pay all of
their own expenses, including the fees and disbursements of their counsel
(excluding those relating to qualification, registration or exemption under
state Blue Sky and foreign securities laws and the Blue Sky memorandum referred
to above). This Section 7 shall not affect any agreements relating to the
payment of expenses between the Company and the Selling Stockholder.
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The Selling Stockholder will pay (directly or by reimbursement) all fees
and expenses incident to the performance of their obligations under this
Agreement which are not otherwise specifically provided for herein, including
but not limited to (i) any fees and expenses of counsel for the Selling
Stockholder; and (ii) all expenses and taxes incident to the sale and delivery
of the Common Shares to be sold by the Selling Stockholder to the Underwriters
hereunder.
SECTION 8
CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS
The obligations of the several Underwriters to purchase and pay for the
Firm Common Shares on the First Closing Date and the Optional Common Shares on
the Second Closing Date shall be subject to the accuracy of the representations
and warranties on the part of the Company and the Selling Stockholder herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Stockholder made pursuant to the provisions hereof, to
the performance by the Company and the Selling Stockholder of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later than
5:00 p.m.(or, in the case of a registration statement filed pursuant to
Rule 462(b) of the Rules and Regulations relating to the Common Shares, not
later than 10:00 p.m.), Washington, D.C. Time, on the date of this Agreement, or
at such later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and Regulations;
and prior to such Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company, the Selling Stockholder or you, shall be contemplated by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement, or otherwise, shall have been
complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i) except as
disclosed in the Prospectus, there shall not have been any change in the capital
stock other than pursuant to the exercise of outstanding options and the
issuance of Class A Common Stock pursuant to the Selling Stockholder's Long-Term
Incentive Plan or any material change in the indebtedness (other than in the
ordinary course of business) of the Company, (ii) except as set forth or
contemplated by the Registration Statement or the Prospectus, no material verbal
or written agreement or other transaction shall have been entered into by the
Company, which is not in the ordinary course of business, (iii) no loss or
damage (whether or not insured) to the property of the Company shall have been
sustained which materially and adversely affects the condition (financial or
otherwise), business or results of operations of the Company, (iv) no legal or
governmental action, suit or proceeding affecting the Company which is material
to the Company or which affects or could reasonably be expected to affect the
transactions contemplated by this Agreement shall have been instituted or
threatened and (v) there shall not have been any material change in the
condition (financial or otherwise), business, management or results of
operations of the Company which makes it impractical or inadvisable in the
reasonable judgment of the Representatives to proceed with the public offering
or purchase the Common Shares as contemplated hereby.
(c) There shall have been furnished to you on each Closing Date, in form
and substance satisfactory to you, except as otherwise expressly provided below:
(i) An opinion of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the
Company and the Selling Stockholder, addressed to the Underwriters and dated the
First Closing Date or the Second Closing Date, as the case may be, to the effect
that:
(1) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business as a
foreign corporation and is in good standing in all other jurisdictions
where the ownership or leasing of properties or the conduct of its
business requires such qualification, except for jurisdictions in
which the failure to so qualify would not have a material adverse
effect on the Company, and has full corporate power and authority to
own its properties and conduct its business as described in the
Registration Statement;
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(2) The authorized, issued and outstanding capital stock of
the Company is as set forth under the caption "Capitalization" in the
Prospectus; immediately upon consummation of the Offering, the Selling
Stockholder will own all the issued and outstanding shares of Common
Stock which are not sold in the Offering other than the shares of
Class A Common Stock issued pursuant to the Selling Stockholder's
Long-Term Incentive Plan; all necessary and proper corporate
proceedings have been taken in order to validly authorize such Common
Stock; all outstanding shares of Common Stock (including the Firm
Common Shares and any Optional Common Shares) have been duly and
validly issued, are fully paid and nonassessable, have been issued in
compliance with the registration and qualification requirements of
federal and state securities laws (other than as may be required by
state securities laws for the Common Shares, as to which such counsel
need express no opinion), were not issued in violation of or subject
to any preemptive rights or, to such counsel's knowledge, other rights
to subscribe for or purchase any securities and conform to the
description thereof in the Prospectus; without limiting the foregoing,
there are no preemptive or, to such counsel's knowledge, other rights
to subscribe for or purchase any of the Common Shares to be sold by
the Company hereunder or any rights of first refusal to purchase the
Common Shares to be sold by the Selling Stockholder hereunder;
(3) The certificates evidencing the Common Shares to be
delivered hereunder are in due and proper form under Delaware law, and
when duly countersigned by the Company's transfer agent and registrar,
and delivered to you or upon your order against payment of the agreed
consideration therefor in accordance with the provisions of this
Agreement, the Common Shares represented thereby will be duly
authorized and validly issued, fully paid and nonassessable, will not
have been issued in violation of or subject to any preemptive rights
or, to such counsel's knowledge, other rights to subscribe for or
purchase securities and will conform in all respects to the
description thereof contained in the Prospectus;
(4) Except as disclosed in or specifically contemplated by
the Prospectus, to the best of such counsel's knowledge there are no
outstanding options, warrants or other rights calling for the issuance
of, and no commitments, plans or arrangements to issue, any shares of
capital stock of the Company or any security convertible into or
exchangeable for capital stock of the Company;
(5) (a) The Registration Statement has become effective
under the Act, and to the best of such counsel's knowledge no stop
order suspending the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated by the Commission; any required filing of the Prospectus
and any supplement thereto pursuant to Rule 424(b) and 462(b) of the
Rules and Regulations has been made in the manner and within the time
period required by such Rule 424(b) or 462(b);
(b) The Registration Statement, the Prospectus and
each amendment or supplement thereto (except for the financial
statements and schedules and other financial and statistical data
included therein as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of
the Act and the Rules and Regulations.
(c) To the best of such counsel's knowledge, there are
no franchises, leases, contracts, agreements or documents of a
character required to be disclosed in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement
which are not disclosed or filed as required, and the descriptions
thereof or references thereto are accurate summaries in all material
respects; and
(d) To the best of such counsel's knowledge, there are
no legal or governmental actions, suits or proceedings pending or
threatened against the Company which are required to be described in
the Prospectus which are not described as required.
(6) The Company has full corporate right, power and
authority to enter into this Agreement and to sell and deliver the
Common Shares to be sold by it to the several Underwriters; this
Agreement has been duly and validly authorized by all necessary
corporate action by the Company, has been duly and validly
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executed and delivered by and on behalf of the Company, and is a valid
and binding agreement of the Company in accordance with its terms,
except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and except as to
those provisions relating to indemnity or contribution for liabilities
arising under the Act as to which no opinion need be expressed; and no
approval, authorization, order, consent, registration, filing,
qualification, license or permit of or with any court, regulatory,
administrative or other governmental body is required for the
execution and delivery of this Agreement by the Company or the
consummation of the transactions contemplated by this Agreement,
except such as have been obtained and are in full force and effect
under the Act and such as may be required under applicable Blue Sky
laws in connection with the purchase and distribution of the Common
Shares by the Underwriters and the clearance of such offering with the
NASD;
(7) The execution and performance of this Agreement by the
Company and the Selling Stockholder and the consummation of the
transactions herein contemplated will not conflict with, result in the
breach of, or constitute, either by itself or upon notice or the
passage of time or both, a default under, any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other
instrument known to such counsel to which the Company is a party or by
which the Company or any of its properties may be bound or affected
which is material to the Company, or violate any of the provisions of
the certificate of incorporation or bylaws, or other organizational
documents, of the Company or, so far as is known to such counsel,
violate any statute, judgment, decree, order, rule or regulation of
any court or governmental body having jurisdiction over the Company or
any of its properties;
(8) The Company is not in violation of its certificate of
incorporation or bylaws, or other organizational documents, or to the
best of such counsel's knowledge, in breach of or default with respect
to any provision of any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument known to
such counsel to which the Company is a party or by which it or any of
its properties may be bound or affected, other than with respect to
two of the Company's product supply contracts (No. GS-00K-91AGS-0567
and GS-00K-94AGS-0451) subject to GSA regulations and except where
such breach or default would not materially adversely affect the
Company;
(9) To the best of such counsel's knowledge, no holders of
securities of the Company have rights which have not been waived to
the registration of shares of Common Stock or other securities,
because of the filing of the Registration Statement by the Company or
the offering contemplated hereby;
(10) The statements in the Registration Statement and
Prospectus under the headings "Management--Stock Plans," "Relationship
with Xxxx Xxxxxxx" and "Description of Capital Stock" and in the
Registration Statement in Items 14 and 15, insofar as they are
descriptions of contracts, agreements or other legal documents, and
under the heading "Shares Eligible for Future Sale" insofar as they
refer to statements of law or legal conclusions, are accurate and
complete and present fairly the information required to be shown;
(11) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder; the execution
and performance of this Agreement by the Selling Stockholder and the
consummation of the transactions herein contemplated will not violate
any provision of the Certificate of Incorporation or Bylaws of the
Selling Stockholder and will not result in a breach of, or constitute
a default under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise, license or
other agreement or instrument to which the Selling Stockholder is a
party or by which the Selling Stockholder or any of its properties may
be bound and which relates to any indebtedness of the Selling
Stockholder, or violate any statute, judgment, decree, order, rule or
regulation known to such counsel of any court or governmental body
having jurisdiction over the Selling Stockholder or any of its
properties; and no approval, authorization, order or consent of any
court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this Agreement or
the consummation by the Selling Stockholder of the transactions
contemplated by this Agreement, except such as have been obtained
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and are in full force and effect under the Act and such as may be
required under the rules of the NASD and applicable Blue Sky laws;
(12) The Selling Stockholder has full corporate right, power
and authority to enter into this Agreement and to sell, transfer and
deliver the Common Shares to be sold by the Selling Stockholder
hereunder; and good and marketable title to such Common Shares so
sold, free and clear of all liens, encumbrances, equities, claims,
restrictions, security interests, voting trusts, or other defects of
title whatsoever, has been transferred to the Underwriters (whom
counsel may assume to be bona fide purchasers) who have purchased such
Common Shares hereunder;
(13) This Agreement constitutes a valid and binding
agreement of the Selling Stockholder in accordance with its terms
except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and except with
respect to those provisions relating to indemnities or contributions
for liabilities under the Act, as to which no opinion need be
expressed; and
(14) No transfer taxes are required to be paid in connection
with the sale and delivery of the Common Shares to the Underwriters
hereunder.
In rendering such opinion, such counsel may rely as to matters of
local law on opinions of local counsel, and as to matters of fact on
certificates of officers of the Selling Stockholder and of the Company and of
governmental officials, in which case their opinion is to state that they are so
doing and that the Underwriters are justified in relying on such opinions or
certificates and copies of said opinions or certificates are to be attached to
the opinion. Such counsel shall also include a statement to the effect that
nothing has come to such counsel's attention that would lead such counsel to
believe that either at the effective date of the Registration Statement or at
the applicable Closing Date the Registration Statement or the Prospectus, or any
such amendment or supplement thereto (except for the financial statements and
schedules and other financial and statistical data included therein as to which
such counsel need express no opinion), contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(ii) An opinion of the General Counsel of the Selling
Stockholder, addressed to the Underwriters and dated the First Closing Date
or the Second Closing Date, as the case may be, to the effect that:
(1) To the best of such counsel's knowledge, the Company
owns all patents, trademarks, trademark registrations, service marks,
service xxxx registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the Prospectus as
being owned by it or necessary for the conduct of its business, and
such counsel is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company with
respect to the foregoing, except where such claim or challenge would
not have a material adverse effect on the Company; and
(2) To the best of such counsel's knowledge, the Company is
in compliance with all laws, rules, regulations, judgments, decrees,
orders and statutes of any court or jurisdiction to which it is
subject, other than with respect to certain GSA regulations pursuant
to which two of the Company's product supply contracts (No.
GS-00K-91AGS-0567 and GS-00K-94AGS-0451) are subject and except where
noncompliance would not materially adversely affect the Company.
(iii) Such opinion or opinions of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, P.C., counsel for the Underwriters dated the First Closing Date or
the Second Closing Date, as the case may be, with respect to the
incorporation of the Company, the sufficiency of all corporate proceedings
and other legal matters relating to this Agreement, the validity of the
Common Shares, the Registration Statement and the Prospectus and other
related matters as you may reasonably require, and the Company and the
Selling Stockholder shall have furnished to such counsel such documents and
shall have exhibited to them such papers and records as they may reasonably
request for the purpose of enabling them to pass upon such matters. In
connection with such opinions, such counsel may rely on representations or
certificates of officers of the Company and governmental officials.
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(iv) A certificate of the Company executed by the Chairman of the
Board or President and the chief financial or accounting officer of the
Company, dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) The representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of the
date of this Agreement and as of the First Closing Date or the Second
Closing Date, as the case may be, and the Company has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied on or prior to such Closing Date;
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus
filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the best of the
knowledge of the respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated under the Act;
(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus; in
his or her opinion and to the best of his or her knowledge, the
Registration Statement and the Prospectus and any amendments or
supplements thereto contain all statements required to be stated
therein regarding the Company; and neither the Registration Statement
nor the Prospectus nor any amendment or supplement thereto includes
any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction or
event has occurred which should have been set forth in an amendment to
the Registration Statement or in a supplement to or amendment of any
prospectus which has not been disclosed in such a supplement or
amendment;
(5) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as
disclosed in the Prospectus, there has not been any material adverse
change or a development involving a material adverse change in the
condition (financial or otherwise), business, properties, results of
operations or management of the Company; and there has been no legal
or governmental action, suit or proceeding is pending or, to such
person's knowledge, threatened against the Company which is material
to the Company, whether or not arising from transactions in the
ordinary course of business, or which could reasonably be expected to
adversely affect the transactions contemplated by this Agreement;
since such dates the Company has not entered into any verbal or
written agreement or other transaction which is not in the ordinary
course of business or incurred any material liability or obligation,
direct, contingent or indirect which is not in the ordinary course of
business, made any change in its capital stock, made any material
change in its short-term debt or funded debt or repurchased or
otherwise acquired any of the Company's capital stock; and the Company
has not declared or paid any dividend, or made any other distribution,
upon its outstanding capital stock payable to stockholders of record
on a date prior to the First Closing Date or Second Closing Date; and
(6) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company
has not sustained a material loss or damage by strike, fire, flood,
windstorm, accident or other calamity (whether or not insured).
(v) On the First Closing Date or the Second Closing Date, as the
case may be, a certificate, dated such Closing Date and addressed to you,
signed by the President and Chief Financial Officer of the Selling
Stockholder to the effect that the representations and warranties of the
Selling Stockholder in Sections 2 and 3 of this Agreement are true and
correct as of the date of this Agreement and as of the First Closing Date
or the Second Closing Date, as the case may be, and the Selling Stockholder
has complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied prior to the First Closing Date or
the Second Closing Date, as the case may be.
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(vi) On the date before this Agreement is executed and also on
the First Closing Date and the Second Closing Date, a letter addressed to
you from Price Waterhouse LLP, independent accountants, the first one to be
dated the day before the date of this Agreement, the second one to be dated
the First Closing Date and the third one (in the event of a Second Closing)
to be dated the Second Closing Date, in form and substance satisfactory to
you.
(vii) On or before the First Closing Date, letters from each
director and executive officer of the Company, in form and substance
satisfactory to you, confirming that for a period of 180 days after the
first date that any of the Common Shares are released by you for sale to
the public, such person or entity will not directly or indirectly sell or
offer to sell or otherwise dispose of any shares of Common Stock or any
right to acquire any such shares without the prior written consent of
Xxxxxxxxxx Securities, which consent may be withheld at the sole discretion
of Xxxxxxxxxx Securities.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel for the Underwriters. The
Company shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any certificate
signed by any officer of the Company and delivered to the Underwriters or to
counsel for the Underwriters shall be deemed to be a representation and warranty
by the Company to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification by you to the Company and the
Selling Stockholder without liability on the part of any Underwriter or the
Company or the Selling Stockholder except for the expenses to be paid or
reimbursed by the Company and by the Selling Stockholder pursuant to Sections 7
and 9 hereof and except to the extent provided in Section 11 hereof.
SECTION 9
REIMBURSEMENT OF UNDERWRITERS' EXPENSES
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to Section 8, or if the sale to the Underwriters of
the Common Shares at the First Closing is not consummated because of any
refusal, inability or failure on the part of the Company or the Selling
Stockholder to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse you and the other Underwriters upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by you and them in connection with the proposed purchase and the sale of the
Common Shares, including but not limited to fees and disbursements of counsel,
printing expenses, travel expenses, postage, telegraph charges and telephone
charges relating directly to the offering contemplated by the Prospectus. Any
such termination shall be without liability of any party to any other party
except that the provisions of this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.
SECTION 10
EFFECTIVENESS OF REGISTRATION STATEMENT
You, the Company and the Selling Stockholder will use your, its and their
best efforts to cause the Registration Statement to become effective, to prevent
the issuance of any stop order suspending the effectiveness of the Registration
Statement and, if such stop order be issued, to obtain as soon as possible the
lifting thereof.
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SECTION 11
INDEMNIFICATION
(a) The Company and the Selling Stockholder, jointly and severally, agree
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state in any of them a
material fact required to be stated therein or necessary to make the statements
in any of them not misleading, or arise out of or are based in whole or in part
on any inaccuracy in the representations and warranties of the Company or the
Selling Stockholder contained herein or any failure of the Company or the
Selling Stockholder to perform their respective obligations hereunder or under
law; and will reimburse each Underwriter and each such controlling person for
any legal and other expenses as such expenses are reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that (i) neither the Company
nor the Selling Stockholder will be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with the information furnished to the Company pursuant to Section 4
hereof and (ii) with respect to any untrue statement or omission or alleged
untrue statement or omission made in any Preliminary Prospectus, the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
Underwriter from whom the person asserting any such loss, claim, damage or
liability purchased Common Shares to the extent that any such loss, claim,
damage or liability of such Underwriter results from the fact that a copy of the
Prospectus was not sent or given to such person at or prior to the written
confirmation of the sale of such Shares to such person as required by the Act,
provided the untrue statement or omission concerned has been corrected in the
Prospectus, unless such failure is the result of noncompliance by the Company
with Section 6(e) hereof. The Company and the Selling Stockholder may agree, as
among themselves and without limiting the rights of the Underwriters under this
Agreement, as to their respective amounts of such liability for which they each
shall be responsible. In addition to their other obligations, under this
Section 11(a), the Company and the Selling Stockholder agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, or any inaccuracy in the representations and
warranties of the Company or the Selling Stockholder herein or failure to
perform their obligations hereunder, all as described in this Section 11(a),
they will reimburse each Underwriter on a quarterly basis for all reasonable
legal or other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's or the Selling Stockholder's obligation to
reimburse each Underwriter for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, each Underwriter shall promptly return it to the
Company and the Selling Stockholder together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by Bank of
America NT&SA, San Francisco, California (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Underwriter within 30 days of a
request for reimbursement, shall bear interest at the Prime Rate from the date
of such request. This indemnity agreement will be in addition to any liability
which the Company or the Selling Stockholder may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, the Selling Stockholder and each person, if any, who controls the
Company or the Selling Stockholder within the meaning of the Act ("controlling
person"), against any losses, claims, damages, liabilities or expenses to which
the Company, or any such director, officer, the Selling Stockholder or
controlling person may become subject, under the Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any
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untrue or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 4 hereof; and will reimburse the
Company, or any such director, officer, the Selling Stockholder or controlling
person for any legal and other expense reasonably incurred by the Company, or
any such director, officer, the Selling Stockholder or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
no Underwriter shall be required to contribute any amount in excess of the
amount of the total underwriting commissions received by such Underwriter in
connection with the Common Shares underwritten by it and distributed to the
public. In addition to its other obligations under this Section 11(b), each
Underwriter severally agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 11(b) which relates to information furnished to the
Company pursuant to Section 4 hereof, it will reimburse the Company (and, to the
extent applicable, each officer, director, the Selling Stockholder or
controlling person) on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, the Selling Stockholder or controlling
person) for such expenses and the possibility that such payments might later be
held to have been improper by a court of competent jurisdiction. To the extent
that any such interim reimbursement payment is so held to have been improper,
the Company (and, to the extent applicable, each officer, director, the Selling
Stockholder or controlling person) shall promptly return it to the Underwriters
together with interest, compounded daily, determined on the basis of the Prime
Rate. Any such interim reimbursement payments which are not made to the Company
within 30 days of a request for reimbursement, shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section or to the
extent it is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representatives in the case of paragraph (a),
representing the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 11 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party shall contribute to the
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amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Stockholder and the Underwriters from the offering of the
Common Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, the Selling Stockholder and the Underwriters in connection
with the statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
respective relative benefits received by the Company, the Selling Stockholder
and the Underwriters shall be deemed to be in the same proportion, in the case
of the Company and the Selling Stockholder as the total price paid to the
Company and to the Selling Stockholder, respectively, for the Common Shares sold
by them to the Underwriters (plus, in the case of Selling Stockholder, the
amount of proceeds received by the Company which are paid to the Selling
Stockholder for repayment of indebtedness) (net of underwriting commissions but
before deducting expenses), and in the case of the Underwriters as the
underwriting commissions received by them bears to the total of such amounts
paid to the Company and to the Selling Stockholder and received by the
Underwriters as underwriting commissions. The relative fault of the Company,
the Selling Stockholder and the Underwriters shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation and/or warranty relates
to information supplied by the Company, the Selling Stockholder or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in subparagraph (c) of this Section 11, any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
subparagraph (c) of this Section 11 with respect to notice of commencement of
any action shall apply if a claim for contribution is to be made under this
subparagraph (d); provided, however, that no additional notice shall be required
with respect to any action for which notice has been given under
subparagraph (c) for purposes of indemnification. The Company, the Selling
Stockholder and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 11 were determined solely by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 11, no Underwriter shall be
required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 11 are several in proportion to their respective
underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 11(a) and 11(b) hereof,
including the amounts of any requested reimbursement payments and the method of
determining such amounts, shall be settled by arbitration conducted under the
provisions of the Constitution and Rules of the Board of Governors of the New
York Stock Exchange, Inc. or pursuant to the Code of Arbitration Procedure of
the NASD. Any such arbitration must be commenced by service of a written demand
for arbitration or written notice of intention to arbitrate, therein electing
the arbitration tribunal. In the event the party demanding arbitration does not
make such designation of an arbitration tribunal in such demand or notice, then
the party responding to said demand or notice is authorized to do so. Such an
arbitration would be limited to the operation of the interim reimbursement
provisions contained in Sections 11(a) and 11(b) hereof and would not resolve
the ultimate propriety or enforceability of the obligation to reimburse expenses
which is created by the provisions of such Sections 11(a) and 11(b) hereof.
SECTION 12
DEFAULT OF UNDERWRITERS
It shall be a condition to this Agreement and the obligation of the Company
and the Selling Stockholder to sell and deliver the Common Shares hereunder, and
of each Underwriter to purchase the Common Shares in the manner as described
herein, that, except as hereinafter in this paragraph provided, each of the
Underwriters shall purchase and pay for all the Common Shares agreed to be
purchased by such Underwriter hereunder upon tender to the Underwriters of all
such shares in accordance
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with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Common Shares hereunder on either the First or Second
Closing Date and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase on such Closing Date
does not exceed 10% of the total number of Common Shares which the Underwriters
are obligated to purchase on such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Common Shares which such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of Common Shares with respect
to which such default occurs is more than the above percentage and arrangements
satisfactory to the Underwriters and the Company for the purchase of such Common
Shares by other persons ore not made within 48 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company or the Selling Stockholder except for the expenses to
be paid by the Company and the Selling Stockholder pursuant to Section 7 hereof
and except to the extent provided in Section 11 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Underwriters or the Company shall have the right to postpone the First or Second
Closing Date, as the case may be, for not more than five business days in order
that the necessary changes in the Registration Statement, Prospectus and any
other documents, as well as any other arrangements, may be effected. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13
EFFECTIVE DATE
This Agreement shall become effective immediately as to Sections 7, 9, 11,
14 and 16 and, as to all other provisions, (i) if, at the time of execution of
this Agreement, the Registration Statement has not become effective, at 2:00
P.M., California time, on the first full business day following the
effectiveness of the Registration Statement, or (ii) if, at the time of
execution of this Agreement, the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this Section 13, the Common Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams
(i) advising Underwriters that the Common Shares are released for public
offering, or (ii) offering the Common Shares for sale to securities dealers,
whichever may occur first.
SECTION 14
TERMINATION
Without limiting the right to terminate this Agreement pursuant to any
other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you and
the Selling Stockholder or by you by notice to the Company and the Selling
Stockholder at any time prior to the time this Agreement shall become effective
as to all its provisions, and any such termination shall be without liability on
the part of the Company or the Selling Stockholder to any Underwriter (except
for the expenses to be paid or reimbursed by the Company and the Selling
Stockholder pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof) or of any Underwriter to the Company or the
Selling Stockholder (except to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have
-21-
been suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by federal,
New York or California authorities, (ii) if an outbreak of major hostilities or
other national or international calamity or any substantial change in political,
financial or economic conditions shall have occurred or shall have accelerated
or escalated to such an extent, as, in the reasonable judgment of the
Underwriters, to affect adversely the marketability of the Common Shares,
(iii) if any adverse event shall have occurred or shall exist which makes untrue
or incorrect in any material respect any statement or information contained in
the Registration Statement or Prospectus or which is not reflected in the
Registration Statement or Prospectus but should be reflected therein in order to
make the statements or information contained therein not misleading in any
material respect, or (iv) if there shall be any action, suit or proceeding
pending or threatened, or there shall have been any development or prospective
development involving particularly the business or properties or securities of
the Company or the transactions contemplated by this Agreement, which, in the
reasonable judgment of the Underwriters, may materially and adversely affect the
Company's business or earnings and makes it impracticable or inadvisable to
offer or sell the Common Shares. Any termination pursuant to this subsection
(b) shall be without liability on the part of any Underwriter to the Company or
the Selling Stockholder or on the part of the Company or the Selling Stockholder
to any Underwriter (except for expenses to be paid or reimbursed by the Company
and the Selling Stockholder pursuant to Sections 7 and 9 hereof and except to
the extent provided in Section 11 hereof).
(c) This Agreement shall also terminate at 5:00 P.M., California Time, on
the tenth full business day after the Registration Statement shall have become
effective if the initial public offering price of the Common Shares shall not
then as yet have been determined as provided in Section 5 hereof. Any
termination pursuant to this subsection (c) shall be without liability on the
part of any Underwriter to the Company or the Selling Stockholder or on the part
of the Company or the Selling Stockholder to any Underwriter (except for
expenses to be paid or reimbursed by the Company and the Selling Stockholder
pursuant to Sections 7 and 9 hereof and except to the extent provided in
Section 11 hereof).
SECTION 15
FAILURE OF THE SELLING STOCKHOLDER TO SELL AND DELIVER
If the Selling Stockholder shall fail to sell and deliver to the
Underwriters the Common Shares to be sold and delivered by the Selling
Stockholder at the First Closing Date or the Second Closing Date under the terms
of this Agreement, then the Underwriters may at their option, by written notice
from you to the Company and the Selling Stockholder, purchase the shares which
the Company has agreed to sell and deliver in accordance with the terms hereof.
In the event of a failure by the Selling Stockholder to sell and deliver as
referred to in this Section, either you or the Company shall have the right to
postpone the Closing Date for a period not exceeding seven business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected.
SECTION 16
REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY
The respective indemnities, agreements, representations, warranties and
other statements of the Company, of its officers, of the Selling Stockholder and
of the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Stockholder, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
-22-
SECTION 17
NOTICES
All communications hereunder shall be in writing and, if sent to the
Underwriters shall be mailed, delivered or telegraphed and confirmed to you at
000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: J. Xxxxxxx
Xxxxxx, with a copy to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., 000 Xxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx, Esq. and Xxxxxx
X. Xxxxxx, Esq.; and if sent to (i) the Company shall be mailed, delivered or
telegraphed and confirmed to the Company at 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Soon, or (ii) the Selling
Stockholder shall be mailed, delivered or telegraphed and confirmed to the
Selling Stockholder at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000-0000,
Attention: Xxxx X. Xxxx, in either instance with a copy to Xxxxxx Xxxxxx &
Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: W. Xxxxxx Xxxxx,
Esq. The Company, the Selling Stockholder or you may change the address for
receipt of communications hereunder by giving notice to the others.
SECTION 18
SUCCESSORS
This Agreement will inure to the benefit of and be binding upon the parties
hereto, including any substitute Underwriters pursuant to Section 12 hereof, and
to the benefit of the officers and directors and controlling persons referred to
in Section 11, and in each case their respective successors, personal
representatives and assigns, and no other person will have any right or
obligation hereunder. No such assignment shall relieve any party of its
obligations hereunder. The term "successors" shall not include any purchaser of
the Common Shares as such from any of the Underwriters merely by reason of such
purchase.
SECTION 19
PARTIAL UNENFORCEABILITY
The invalidity or unenforceability of any Section, paragraph or provision
of this Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
SECTION 20
APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with the
internal laws (and not the laws pertaining to conflicts of laws) of the State of
California.
SECTION 21
GENERAL
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in several counterparts, each one of
which shall be an original, and all of which shall constitute one and the same
document.
-23-
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholder and you.
-24-
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company, the Selling Stockholder and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
LARSCOM INCORPORATED
By: ____________________________________
Title: _________________________________
XXXX XXXXXXX INC.
By: ____________________________________
Title: _________________________________
The foregoing Underwriting Agreement is
hereby confirmed and accepted by us in
San Francisco, California as of the date
first above written.
XXXXXXXXXX SECURITIES
XXXXX & COMPANY
PUNK, XXXXXX & XXXXXX, X.X.
By: XXXXXXXXXX SECURITIES
By: ____________________________________
Title: _________________________________
-25-
SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
----------------------------------------------- ----------------
Xxxxxxxxxx Securities . . . . . . . . . . . . .
Xxxxx & Company . . . . . . . . . . . . . . . .
Punk, Xxxxxx & Xxxxxx, X.X. . . . . . . . . . .
---------
---------
TOTAL . . . . . . . . . 7,000,000
---------
---------
A-1
SCHEDULE B
Number of Optional
Name of Seller Common Shares to be Sold
Xxxx Xxxxxxx Inc. . . . . . . . . . . . . . . 700,000
Larscom Incorporated. . . . . . . . . . . . . 350,000
------------
------------
TOTAL . . . . . 1,050,000
------------
------------
