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5,000,000 SHARES
APPLIED GRAPHICS TECHNOLOGIES, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
August , 1997
XXXXX & COMPANY
BEAR, XXXXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
XXXXXXXXXX SECURITIES
As Representatives of the several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. Applied Graphics Technologies, Inc., a Delaware
corporation (the "Company"), proposes to sell, pursuant to the terms of this
Agreement, to the several underwriters named in Schedule A hereto (the
"Underwriters," or, each, an "Underwriter"), an aggregate of 3,000,000 shares of
Common Stock, par value $.01 (the "Common Stock"), of the Company (the
"Company"). Applied Printing Technologies, L.P., a Delaware limited partnership
("APT"), proposes to sell, pursuant to the terms of this Agreement, to the
Underwriters, an aggregate of 1,750,000 shares of Common Stock. SpotLink, Inc.,
a California corporation ("SpotLink," and together with APT, the "Selling
Stockholders"), proposes to sell, pursuant to the terms of this Agreement, to
the Underwriters, an aggregate of 250,000 shares of Common Stock. The aggregate
of such 5,000,000 shares so proposed to be sold by the Company and the Selling
Stockholders is hereinafter referred to as the "Firm Stock." APT also proposes
to sell to the Underwriters, upon the terms and conditions set forth in Section
3 hereof, up to an additional 750,000 shares of Common Stock (the "Optional
Stock"). The Firm Stock and the Optional Stock are hereinafter collectively
referred to as the "Stock." Xxxxx & Company ("Cowen"), Bear, Xxxxxxx & Co.
("Bear Xxxxxxx"), Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx
Xxxxx") and Xxxxxxxxxx Securities ("Xxxxxxxxxx") are acting as representatives
of the several Underwriters and in such capacity are hereinafter referred to as
the "Representatives."
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2. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with,
the several Underwriters that:
(i) A registration statement on Form S-3 (File No.
333-32121), as amended by one or more pre-effective amendments thereto,
including any preeffective prospectuses included as part of the
registration statement as originally filed or as part of any amendment,
copies of which registration statement and amendment(s) have heretofore
been delivered to the Representatives, has been carefully prepared by
the Company in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities 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 under the Securities Act. The term "Registration
Statement" as used in this Agreement means such registration statement,
including all financial statement schedules and exhibits, as heretofore
amended (or, if not yet effective, in the form in which it shall become
effective) and, if any post-effective amendment thereto is filed, such
registration statement as so amended, together with any information
permitted to be omitted from the registration statement when it becomes
effective pursuant to Rule 430A under the Securities Act and deemed to
be included therein as provided by said Rule 430A. The term
"Registration Statement" as used in this Agreement shall also include
any registration statement relating to the Stock that is filed and
declared effective pursuant to Rule 462(b) under the Securities Act.
The term "Prospectus" as used in this Agreement means the prospectus in
the form included in the Registration Statement (including all
information from time to time incorporated by reference therein), or,
(A) if the prospectus included in the Registration Statement omits
information in reliance on Rule 430A under the Securities Act and such
information is included in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act, the term "Prospectus"
as used in this Agreement means the prospectus in the form included in
the Registration Statement as supplemented by the addition of the Rule
430A information contained in the prospectus filed with the Commission
pursuant to Rule 424(b) and (B) if prospectuses that meet the
requirements of Section 10(a) of the Securities Act are delivered
pursuant to Rule 434 under the Securities Act, then (i) the term
"Prospectus" as used in this Agreement means the "prospectus subject to
completion" (as such term is defined in Rule 434(g) under the
Securities Act) as supplemented by (a) the addition of Rule 430A
information or other information contained in the form of prospectus
delivered pursuant to Rule 434(b)(2) under the Securities Act or (b)
the information contained in the term sheet described in Rule 434(b)(3)
under the Securities Act, and (ii) the date of such prospectus shall
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be deemed to be the date of the term sheet. The term "Preeffective
Prospectus" as used in this Agreement means the prospectus subject to
completion in the form included in the Registration Statement at the
time of the initial filing of the Registration Statement with the
Commission, and as such prospectus shall have been amended from time to
time prior to the date of the Prospectus.
(ii) The Commission has not issued or threatened to
issue any order preventing or suspending the use of any Preeffective
Prospectus, and, at its date of issue, each Preeffective Prospectus
conformed in all material respects with the requirements of the
Securities Act and did not 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, in light of the circumstances
under which they were made, not misleading; and, when the Registration
Statement becomes effective and at all times subsequent thereto up to
and including the Closing Dates (as defined below), the Registration
Statement and the Prospectus and any amendments or supplements thereto
contained and will contain all material statements and information
required to be included therein by the Securities Act and conformed and
will conform in all material respects to the requirements of the
Securities Act; and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, included or will
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing
representations, warranties and agreements shall not apply to
information contained in or omitted from any Preeffective Prospectus or
the Registration Statement or the Prospectus or any such amendment or
supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any
Underwriter, directly or through you, specifically for use in the
preparation thereof; there is no franchise, lease, contract, agreement
or document required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed therein as required; and all
descriptions of any such franchises, leases, contracts, agreements or
documents contained in the Registration Statement are accurate and
complete descriptions of such documents in all material respects.
(iii) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, and
except as set forth or contemplated in the Prospectus, the Company has
not incurred any material liability or obligation, direct or
contingent, or entered into any material transaction, not in the
ordinary course of
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business, and there has not been any material adverse change in the
condition (financial or otherwise), properties, business, management,
prospects, net worth or results of operations of the Company or any
change in the capital stock, short-term or long-term debt of the
Company.
(iv) The financial statements, together with the
related notes and schedules, set forth in the Prospectus and elsewhere
in the Registration Statement fairly present, on the basis stated in
the Registration Statement, the financial position and the results of
operations and changes in financial position of the entities shown
thereby at the respective dates or for the respective periods therein
specified. Such financial statements and related notes and schedules
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis except as may be set forth in
the Prospectus. The selected financial and statistical data set forth
in the Prospectus under the captions "Summary Combined Financial Data",
"Unaudited Pro Forma Condensed Combined Financial Data" and "Selected
Combined Financial Data" fairly present, on the basis stated in the
Registration Statement, the information set forth therein.
(v) Deloitte & Touche LLP and Coopers & Xxxxxxx
L.L.P., who have expressed their respective opinions on certain audited
financial statements included in the Registration Statement and the
Prospectus, are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(vi) The Company has been duly organized and is
validly existing and in good standing as a corporation under the laws
of its jurisdiction of organization, with full power and authority
(corporate and other) to own or lease its properties and to conduct its
business as described in the Prospectus; the Company is in possession
of and operating in compliance with all material franchises, grants,
authorizations, licenses, permits, easements, consents, certificates
and orders required for the conduct of its business as described in the
Prospectus, all of which are valid and in full force and effect; and
the Company is duly qualified to do business and in good standing as a
foreign corporation in all other jurisdictions where its ownership or
leasing of properties or the conduct of its business as described in
the Prospectus requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the financial
condition of the Company. The Company has all requisite power and
authority, and all necessary consents, approvals, authorizations,
orders, registrations, qualifications, licenses and permits of and from
all public regulatory or governmental agencies and bodies to own, lease
and operate its properties and conduct its business as now being
conducted and as described in the Registration Statement and
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the Prospectus, except where the failure to so qualify would not have a
material adverse effect on the financial condition of the Company, and
no such consent, approval, authorization, order, registration,
qualification, license or permit contains a materially burdensome
restriction not adequately disclosed in the Registration Statement and
the Prospectus.
(vii) The Company's authorized and outstanding
capital stock is on the date hereof, and will be on the Closing Dates,
as set forth under the heading "Capitalization" in the Prospectus; the
outstanding shares of Common Stock (including on each of the Closing
Dates the outstanding shares of Stock being sold on each such Date)
conform to the description thereof in the Prospectus and have been duly
authorized and validly issued and are fully paid and nonassessable; the
outstanding shares of Common Stock (including the Stock) are duly
listed on the Nasdaq National Market and have been issued in compliance
with all federal and state securities laws and were not issued in
violation of or subject to any preemptive rights or similar rights to
subscribe for or purchase securities. Except as disclosed in or
contemplated by the Prospectus, the Company does not have outstanding
any options or warrants 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, except for options granted subsequent to the
date of information provided in the Prospectus pursuant to the
Company's stock option plans. The description of the Company's stock
option plans, and the options granted or exercised thereunder, as set
forth in the Prospectus, accurately and fairly presents the information
required to be shown with respect to such plans and options.
(viii) The Stock to be issued and sold by the Company
to the Underwriters hereunder has been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued, fully paid and nonassessable and free
of any preemptive or similar rights and will conform to the description
thereof in the Prospectus.
(ix) Except as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company is a
party or of which any property of the Company is subject, which, if
determined adversely to the Company, might individually or in the
aggregate (i) prevent or adversely affect the transactions contemplated
by this Agreement, (ii) suspend the effectiveness of the Registration
Statement, (iii) prevent or suspend the use of the Preeffective
Prospectus in any jurisdiction or (iv) result in a material adverse
change in the condition
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(financial or otherwise), properties, business, management prospects,
net worth or results of operations of the Company; and to the best of
the Company's knowledge no such proceedings are threatened or
contemplated against the Company by governmental authorities or others.
The Company is not a party and is not subject to the provisions of any
material injunction, judgment, decree or order of any court, regulatory
body or other governmental agency or body. The description of the
Company's litigation under the heading "Business -- Legal Proceedings"
in the Prospectus is true and correct and complies with the Rules and
Regulations.
(x) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms or
provisions of or constitute a default under any indenture, mortgage,
deed of trust, note agreement or other agreement or instrument to which
the Company is a party or by which it or any of its properties is or
may be bound, the Certificate of Incorporation, By-laws or other
organizational documents of the Company, or any law, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company, or any of its properties or will result
in the creation of a lien, except for such liens that individually and
in the aggregate would not have a material adverse effect on the
financial condition of the Company.
(xi) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by this
Agreement, except as such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or under the
Securities Act or the securities or "Blue Sky" laws of any jurisdiction
in connection with the purchase and distribution of the Stock by the
Underwriters.
(xii) The Company has the full corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder (including to issue, sell and deliver the Stock), and this
Agreement has been duly and validly authorized, executed and delivered
by the Company and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to
the extent that rights to indemnity and contribution hereunder may be
limited by federal or state securities laws or the public policy
underlying such laws.
(xiii) The Company is in all material respects in
compliance with, and conducts its business in conformity with, all
applicable federal, state, local and foreign laws, rules and
regulations or any court or governmental agency or body; to the
knowledge of the Company, otherwise than as set forth in the
Registration Statement and the Prospectus, no
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prospective change in any of such federal or state laws, rules or
regulations has been adopted which, when made effective, would have a
material adverse effect on the operations of the Company.
(xiv) The Company has filed all necessary federal,
state, local and foreign income, payroll, franchise and other tax
returns and has paid all taxes shown as due thereon or with respect to
any of its properties, and there is no tax deficiency that has been or,
to the knowledge of the Company, is likely to be asserted against the
Company or any of its properties or assets that would materially
adversely affect the financial position, business or operations of the
Company.
(xv) In the ordinary course of business, employees of
the Company conduct periodic reviews of the effect of Environmental
Laws (as defined below) on the business operations and properties of
the Company, in the ordinary course of which they seek to identify and
evaluate associated costs and liabilities. The Company is in compliance
with all applicable existing federal, state, local and foreign laws and
regulations relating to the protection of human health or the
environment or imposing liability or requiring standards of conduct
concerning any Hazardous Materials ("Environmental Laws"), except for
such instances of noncompliance which, either singly or in the
aggregate, would not have a material adverse effect. The term
"Hazardous Material" means (i) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (ii) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act, as amended, (iii) any petroleum
or petroleum product, (iv) any polychlorinated biphenyl and (v) any
pollutant or contaminant or hazardous, dangerous or toxic chemical,
material, waste or substance regulated under or within the meaning of
any other Environment Law.
(xvi) Except as set forth in the Prospectus, no
person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement or otherwise.
(xvii) Neither the Company nor any of its respective
officers, directors, partners or affiliates have taken nor will any
take, directly or indirectly, any action designed or intended to
stabilize or manipulate the price of any security of the Company, or
which caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the
price of any security of the Company.
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(xviii) The Company has provided you with all
financial statements of the Company since January 1, 1996 to the date
hereof that are available to the officers of the Company, including
financial statements for the months of January through [June] [July]
1997.
(xix) The Company owns or possesses 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 the Company 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. The Company's
business has not, and as now conducted and as proposed to be conducted
by the Company, does not and will not, infringe or conflict with in any
material respect patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses or other intellectual property or
franchise rights of any person. Except as described in the Prospectus,
no claim has been made against the Company alleging the infringement by
the Company of any patent, trademark, service xxxx, tradename,
copyright, trade secret, license in or other intellectual property
right or franchise right of any person.
(xx) The Company has performed all material
obligations required to be performed by it under all contracts that
would be required by Item 601(b)(10) of Regulation S-K to be filed as
exhibits to a registration statement on Form S-1 if filed by the
Company on the date hereof. The Company is not and, to the Company's
knowledge, any other party to any such contract is not, in default
under or in breach of any such obligations. The Company has not
received any notice of such default or breach.
(xxi) The Company is not involved in any labor
dispute, nor to the Company's knowledge, is any such dispute
threatened. The Company is not aware that (A) any executive, key
employee or significant group of employees of the Company plans to
terminate employment with the Company or (B) any such executive or key
employee is subject to any noncompete, nondisclosure, confidentiality,
employment, consulting or similar agreement that would be violated by
the present or proposed business activities of the Company. The Company
does not have nor does it expect to have any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or
other plan which is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), to which the Company makes or ever
has made a contribution and in which any employee of the Company is or
has ever been a participant. With respect to such plans, the Company is
in compliance in
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all material respects with all applicable provisions of ERISA.
(xxii) The Company has obtained the written
agreements referred to in Section 9(l) of this Agreement.
(xxiii) The Company has, and as of the Closing Dates
will have, good and marketable title to all personal property owned or
proposed to be owned by it which is material to the business of the
Company, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as would
not have a material adverse effect on the Company; and any real
property and buildings held under lease by the Company are, or will be
as of the Closing Dates, held by it under valid, subsisting and
enforceable leases with such exceptions as would not have a material
adverse effect on the Company, in each case except as described in the
Prospectus.
(xxiv) The Company is insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as are customary in the businesses in which it is
engaged or proposes to engage; and the Company does not have any reason
to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or
operations of the Company, except as described in or contemplated by
the Prospectus.
(xxv) Other than as contemplated by this Agreement,
there is no broker, finder or other party that is entitled to receive
from the Company any brokerage or finder's fee or other fee or
commission as a result of any of the transactions contemplated by this
Agreement.
(xxvi) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general
or specific authorization; (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.
(xxvii) Except as set forth in the Prospectus, to the
Company's knowledge, neither the Company nor any officer, director,
employee, partner or agent of the Company
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has made any payment of funds of the Company or received or retained
any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(xxviii) The Company is not an "investment company"
or an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
(b) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be deemed to
be a representation and warranty by the Company as to the matters covered
thereby.
3. Representations and Warranties of the Selling Stockholders. Each of
the Selling Stockholders severally, and not jointly, represents and warrants to,
and agrees with, the several Underwriters that:
(a) Such Selling Stockholder has been duly organized and is
validly existing and in good standing as a corporate or partnership entity under
the laws of its jurisdiction of organization.
(b) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not result in
a breach or violation of any of the terms or provisions of or constitute a
default under any indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which such Selling Stockholder is a party or by which
it or any of its properties is or may be bound, the certificate of limited
partnership, the agreement of limited partnership, the certificate of
incorporation, bylaws or other applicable organizational documents of such
Selling Stockholder, or any law, order, rule or regulation of any court or
governmental agency or body having jurisdiction over such Selling Stockholder,
or any of its properties or will result in the creation of a lien, except for
such liens that individually and in the aggregate would not have a material
adverse effect on the financial condition of such Selling Stockholder.
(c) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation by such Selling
Stockholder of the transactions contemplated by this Agreement, except such as
may be required by the National Association of Securities Dealers, Inc. (the
"NASD") or under the Securities Act or the securities or "Blue Sky" laws of any
jurisdiction in connection with the purchase and distribution of the Stock by
the Underwriters.
(d) Such Selling Stockholder has the full applicable corporate
or partnership power and authority to enter into this Agreement and to perform
its obligations hereunder and thereunder, and this Agreement has been duly and
validly
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authorized, executed and delivered by such Selling Stockholder and is a valid
and binding obligation of such Selling Stockholder, enforceable against such
Selling Stockholder in accordance with its terms, except to the extent that
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws or the public policy underlying such laws.
(e) Such Selling Stockholder has, and as of the Closing Dates
will have, valid and marketable title to the Stock to be sold by such Selling
Stockholder, free and clear of any lien, claim, security interest or other
encumbrance, including, without limitation, any restriction on transfer.
(f) Such Selling Stockholder has, and as of the Closing Dates
will have, full right, power and authority and all approvals required by law, if
any, to sell, transfer, assign and deliver the Stock being sold by such Selling
Stockholder hereunder and each of the several Underwriters will acquire valid
and marketable title to all of the Stock being sold to the Underwriters by such
Selling Stockholder, free and clear of any lien, claim, security interest,
encumbrance, including, without limitation, any restriction on transfer.
(g) Such Selling Stockholder has duly authorized, executed and
delivered, in the form heretofore furnished to the Representatives, a Custody
Agreement and Power of Attorney (a "Custody Agreement") appointing Xxxxxxxx X.
Xxxxxxxxx and Xxxx Xxxxxxx (collectively, the "Attorneys"), as the
attorney-in-fact with authority to execute and deliver this Agreement and a
Custody Agreement (a "Custody Agreement") with The Bank of New York, as
custodian (the "Custodian") on behalf of such Selling Stockholder and to take
certain other actions with respect hereto and thereto; the Custody Agreement
constitutes and valid and binding agreement of such Selling Stockholder,
enforceable in accordance with its terms; and each of such Selling Stockholder's
Attorneys is authorized, to execute and deliver this Agreement, the Custody
Agreement and the certificate referred to in Section 9(j) hereof on behalf of
such Selling Stockholder, to determine the purchase price to be paid by the
several Underwriters to such Selling Stockholder as provided in Section 3
hereof, to authorize the delivery of the Stock to be sold by such Selling
Stockholder under this Agreement and to duly endorse (in blank or otherwise) the
certificate or certificates representing such Stock or a stock power or powers
with respect thereto, to accept payment therefor, and to otherwise act on behalf
of such Selling Stockholder in connection with this Agreement.
(h) To the best knowledge of such Selling Stockholder, the
representations and warranties of the Company contained in Section 2 are true
and correct; such Selling Stockholder has reviewed and is familiar with the
Registration Statement and the Prospectus and to the best knowledge of such
Selling Stockholder neither the Prospectus nor any amendments or supplements
thereto (including any prospectus wrapper) includes any untrue statement of a
material fact or omits to state a
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material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; such Selling
Stockholder is not prompted to sell the stock to be sold by such Selling
Stockholder hereunder by any information concerning the Company or any
subsidiary of the Company which is not set forth in the Prospectus.
4. Purchase by, and Sale and Delivery to, Underwriters -- Closing
Dates. The Company and the Selling Stockholders agree to sell to the
Underwriters the Firm Stock, and on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Underwriters agree, severally and not
jointly, to purchase the Firm Stock from the Company and the Selling
Stockholders, the number of shares of Firm Stock to be purchased by each
Underwriter from the Company and the Selling Stockholders being set opposite its
name in Schedule A, subject to adjustment in accordance with Section 13 hereof.
The purchase price per share to be paid by the Underwriters to
the Company and the Selling Stockholders will be $ per share (the "Purchase
Price").
The Company and the Selling Stockholders will deliver their
respective portions of the Firm Stock to the Representatives for the respective
accounts of the several Underwriters (in the form of definitive certificates,
issued in such names and in such denominations as the Representatives may direct
by notice in writing to the Company given at or prior to 12:00 Noon, New York
Time, on the second full business day preceding the First Closing Date (as
defined below) or, if no such direction is received, in the names of the
respective Underwriters or in such other names as the Representatives may
designate (solely for the purpose of administrative convenience) and in such
denominations as the Representatives may determine), at the offices of
X'Xxxxxxxx Graev & Karabell, LLP, 00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, against payment of the aggregate Purchase Price therefor in same
day funds to the Company and the Selling Stockholders or their respective
designees. The time and date of the delivery and closing shall be at 10:00 A.M.,
New York Time, on August __, 1997, in accordance with Rule 15c6-1 of the
Exchange Act. The time and date of such payment and delivery are herein referred
to as the "First Closing Date". The Closing Date and the location of delivery
of, and the form of payment for, the Firm Stock may be varied by agreement
between the Company and the Representatives. The First Closing Date may be
postponed pursuant to the provisions of Section 13.
The Company and the Selling Stockholders shall make the
respective certificates for their respective portions of the Stock available to
the Representatives for examination on behalf of the Underwriters not later than
10:00 A.M., New York Time, on the business day preceding the First Closing Date
at the
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offices of Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
It is understood that Cowen, Bear Xxxxxxx, Xxxxxxx Xxxxx or
Xxxxxxxxxx, individually and not as a Representative of the several
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Stockholders on behalf of any Underwriter or Underwriters, for
their respective portions of the Stock to be purchased by such Underwriter or
Underwriters. Any such payment by Cowen, Bear Xxxxxxx, Xxxxxxx Xxxxx or
Xxxxxxxxxx shall not relieve such Underwriter or Underwriters from any of its or
their other obligations hereunder.
The several Underwriters agree to make a public offering of
the Firm Stock at $[ ] per share as soon after the effectiveness of the
Registration Statement as in their judgment is advisable. The Representatives
shall promptly advise the Company of the making of the public offering.
For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Stock as contemplated by the
Prospectus, APT hereby grants to the Underwriters an option to purchase,
severally and not jointly, up to an aggregate of 750,000 shares of Optional
Stock. The price per share to be paid for the Optional Stock shall be the
Purchase Price. The option granted hereby may be exercised as to all or any part
of the Optional Stock at any time, and from time to time, not more than thirty
(30) days subsequent to the effective date of this Agreement. No Optional Stock
shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered. The right to purchase the Optional Stock
or any portion thereof may be surrendered and terminated at any time upon notice
by the Underwriters to APT.
The option granted hereby may be exercised by the Underwriters
by giving written notice from the Representatives to APT setting forth the
number of shares of the Optional Stock to be purchased by them and the date and
time for delivery of and payment for the Optional Stock. Each date and time for
delivery of and payment for the Optional Stock (which may be the First Closing
Date, but not earlier) is herein called the "Option Closing Date" and shall in
no event be earlier than two (2) business days nor later than ten (10) business
days after written notice is given. (The Option Closing Date and the First
Closing Date are herein called the "Closing Dates.") Optional Stock shall be
purchased for the account of each Underwriter in the same proportion as the
number of shares of Firm Stock set forth opposite such Underwriter's name in
Schedule A hereto bears to the total number of shares of Firm Stock (subject to
adjustment by the Underwriters to eliminate odd lots). Upon exercise of the
option by the Underwriters, APT agrees to sell to the Underwriters the number of
shares of Optional Stock set forth in the written notice of exercise and the
Underwriters agree, severally and not jointly and subject to the terms and
conditions
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herein set forth, to purchase the number of such shares determined as aforesaid.
APT will deliver the Optional Stock to the Underwriters (in
the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to APT
given at or prior to 12:00 Noon, New York Time, on the second full business day
preceding the Option Closing Date or, if no such direction is received, in the
names of the respective Underwriters or in such other names as the
Representatives may designate (solely for the purpose of administrative
convenience) and in such denominations as the Representatives may determine),
against payment of the aggregate Purchase Price therefor by certified or
official bank check or checks in Clearing House funds (same day funds), payable
to the order of APT all at the offices of X'Xxxxxxxx Graev & Karabell, LLP, 00
Xxxxxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The Option Closing Date
and the location of delivery of, and the form of payment for, the Optional Stock
may be varied by agreement between APT and the Representatives. The Option
Closing Date may be postponed pursuant to the provisions of Section 13.
5. Covenants and Agreements of the Company and the Selling
Stockholders.
(a) The Company covenants and agrees with the several
Underwriters that:
(i) The Company will (A) if the Company and the
Representatives have determined not to proceed pursuant to Rule 430A,
use its best efforts to cause the Registration Statement to become
effective, (B) if the Company and the Representatives have determined
to proceed pursuant to Rule 430A, use its best efforts to comply with
the provisions of and make all requisite filings with the Commission
pursuant to Rule 430A and Rule 424 of the Rules and Regulations and (C)
if the Company and the Representatives have determined to deliver
Prospectuses pursuant to Rule 434 of the Rules and Regulations, to use
its best efforts to comply with all the applicable provisions thereof.
The Company will advise the Representatives promptly as to the time at
which the Registration Statement becomes effective, will advise the
Representatives promptly 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, and will use its
best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible the lifting thereof, if issued. The Company
will advise the Representatives promptly of the receipt of any comments
of the Commission or any request by the Commission for any amendment of
or supplement to the Registration Statement or the Prospectus or for
additional information and will not at any time file any amendment to
the Registration Statement or supplement to the Prospectus
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which shall not previously have been submitted to the Representatives a
reasonable time prior to the proposed filing thereof or to which the
Representatives shall reasonably object in writing or which is not in
compliance with the Securities Act and the Rules and Regulations.
(ii) The Company will prepare and file with the
Commission, promptly upon the request of the Representatives, any
amendments or supplements to the Registration Statement or the
Prospectus which in the opinion of the Representatives may be necessary
to enable the several Underwriters to continue the distribution of the
Stock and will use its best efforts to cause the same to become
effective as promptly as possible.
(iii) If at any time after the effective date of the
Registration Statement when a prospectus relating to the Stock is
required to be delivered under the Securities Act any event relating to
or affecting the Company occurs as a result of which the Prospectus or
any other prospectus as then in effect would include an untrue
statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or if it is necessary at
any time to amend the Prospectus to comply with the Securities Act, the
Company will promptly notify the Representatives thereof and will
prepare an amended or supplemented prospectus which will correct such
statement or omission; and in case any Underwriter is required to
deliver a prospectus relating to the Stock nine (9) months or more
after the effective date of the Registration Statement, the Company
upon the request of the Representatives and at the expense of such
Underwriter will prepare promptly such prospectus or prospectuses as
may be necessary to permit compliance with the requirements of Section
10(a)(3) of the Securities Act.
(iv) The Company will deliver to the Representatives,
at or before the Closing Dates, signed copies of the Registration
Statement, as originally filed with the Commission, and all amendments
thereto including all financial statements and exhibits thereto, and
will deliver to the Representatives such number of copies of the
Registration Statement, including such financial statements but without
exhibits, and all amendments thereto, as the Representatives may
reasonably request. The Company will deliver or mail to or upon the
order of the Representatives, from time to time until the effective
date of the Registration Statement, as many copies of the Preeffective
Prospectus as the Representatives may reasonably request. The Company
will deliver or mail to or upon the order of the Representatives on the
date of the initial public offering, and thereafter from time to time
during the period when delivery of a prospectus relating to the Stock
is required under the Securities Act, as many copies of the Prospectus,
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in final form or as thereafter amended or supplemented as the
Representatives may reasonably request; provided, however, that the
expense of the preparation and delivery of any prospectus required for
use nine (9) months or more after the effective date of the
Registration Statement shall be borne by the Underwriters required to
deliver such prospectus.
(v) The Company will make generally available to its
shareholders as soon as practicable, but not later than fifteen (15)
months after the effective date of the Registration Statement, an
earnings statement which will be in reasonable detail (but which need
not be audited) and which will comply with Section 11(a) of the
Securities Act, covering a period of at least twelve (12) months
beginning after the "effective date" (as defined in Rule 158 under the
Securities Act) of the Registration Statement.
(vi) The Company will cooperate with the
Representatives to enable the Stock to be registered or qualified for
offering and sale by the Underwriters and by dealers under the
securities laws of such jurisdictions as the Representatives may
designate and at the request of the Representatives will make such
applications and furnish such consents to service of process or other
documents as may be required of it as the issuer of the Stock for that
purpose; provided, however, that the Company shall not be required to
qualify to do business or to file a general consent (other than that
arising out of the offering or sale of the Stock) to service of process
in any such jurisdiction where it is not now so subject. The Company
will, from time to time, prepare and file such statements and reports
as are or may be required of it as the issuer of the Stock, to continue
such qualifications in effect for so long a period as the
Representatives may reasonably request for the distribution of the
Stock. The Company will advise the Representatives promptly after the
Company becomes aware of the suspension of the qualifications or
registration of (or any such exception relating to) the Common Stock of
the Company for offering, sale or trading in any jurisdiction or of any
initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any orders suspending such qualifications,
registration or exception, the Company will, with the cooperation of
the Representatives, use its best efforts to obtain the withdrawal
thereof.
(vii) The Company will furnish to its shareholders
annual reports containing financial statements certified by independent
public accountants and with quarterly summary financial information in
reasonable detail which may be unaudited. During the period of five (5)
years from the date hereof, the Company will deliver to the
Representatives and, upon request, to each of the other Underwriters,
(A) as soon as practicable after the end of each fiscal year, copies of
the Annual Report of the Company
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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; (B) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other report
or financial statements furnished to or filed with the Commission, the
NASD or any securities exchange; and (C) as soon as available, copies
of any report or communication (financial or otherwise) of the Company
mailed generally to holders of its Common Stock and (D) from time to
time such other information concerning the Company as you may
reasonably request. So long as the Company has active subsidiaries,
such financial statements will be on a consolidated basis to the extent
the accounts of the Company and its subsidiaries are consolidated in
reports furnished to its shareholders generally. Separate financial
statements shall be furnished for all subsidiaries whose accounts are
not consolidated but which at the time are significant subsidiaries as
defined in the Rules and Regulations.
(viii) The Company will use its best efforts to list,
subject to official notice of issuance, the Stock on the Nasdaq
National Market.
(ix) The Company will maintain a transfer agent and
registrar for its Common Stock.
(x) Prior to filing its quarterly statements on Form
10-Q, the Company will have its independent auditors perform a limited
quarterly review of its quarterly numbers.
(xi) Without the prior written consent of Cowen, the
Company will not offer, sell, assign, transfer, encumber, contract to
sell, grant an option to purchase or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock during the 90 days following the date on
which the price of the Common Stock to be purchased by the Underwriters
is set, other than the Company's sale of Common Stock hereunder, the
Company's issuance of Common Stock upon the exercise of stock options
which are presently outstanding and described in the Prospectus, the
grant of options pursuant to stock option plans which are presently
existing and described in the Prospectus, the issuance of warrants to
purchase Common Stock for which a contractual commitment of the Company
presently exists as described in the Prospectus and the issuance of
Common Stock pursuant to the acquisition of a business or part thereof
not affiliated with the Company or APT.
(xii) The Company will apply the net proceeds from
the sale of the Stock as set forth in the description
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under "Use of Proceeds" in the Prospectus, which description complies
in all respects with the requirements of Item 504 of Regulation S-K.
(xiii) The Company will supply you with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
(xiv) Prior to the First Closing Date and the Option
Closing Date, the Company will furnish to you, as soon as they have
been prepared, copies of any unaudited interim financial statements of
the Company for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the
Prospectus.
(xv) Prior to the Closing Dates the Company will
issue no press release or other communications directly or indirectly
and hold no press conference with respect to the Company, the financial
condition, results of operation, business, prospects, assets or
liabilities of the Company, or the offering of the Stock, without your
prior written consent. For a period of twelve (12) months following the
Closing Date, the Company will use its best efforts to provide to you
copies of each press release or other public communications with
respect to the financial condition, results of operations, business,
prospects, assets or liabilities of the Company at least twenty-four
(24) hours prior to the public issuance thereof or such longer advance
period as may reasonably be practicable.
(xvi) Any action or decision with respect to the
enforcement of the Company's rights and remedies against APT, or the
defense of its obligations to APT, shall be made by a vote of a
majority of those members of the Board of Directors of the Company (the
"Independent Directors") who have no business affiliation with Xxxxxxxx
X. Xxxxxxxxx other than as directors of the Company. Except as
otherwise determined by a vote of a majority of the Independent
Directors, the Company will preserve, protect, defend and enforce, to
the full extent permitted by applicable law, all of its rights and
remedies against APT arising under or in connection with the terms of
the Amended and Restated Conveyance Agreement (the "Conveyance
Agreement") dated as of April 16, 1996, between the Company and APT.
(xvii) Without the prior written consent of a
majority of the Independent Directors, the Company will not agree to
the amendment or modification of the Conveyance Agreement or waive the
observance of any term of the Conveyance Agreement.
(b) Each of the Selling Stockholders covenants and agrees with
the several Underwriters that such Selling
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Stockholder will not take any action, and will not permit any of its affiliates
or subsidiaries to take any action, that would prevent the Company from
observing or performing the covenants contained in paragraphs 5(a)(xvi) and
5(a)(xvii) above.
6. Payment of Expenses.
The Company will pay (directly or by reimbursement) all costs,
fees and expenses incurred in connection with or incident to the performance of
the obligations of the Company and the Selling Stockholders under this Agreement
and in connection with the transactions contemplated hereby, including but not
limited to (i) all expenses and taxes incident to the issuance (to the extent
required) and delivery of the Stock to the Representatives; (ii) all expenses
incident to the registration of the Stock under the Securities Act; (iii) the
costs of preparing stock certificates (including printing and engraving costs);
(iv) all fees and expenses of the registrar and transfer agent of the Stock; (v)
all necessary issue, transfer and other stamp taxes in connection with the
issuance (to the extent applicable) and sale of the Stock to the Underwriters;
(vi) fees and expenses of the Company's counsel and independent accountants;
(vii) all costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of the Registration Statement, each
Preeffective Prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, the
"Agreement Among Underwriters" between the Representatives and the Underwriters,
the Master Selected Dealers' Agreement, the Underwriters' Questionnaire and the
Blue Sky memoranda and this Agreement; (viii) all reasonable filing fees,
attorneys' fees and expenses incurred by the Company, the Selling Stockholders
or the Underwriters in connection with exemptions from the qualifying or
registering (or obtaining qualification or registration of) all or any part of
the Stock for offer and sale and determination of its eligibility for investment
under the Blue Sky or other securities laws of such jurisdictions as the
Representatives may designate; (ix) all fees and expenses paid or incurred in
connection with filings made with the NASD; and (x) all other costs and expenses
incident to the performance of the Company's and the Selling Stockholders'
obligations hereunder which are not otherwise specifically provided for in this
Section.
7. Indemnification and Contribution.
(a) The Company and the Selling Stockholders, severally and
not jointly, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls such Underwriter within the meaning of the
Securities Act and the respective officers, directors, partners, employees,
representatives and agents of each of such Underwriter (collectively, the
"Underwriter Indemnified Parties" and, each, an "Underwriter Indemnified
Party"), against any losses, claims, damages, liabilities or expenses (including
the reasonable cost
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of investigating and defending against any claims therefor and reasonable
counsel fees incurred in connection therewith), joint or several, which may be
based upon the Securities Act, or any other statute or at common law, on the
ground or alleged ground that any Preeffective Prospectus, the Registration
Statement or the Prospectus (or any Preeffective Prospectus, the Registration
Statement or the Prospectus as from time to time amended or supplemented)
includes or allegedly includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, written information furnished to the Company by
any Underwriter, directly or through the Representatives, specifically for use
in the preparation thereof; provided, however, that the indemnity and hold
harmless obligations of SpotLink shall be to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with information furnished
by SpotLink to the Company or any Underwriter, directly or through any
representative of SpotLink specifically for inclusion therein; provided further,
however, that with respect to any untrue statement or omission or alleged untrue
statement or omission made in any Preeffective Prospectus, the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
Underwriter Indemnified Party from whom the person asserting any such losses,
claims, damages, liabilities or expenses purchased the shares of Stock concerned
to the extent that any such loss, claim, damage, liability or expense of such
Underwriter Indemnified Party 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 of Stock to such person as required by
the Securities Act and if the untrue statement or omission concerned has been
corrected in the Prospectus, unless such failure to deliver was the result of
the breach by the Company of Section 5(a)(iii) or (iv) hereof. The Company and
the Selling Stockholders will be entitled to participate at their own expense in
the defense or, if they so elect, to assume the defense of any suit brought to
enforce any such liability, but if the Company and the Selling Stockholders
elect to assume the defense, such defense shall be conducted by counsel chosen
by them. In the event the Company and the Selling Stockholders elect to assume
the defense of any such suit and retain such counsel, any Underwriter
Indemnified Parties, defendant or defendants in the suit, may retain additional
counsel but shall bear the fees and expenses of such counsel unless (i) the
Company and the Selling Stockholders shall have specifically authorized the
retaining of such counsel or (ii) the parties to such suit include any such
Underwriter Indemnified Parties, and the Company and such Underwriter
Indemnified Parties have been advised by counsel to the Underwriters that one or
more legal defenses may be available to it or them which may not be available to
the Company and the Selling Stockholders, in which case the Company and the
Selling Stockholders shall not be entitled to assume the defense of such
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suit notwithstanding their obligation to bear the fees and expenses of such
counsel. In no event shall the Company and the Selling Stockholders be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel, for all Underwriter Indemnified
Parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances unless the Company and the Selling Stockholders, on the one hand,
and such Underwriter Indemnified Parties, on the other hand, have been advised
by counsel to the Underwriter Indemnified Parties that one or more factual or
legal defenses may be available to one or more of the Underwriter Indemnified
Parties which may not be available to all of the Underwriter Indemnified
Parties. The Company and the Selling Stockholders shall not be liable to
indemnify any person for any settlement of any such claim effected without the
consent of the Company and the Selling Stockholders, respectively. This
indemnity agreement is not exclusive and will be in addition to any liability
which the Company or the Selling Stockholders might otherwise have and shall not
limit any rights or remedies which may otherwise be available at law or in
equity to each Underwriter Indemnified Party.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act (collectively, the "Company
Indemnified Parties") and the Selling Stockholders and each person, if any, who
controls each Selling Stockholder within the meaning of the Securities Act
(collectively, the "Selling Stockholders Indemnified Parties"), against any
losses, claims, damages, liabilities or expenses (including, unless the
Underwriter or Underwriters elect to assume the defense, the reasonable cost of
investigating and defending against any claims therefor and counsel fees
incurred in connection therewith), joint or several, which arise out of or are
based in whole or in part upon the Securities Act, the Exchange Act or any other
federal, state, local or foreign statute or regulation, or at common law, on the
ground or alleged ground that any Preeffective Prospectus, the Registration
Statement or the Prospectus (or any Preeffective Prospectus, the Registration
Statement or the Prospectus, as from time to time amended and supplemented)
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
but only insofar as any such statement or omission was made in reliance upon,
and in conformity with, written information furnished to the Company by such
Underwriter, directly or through the Representatives, specifically for use in
the preparation thereof. Such Underwriter shall be entitled to participate at
its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but, if such Underwriter elects
to assume the defense, such defense shall be conducted by counsel chosen by it.
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In the event that any Underwriter elects to assume the defense of any such suit
and retain such counsel, the Company Indemnified Parties, the Selling
Stockholders Indemnified Parties and any other Underwriter or Underwriters or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, respectively.
In no event shall the Underwriters be liable for fees and expenses of more than
one counsel (in addition to any local counsel) separate from its own counsel,
for all Company Indemnified Parties and Selling Stockholders Indemnified Parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising our of the same general allegations or
circumstances unless the Underwriters and such Company Indemnified Parties and
Selling Stockholders Indemnified Parties have been advised by counsel to the
Company Indemnified Parties and Selling Stockholders Indemnified Parties that
one or more factual or legal defenses may be available to one or more of the
Company Indemnified Parties or Selling Stockholders Indemnified Parties which
may not be available to all of the Company Indemnified Parties and Selling
Stockholders Indemnified Parties. The Underwriter against whom indemnity may be
sought shall not be liable to indemnify any person for any settlement of any
such claim effected without such Underwriter's consent. This indemnity agreement
is not exclusive and will be in addition to any liability which such Underwriter
might otherwise have and shall not limit any rights or remedies which may
otherwise be available at law or in equity to any Company Indemnified Party or
Selling Stockholders Indemnified Party.
(c) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other from the offering
of the Stock. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and
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commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by either of the Company or Selling Stockholders
or the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it would
not be just and equitable if contribution were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating, defending, settling or compromising any such
claim. Notwithstanding the provisions of this subsection (c), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the shares of the Stock underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Underwriters'
obligations to contribute are several in proportion to their respective
underwriting obligations and not joint. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(d) Each party indemnified under the provisions of Sections
7(a) or 7(b) agrees that, upon the service of a summons or other initial legal
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceedings against, it in respect of which indemnity may be sought on
account of any indemnity agreement contained in such sections, it will promptly
give written notice (herein called the "Notice") of such service or notification
to the party or parties from whom indemnification may be sought hereunder. No
indemnification provided for in such sections shall be available to any party
who shall fail so to give the Notice if the party to whom such Notice was not
given was unaware of the action, suit, investigation, inquiry or proceedings to
which the Notice would have related to the extent such indemnifying party was
materially prejudiced by the failure to give the Notice, but the omission to
notify such indemnifying party or parties of any such service or notification
shall not relieve such indemnifying party or parties from any liability which it
or they may have to the indemnified party for contribution or otherwise than on
account of its indemnity agreement contained in Sections 7(a) or 7(b).
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(e) In addition to their other obligations under Section 7(a)
hereof, each of the Company and the Selling Stockholders severally agree that,
as an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon (i) any statement or
omission or any alleged statement or omission or (ii) any breach or inaccuracy
in their representations and warranties, they will reimburse each Underwriter on
a quarterly basis for all 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 and the Selling Stockholders'
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 Stockholders, as the case may be, 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 Citibank, N.A., New York, New York (the "Prime
Rate"). Any such interim reimbursement payments which are not made to an
Underwriter within 30 days of a written request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This expense
reimbursement agreement will be in addition to any other liability which the
Company and the Selling Stockholders may otherwise have.
(f) In addition to its other obligations under Section 7(b)
hereof, 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 Section 7(b) hereof which relates to information
furnished by such Underwriter to the Company hereunder, it will reimburse the
Company and the Selling Stockholders (and, to the extent applicable, each
officer, director or controlling person) on a quarterly basis for all 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 the Selling
Stockholders (and, to the extent applicable, each officer, director 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 the Selling Stockholders (and, to the extent
applicable, each officer, director or controlling person) shall promptly return
it to the Underwriter together with interest, compounded daily, determined on
the basis of the Prime Rate. Any such interim reimbursement payments which are
not made
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to the Company and the Selling Stockholders within thirty (30) days of a written
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.
(g) No indemnifying party shall, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 7 (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(h) Notwithstanding any other provision of this Agreement, the
liability of each Selling Stockholder under the representations and warranties
contained in Section 3 hereof and under the indemnity and contribution
agreements contained in the provisions of this Section 7 shall be limited to an
amount equal to the public offering price of the shares of stock sold by such
Selling Stockholder to the Underwriters minus the amount of the underwriting
discount paid thereon to the Underwriters by such Selling Stockholder.
8. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Company, the
Selling Stockholders, any of their respective officers, directors or partners or
any controlling person, and shall survive delivery of and payment for the Stock.
9. Conditions of Underwriters' Obligations. The respective obligations
of the several Underwriters hereunder shall be subject to the accuracy, at and
(except as otherwise stated herein) as of the date hereof and at and as of the
Closing Dates, of the representations and warranties made herein by the Company
and the Selling Stockholders, to compliance at and as of the Closing Dates by
the Company and the Selling Stockholders with their respective covenants and
agreements herein contained and other provisions hereof to be satisfied at or
prior to the Closing Dates, and to the following additional conditions:
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(a) The Registration Statement shall have become
effective and no stop order suspending the effectiveness
thereof shall have been issued and no proceedings for that
purpose shall have been initiated or, to the knowledge of the
Company, the Selling Stockholders or the Representatives,
shall be threatened by the Commission, and any request for
additional information on the part of the Commission (to be
included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the reasonable
satisfaction of the Representatives. Any filings of the
Prospectus, or any supplement thereto, required pursuant to
Rule 424(b) or Rule 434 of the Rules and Regulations, shall
have been made in the manner and within the time period
required by Rule 424(b) and Rule 434 of the Rules and
Regulations, as the case may be.
(b) The Representatives shall have been satisfied
that there shall not have occurred any change prior to the
Closing Dates in the condition (financial or otherwise),
properties, business, management, prospects, net worth or
results of operations of the Company, or any change in the
capital stock, short-term or long-term debt of the Company,
such that (i) the Registration Statement or the Prospectus, or
any amendment or supplement thereto, contains an untrue
statement of fact which, in the opinion of the
Representatives, is material, or omits to state a fact which,
in the opinion of the Representatives, is required to be
stated therein or is necessary to make the statements therein
not misleading, or (ii) it is impracticable in the reasonable
judgment of the Representatives to proceed with the public
offering or purchase the Stock as contemplated hereby.
(c) The Representatives shall be satisfied that no
legal or governmental action, suit or proceeding affecting the
Company which is material and adverse to the Company or which
affects or may affect the Company's ability to perform its
respective obligations under this Agreement shall have been
instituted or threatened and there shall have occurred no
material adverse development in any existing such action, suit
or proceeding.
(d) At the time of execution of this Agreement, the
Representatives shall have received from Deloitte & Touche
LLP, independent certified public accountants, a letter, dated
the date hereof, in form and substance satisfactory to the
Underwriters.
(e) The Representatives shall have received from
Deloitte & Touche LLP, independent certified public
accountants, letters, dated the Closing Dates, to the
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effect that such accountants reaffirm, as of the Closing
Dates, and as though made on the Closing Dates, the statements
made in the letter furnished by such accountants pursuant to
paragraph (d) of this Section 9.
(f) The Representatives shall have received from
Shaw, Pittman, Xxxxx & Xxxxxxxxxx, counsel for the Company and
APT, opinions, dated the Closing Dates, in substance
reasonably satisfactory to the Representatives.
(g) The Representatives shall have received from ,
counsel for SpotLink, opinions, dated the Closing Dates, in
substance reasonably satisfactory to the Representatives.
(h) The Representatives shall have received from
X'Xxxxxxxx Graev & Karabell, LLP, counsel for the
Underwriters, an opinion dated the First Closing Date in
substance reasonably satisfactory to the Representatives.
(i) The Representatives shall have received
certificates, dated the Closing Dates, of the Chairman and
Chief Executive Officer and the chief financial or accounting
officer of the Company to the effect that:
(i) No stop order suspending the effectiveness
of the Registration Statement has been issued, and, to
the best of the knowledge of the signers, no proceedings
for that purpose have been instituted or are pending or
contemplated under the Securities Act;
(ii) Neither any Preeffective Prospectus, as of
its date, nor the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, as
of the time when the Registration Statement became
effective and at all times subsequent thereto up to the
delivery of such certificate, included any untrue
statement of a material fact or omitted to state any
material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iii) The representations and warranties of the
Company in this Agreement are true and correct at and as
of the Closing Dates, and the Company has complied with
all the agreements and performed or satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Dates; and
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(iv) Since the respective dates as of which
information is given in the Registration Statement and
the Prospectus, and except as disclosed in or
contemplated by the Prospectus, (i) there has not been
any material adverse change or a development involving a
material adverse change in the condition (financial or
otherwise), properties, business, management, prospects,
net worth or results of operations of the Company; (ii)
the business and operations conducted by the Company have
not sustained a loss by strike, fire, flood, accident or
other calamity (whether or not insured) of such a
character as to interfere materially with the conduct of
the business and operations of the Company; (iii) no
legal or governmental action, suit or proceeding is
pending or, to the Company'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 may materially and adversely
affect the transactions contemplated by this Agreement;
(iv) the Company has not incurred any material liability
or obligation, direct, contingent or indirect, or entered
into a material transaction, not in the ordinary course
of business; (v) the Company has not made any change in
its capital stock (except pursuant to its stock plans),
made any material change in its short-term or funded debt
or repurchased or otherwise acquired any of the Company's
capital stock; and (vi) 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 Closing Date.
(j) The Representatives shall have received
certificates, dated the Closing Dates, of the Attorneys for
each Selling Stockholder to the effect that, as of each such
Closing Date, such Attorneys have not been informed that the
representations and warranties made by each Selling
Stockholder in this Agreement are not true and correct at and
as of the Closing Dates, and each Selling Stockholder has not
complied with all the agreements and not performed or
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Dates; and
(k) The Company and the Selling Stockholders shall
have furnished to the Representatives such additional
certificates as the Representatives may have reasonably
requested as to the accuracy, at and as of the Closing Dates,
of the representations and warranties made herein by them and
as to compliance at and as of the
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Closing Dates by them with their covenants and agreements
herein contained and other provisions hereof to be satisfied
at or prior to the Closing Dates, and as to satisfaction of
the other conditions to the obligations of the Underwriters
hereunder.
(l) The Representatives shall have received the
written agreements of the Selling Stockholders and the limited
partners and general partner of APT in the form of Exhibit I
hereto.
All opinions, certificates, letters and other documents will be in
compliance with the provisions hereunder only if they are satisfactory in form
and substance to the Representatives. The Company and the Selling Stockholders
will furnish to the Representatives conformed copies of such opinions,
certificates, letters and other documents as the Representatives shall
reasonably request. If any of the conditions hereinabove provided for in this
Section shall not have been satisfied when and as required by this Agreement,
this Agreement may be terminated by the Representatives by notifying the Company
and the Selling Stockholders of such termination in writing or by telegram at or
prior to the Closing Dates, but the Representative shall be entitled to waive
any of such conditions.
10. Effective Date. This Agreement shall become effective immediately
as to Sections 6, 7, 8, 10, 11, 12, 14, 15, 16, 17 and 18 and, as to all other
provisions, at 11:00 a.m. New York Time on the first full business day following
the effectiveness of the Registration Statement or at such earlier time after
the Registration Statement becomes effective as the Representatives may
determine on and by notice to the Company or by release of any of the Stock for
sale to the public. For the purposes of this Section 10, the Stock shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Stock or upon the release by you of
telegrams (i) advising Underwriters that the shares of Stock are released for
public offering or (ii) offering the Stock for sale to securities dealers,
whichever may occur first.
11. Termination. This Agreement (except for the provisions of Section
6) may be terminated by the Company at any time before it becomes effective in
accordance with Section 10 by notice to the Representatives and the Selling
Stockholders and may be terminated by the Representatives at any time before it
becomes effective in accordance with Section 10 by notice to the Company and the
Selling Stockholders. In the event of any termination of this Agreement under
this or any other provision of this Agreement, there shall be no liability of
any party to this Agreement to any other party, other than as provided in
Sections 6, 7 and 12 and other than as provided in Section 13 as to the
liability of defaulting Underwriters.
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This Agreement may be terminated after it becomes effective by
the Representatives by notice to the Company and the Selling Stockholders (i) if
at or prior to the First Closing Date or the Option Closing Date trading in
securities on the Nasdaq National Market, the New York Stock Exchange or the
American Stock Exchange shall have been suspended or minimum or maximum prices
shall have been established on any such exchange or market, or a banking
moratorium shall have been declared by New York or United States authorities;
(ii) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market; (iii) if at or prior to the First
Closing Date or the Option Closing Date there shall have been (A) an outbreak or
escalation of hostilities between the United States and any foreign power or of
any other insurrection or armed conflict involving the United States or (B) any
change in financial markets or any calamity or crisis which, in the judgment of
the Representatives, makes it impractical or inadvisable to offer or sell the
Firm Stock or Optional Stock, as applicable on the terms contemplated by the
Prospectus; (iv) if there shall have been any development or prospective
development involving particularly the business or properties or securities of
the Company or the transactions contemplated by this Agreement, which, in the
judgment of the Representatives, makes it impracticable or inadvisable to offer
or deliver the Firm Stock or the Optional Stock, as applicable on the terms
contemplated by the Prospectus; (v) if there shall be any litigation or
proceeding, pending or threatened, which, in the judgment of the
Representatives, makes it impracticable or inadvisable to offer or deliver the
Firm Stock or Optional Stock, as applicable, on the terms contemplated by the
Prospectus; or (vi) if there shall have occurred any of the events specified in
the immediately preceding clauses (i) - (v) together with any other such event
that makes it, in the judgment of the Representatives, impractical or
inadvisable to offer or deliver the Firm Stock or Optional Stock, as applicable
on the terms contemplated by the Prospectus.
12. Reimbursement of Underwriters. Notwithstanding any other provisions
hereof, if this Agreement shall not become effective by reason of any election
of the Company pursuant to the first paragraph of Section 11 or shall be
terminated by the Representatives under Section 9 or Section 11, the Company
will bear and pay the expenses specified in Section 6 hereof and, in addition to
its obligations pursuant to Section 7 hereof, the Company will reimburse the
reasonable out-of-pocket expenses of the several Underwriters (including
reasonable fees and disbursements of counsel for the Underwriters) incurred in
connection with this Agreement and the proposed purchase of the Stock, and
promptly upon demand the Company will pay such amounts to you as
Representatives.
13. Substitution of Underwriters. If any Underwriter or Underwriters
shall default in its or their obligations to purchase shares of Stock hereunder
and the aggregate number of
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shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of the total number of shares
underwritten, the other Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters shall so default and the aggregate number of shares
with respect to which such default or defaults occur is more than ten percent
(10%) of the total number of shares underwritten and arrangements satisfactory
to the Representatives and the Company for the purchase of such shares by other
persons are not made within forty-eight (48) hours after such default, this
Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are
required hereby or agree to take up all or part of the shares of Stock of a
defaulting Underwriter or Underwriters as provided in this Section 13, (i) the
Company and the Selling Stockholders shall have the right to postpone the
Closing Dates for a period of not more than five (5) full business days in order
that the Company and the Selling Stockholders may effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective numbers of shares to be
purchased by the remaining Underwriters or substituted Underwriters shall be
taken as the basis of their underwriting obligation for all purposes of this
Agreement. Nothing herein contained shall relieve any defaulting Underwriter of
its liability to the Company, the Selling Stockholders or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 13 shall be without liability on the part of
any non-defaulting Underwriter, the Selling Stockholders or the Company, except
for expenses to be paid or reimbursed pursuant to Section 6 and except for the
provisions of Section 7.
14. Notices. All communications hereunder shall be in writing and, if
sent to the Underwriters shall be mailed, delivered or telegraphed and confirmed
to you, as their Representatives c/o Cowen & Company at Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 except that notices given to an Underwriter pursuant to
Section 7 hereof shall be sent to such Underwriter at the address furnished by
the Representatives, if sent to the Company or APT, shall be mailed, delivered
or telegraphed and confirmed c/o Applied Graphics Technologies, Inc. at 00 Xxxx
00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or if sent to SpotLink, shall
be mailed, delivered or telegraphed and confirmed to c/o Western International
Media Corporation, 0000 Xxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: President.
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15. Successors. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company, the Selling Stockholders and
their respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
other than the persons mentioned in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company and the Selling
Stockholders contained in this Agreement shall also be for the benefit of the
person or persons, if any, who control any Underwriter or Underwriters within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and the indemnities of the several Underwriters shall also be for the
benefit of each director of the Company, each of its officers who has signed the
Registration Statement and the person or persons, if any, who control the
Company or the Selling Stockholders within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
16. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
17. Authority of the Representatives. In connection with this
Agreement, you will act for and on behalf of the several Underwriters, and any
action taken under this Agreement by either of you, as a Representative, will be
binding on all the Underwriters.
18. 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.
19. 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.
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
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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 Stockholders and
the Representatives.
20. Counterparts. This Agreement may be signed in two (2) or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter and your acceptance shall constitute a binding
agreement between us.
Very truly yours,
APPLIED GRAPHICS TECHNOLOGIES, INC.
By:_____________________________________
Name:
Title:
SELLING STOCKHOLDERS
By:_____________________________________
Xxxxxxxx X. Xxxxxxxxx
Attorney-in-Fact for Applied
Printing Technologies, L.P.
and SpotLink, Inc.
By:_____________________________________
Xxxx Xxxxxxx
Attorney-in-Fact for Applied
Printing Technologies, L.P.
and SpotLink, Inc.
Accepted and delivered as of
the date first above written:
XXXXX & COMPANY,
Acting on its own behalf
and as Representative of the several
Underwriters referred to in the
foregoing Agreement.
By: Cowen Incorporated,
its general partner
By:______________________________
Name:
Title:
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BEAR, XXXXXXX & CO.
Acting on its own behalf
and as Representative of the several
Underwriters referred to in the
foregoing Agreement.
By:______________________________
Name:
Title:
XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
Acting on its own behalf
and as Representative of the several
Underwriters referred to in the
foregoing Agreement.
By:______________________________
Name:
Title:
XXXXXXXXXX SECURITIES,
Acting on its own behalf
and as Representative of the several
Underwriters referred to in the
foregoing Agreement.
By:______________________________
Name:
Title:
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SCHEDULE A
Number
of Firm
Shares
to be
Name Purchased
---- ---------
Xxxxx & Company .......................................................... [ ]
Bear, Xxxxxxx & Co. ...................................................... [ ]
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated. ...................... [ ]
Xxxxxxxxxx Securities .................................................... [ ]
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EXHIBIT I
