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Exhibit 1.1
2,600,000 SHARES
ACCELGRAPHICS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
XXXXX & COMPANY
XXXXXXXXX, XXXXXXXX & COMPANY LLC
SOUNDVIEW FINANCIAL GROUP, INC.
As Representatives of the several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Dear Sirs:
1. Introductory. AccelGraphics, Inc., a Delaware corporation (the
"Company"), and the selling stockholders named in Schedule B hereto
(the "Selling Stockholders") propose 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
2,600,000 shares of Common Stock, $.001 par value (the "Common Stock")
of the Company. The aggregate of 2,600,000 shares so proposed to be
sold is hereinafter referred to as the "Firm Stock." The Company and
the Selling Stockholders listed in Schedule B hereto also propose to
sell to the Underwriters, upon the terms and conditions set forth in
Section 3 hereof, up to an additional 390,000 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"), Xxxxxxxxx, Xxxxxxxx & Company LLC and SoundView Financial
Group, Inc. are acting as representatives of the several Underwriters
and in such capacity are hereinafter referred to as the
"Representatives."
2. (a) Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several
Underwriters that:
(i) A registration statement on Form SB-2 (File No. 333-_______)
in the form in which it became or becomes effective and also
in such form as it may be when any post-effective amendment
thereto shall become effective with respect to the Stock,
including any preeffective prospectuses included as part of
the registration statement as originally filed or as part of
any amendment or supplement thereto, or filed pursuant to
Rule 424 under 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, copies of which have
heretofore been delivered to you, has been carefully
prepared by the Company in conformity with the requirements
of the Securities Act and has been filed with the Commission
under the Securities Act; one or more amendments to such
registration statement, including in each case an amended
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preeffective prospectus, copies of which amendments have
heretofore been delivered to you, have been so prepared and
filed. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to the
registration statement will be filed and must be declared
effective before the offering of the Stock may commence, the
term "Registration Statement" as used in this Agreement
means the registration statement as amended by said
post-effective amendment. 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, 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 sheets
described in Rule 434(b)(3) under the Securities Act, and
(ii) the date of such prospectuses shall be deemed to be the
date of the term sheets. 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, to the Company's
knowledge, 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, other than any such nonconformance or
untrue statement or omission in a Preeffective Prospectus
that has been corrected in the Prospectus; and, when the
Registration Statement becomes effective and at all times
subsequent thereto up to and including each of the Closing
Dates (as hereinafter defined), 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
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Underwriter, directly or through you, or by any Selling
Stockholder, 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,
neither the Company nor any of its subsidiaries has incurred
any material liabilities or obligations, direct or
contingent, nor entered into any transactions not in the
ordinary course of business, and there has not been any
material adverse change in the condition (financial or
otherwise), properties, business, management, net worth or
results of operations of the Company and its subsidiaries
considered as a whole, or any change in the capital stock,
short-term or long-term debt of the Company and its
subsidiaries considered as a whole.
(iv) The consolidated financial statements, together with the
related notes and schedules, set forth in the Prospectus in
the Registration Statement fairly present the financial
position and the results of operations and changes in
financial position of the Company and its consolidated
subsidiaries at the respective dates or for the respective
periods therein specified. Such statements and related notes
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 "Prospectus Summary -- Summary
Consolidated Financial Data" and "Selected Consolidated
Financial Data" fairly present, on the basis stated in the
Registration Statement, the information set forth therein.
(v) The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing as
corporations under the laws of their respective
jurisdictions of organization, with power and authority
(corporate and other) to own or lease their properties and
to conduct their businesses as described in the Prospectus;
the Company is and each of its subsidiaries are 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, all of which are valid and in
full force and effect; and the Company is and each of such
subsidiaries is duly qualified to do business and in good
standing as foreign corporations in all other jurisdictions
where their ownership or leasing of properties or the
conduct of their businesses requires such qualification,
except where failure to so qualify would not have a material
adverse effect on the Company and its subsidiaries taken as
a whole. The Company and each of its subsidiaries have 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 their properties and conduct their business as
now being conducted and as described in the Registration
Statement and the Prospectus, 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. The Company owns or controls, directly or
indirectly, only the corporations, associations or other
entities set forth in Exhibit 21.1 to the Registration
Statement.
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(vi) The Company's authorized and outstanding capital stock will
be on the Closing Dates as set forth under the heading
"Capitalization" in the Prospectus; the outstanding shares
of Common Stock (including the outstanding shares of Stock)
of the Company conform to the description thereof in the
Prospectus; the outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid and
nonassessable; and the outstanding shares of Common 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 and conform to the description thereof
contained in the Prospectus. Except as disclosed in and or
contemplated by the Prospectus and the consolidated
financial statements of the Company and related notes
thereto included in 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 employee and stock
option plans as disclosed in the Prospectus. The description
of the Company's stock option and other stock plans or
arrangements, and the options or other rights 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, arrangements, options
and rights. All outstanding shares of capital stock of each
subsidiary have been duly authorized and validly issued, and
are fully paid and nonassessable and (except for directors'
qualifying shares) are owned directly by the Company or by
another wholly owned subsidiary of the Company free and
clear of any liens, encumbrances, equities or claims.
(vii) 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.
(viii) Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of
the Company or any subsidiary is subject, which, if
determined adversely to the Company or any such subsidiary,
might individually or in the aggregate (A) prevent or
adversely affect the transactions contemplated by this
Agreement, (B) suspend the effectiveness of the Registration
Statement, (C) prevent or suspend the use of the
Preeffective Prospectus in any jurisdiction or (D) result in
a material adverse change in the condition (financial or
otherwise), properties, business, management, net worth or
results of operations of the Company and its subsidiaries
considered as a whole and the Company is not aware of any
valid basis for any such legal or governmental proceeding;
and to the Company's knowledge no such proceedings are
threatened or contemplated against the Company or any
subsidiary by governmental authorities or others. The
Company is not a party nor 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
"Legal Proceedings" in the Prospectus is true and correct
and complies with the Rules and Regulations.
(ix) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated
(A) will not result in any violation of the
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provisions of the certificate of incorporation, bylaws or
other organizational documents of the Company or any
subsidiary, or to the knowledge of the Company any law,
order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any
subsidiary or any of their properties or assets, and (B)
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, loan agreement or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of its
properties is or may be bound.
(x) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company
and the consummation of the transactions contemplated
hereby, except such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or
under the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act") or the securities or
"Blue Sky" laws of any jurisdiction in connection with the
purchase and distribution of the Stock by the Underwriters.
(xi) 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 and by applicable bankruptcy,
insolvency and other similar laws affecting conditions,
rights and rules of law governing specific performance,
injunctive relief and other equitable remedies.
(xii) The Company and its subsidiaries are, in all material
respects, in compliance with, and conduct their businesses
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 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 and its
subsidiaries. Except as disclosed in the Registration
Statement, to its knowledge the Company and its subsidiaries
are 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 (A) any
"hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended, (B) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act, as amended, (C)
any petroleum or petroleum product, (D) any polychlorinated
biphenyl and (E) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance
regulated under or within the meaning of any other
Environmental Law.
(xiii) The Company and its subsidiaries have filed all necessary
federal, state, local and foreign income, payroll, franchise
and other tax returns and have paid all taxes shown as due
thereon or with respect to any of their properties, and
there is no tax deficiency that has been, or to the
knowledge of the Company is likely to be, asserted against
the
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Company or any of its subsidiaries or any of their
respective properties or assets that would have a material
adverse effect on the financial position, business or
operations of the Company and its subsidiaries.
(xiv) 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, except for persons and entities who
have expressly waived such right or who have been given
proper notice and have failed to exercise such right within
the time or times required under the terms and conditions of
such right.
(xv) Neither the Company nor any of its officers has taken or
will 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.
(xvi) To the Company's knowledge, the Company and its subsidiaries
own or possess the right to use all patents described in the
Prospectus as being owned by them or any of them or
necessary for the conduct of their respective businesses;
the Company and its subsidiaries own or possess the right to
use all trademarks (including "AccelGraphics" and the other
trademarks listed in the Prospectus), trademark
registrations, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by
them or any of them or necessary for the conduct of their
respective businesses; 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 and its subsidiaries with
respect to the foregoing. The Company's business as now
conducted does not and will not infringe or conflict with in
any material respect: (A) any registered trademarks or
service marks or copyrights; or (B) to the Company's
knowledge, patents, trade names, trade secrets, licenses or
other intellectual property or franchise right of any
person. Except as described in the Prospectus, the Company
has not received any claim alleging the infringement by the
Company of any patent, trademark, service xxxx, trade name,
copyright, trade secret, license in or other intellectual
property right or franchise right of any person.
(xvii) The Company and its subsidiaries have performed all material
obligations required to be performed by them under all
contracts required by Item 601(b)(10) of Regulation S-B
under the Securities Act to be filed as exhibits to the
Registration Statement, and neither the Company nor any of
its subsidiaries nor any other party to such contract is in
default under or in breach of any such obligations. Neither
the Company nor any of its subsidiaries has received any
notice of such default or breach.
(xviii) 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 or any
subsidiary plans to terminate employment with the Company or
any such subsidiary 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 and its subsidiaries. Neither the
Company nor any subsidiary has or expects 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 or
any
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subsidiary makes or ever has made a contribution and in
which any employee of the Company or any subsidiary is or
has ever been a participant. With respect to such plans, the
Company and each subsidiary are in compliance in all
material respects with all applicable provisions of ERISA.
(xix) The Company has obtained the written agreement described in
Section 8(k) of this Agreement from each of its officers,
directors and holders of Common Stock.
(xx) The Company and its subsidiaries have, and the Company and
its subsidiaries as of the Closing Dates will have, good and
marketable title in fee simple to all real property and good
and marketable title to all personal property owned or
proposed to be owned by them which is material to the
business of the Company or of its subsidiaries, in each case
free and clear of all liens, encumbrances and defects,
except (A) such as are described the Prospectus, (B) liens
on property held by the lessor of property leased by the
Company, (C) the lien held by Kubota Corporation pursuant to
its subordinated convertible note in the original principal
amount of $3,300,000 or (D) such as would not have a
material adverse effect on the Company and its subsidiaries
considered as a whole; and any real property and buildings
held under lease by the Company and its subsidiaries or
proposed to be held after giving effect to the transactions
described in the Prospectus are, or will be as of each of
the Closing Dates, held by them under valid, subsisting and
enforceable leases with such exceptions as would not have a
material adverse effect on the Company and its subsidiaries
considered as a whole, in each case except as described in
or contemplated by the Prospectus.
(xxi) The Company and its subsidiaries are insured against losses
and risks and in such amounts as are customary in the
businesses in which they are engaged, and neither the
Company nor any subsidiary of the Company has 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 their 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 and its subsidiaries considered as a whole, except
as described in or contemplated by the Prospectus.
(xxii) 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.
(xxiii) The Company has complied with all provisions of Section
517.075 Florida Statutes (Chapter 92-198; Laws of Florida).
(xxiv) The Company and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in
accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity
with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is
permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability
for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to
any differences.
(xxv) To the Company's knowledge, neither the Company nor any of
its subsidiaries nor any employee or agent of the Company or
any of its subsidiaries has made any payment of
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funds of the Company or any of its subsidiaries 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.
(xxvi) 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.
(xxvii) To the Company's knowledge, no relationship, direct or
indirect, exists between or among the Company or its
subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or its
subsidiaries, on the other hand, which is required to be
described in the Prospectus that is not so described.
(xxviii) Neither the Company nor any of its subsidiaries is or, after
application of the net proceeds of this offering as
described under the caption "Use of Proceeds" in the
Prospectus, will become 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) Representations and Warranties and Agreements of the Selling
Stockholders. Each Selling Stockholder represents and warrants to, and
agrees with, the several Underwriters that such Selling Stockholder:
(i) Now has, and on the Closing Dates will have, valid and
marketable title to the Stocks 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, and has full right,
power and authority to enter into this Agreement, the Power
of Attorney and the Custody Agreement (each as hereinafter
defined), and, to the extent such Selling Stockholder is a
corporation, has been duly organized and is validly existing
and in good standing as a corporation under the laws of its
jurisdiction of organization.
(ii) Now has, and on each of the Closing Dates will have, upon
delivery of and payment for each share of Stock hereunder,
full right, power and authority, any approval required by
law 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 liens,
encumbrances, equities, claims, restrictions on transfer or
other defects whatsoever.
(iii) For a period of 180 days after the date of the Prospectus,
without the consent of Cowen, such Selling Stockholder will
not, directly or indirectly, (A) offer, sell, assign,
transfer, encumber, pledge, contract to sell, grant an
option to purchase or otherwise dispose of, other than by
operation of law, any shares of Stock (including, without
limitation, Stock which may be deemed to be beneficially
owned by the undersigned in accordance with the rules and
regulations under the Securities Act), or (B) enter into any
swap or similar agreement that transfers, in whole or in
part, the economic risk of the Stock, whether any such
transaction described in clause (A) or (B) above is to be
settled by delivery of Stock or such other securities, in
cash or otherwise, and whether any such transaction relates
to Stock now owned or hereafter acquired.
(iv) Has duly executed and delivered a power of attorney, in
substantially the form heretofore delivered by the
Representatives (the "Power of Attorney"), appointing
Xxxxxxx X. Xxxx and Xxxxx X. Xxxx, and each of them, as
attorney-in-fact (the "Attorneys-in-fact") with authority to
execute and deliver this Agreement on behalf of
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such Selling Stockholder, to authorize the delivery of the
shares of Stock to be sold by such Selling Stockholder
hereunder and otherwise to act on behalf of such Selling
Stockholder in connection with the transactions contemplated
by this Agreement.
(v) Has duly executed and delivered a custody agreement, in
substantially the form heretofore delivered by the
Representatives (the "Custody Agreement"), with Xxxxxx Trust
and Savings Bank as custodian (the "Custodian"), pursuant to
which certificates in negotiable form for the shares of
Stock to be sold by such Selling Stockholder hereunder have
been placed in custody for delivery under this Agreement.
(vi) Has, by execution and delivery of each of this Agreement,
the Power of Attorney and the Custody Agreement, created
valid and binding obligations of such Selling Stockholder,
enforceable against such Selling Stockholder in accordance
with its terms, except to the extent that rights to
indemnity hereunder may be limited by federal or state
securities laws or the public policy underlying such laws
and by applicable bankruptcy, insolvency and other similar
laws affecting creditors' rights and rules of law governing
specific performance, injunctive relief and other equitable
remedies.
Each Selling Stockholder agrees that the shares of Stock
represented by the certificates held in custody under the
Custody Agreement are for the benefit of and coupled with
and subject to the interests of the Underwriters and the
Company hereunder, and that the arrangement for such custody
and the appointment of the Attorneys-in-fact are
irrevocable; that the obligations of such Selling
Stockholder hereunder shall not be terminated by operation
of law, whether by the death or incapacity, liquidation or
distribution of such Selling Stockholder, or any other
event, that if such Selling Stockholder should die or become
incapacitated or is liquidated or dissolved or any other
event occurs, before the delivery of the Stock hereunder,
certificates for the Stock to be sold by such Selling
Stockholder shall be delivered on behalf of such Selling
Stockholder in accordance with the terms and conditions of
this Agreement and the Custody Agreement, and action taken
by the Attorneys-in-fact or any of them under the Power of
Attorney shall be as valid as if such death, incapacity,
liquidation or dissolution or other event had not occurred,
whether or not the Custodian, the Attorneys-in-fact or any
of them shall have notice of such death, incapacity,
liquidation or dissolution or other event.
(vii) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause
or result in the stabilization or manipulation of the price
of the Common Stock of the Company and, other than as
permitted by the Securities Act, the Selling Stockholder
will not distribute any prospectus or other offering
material in connection with the offering of the Stock.
(viii) The information pertaining to such Selling Stockholder under
the caption "Principal and Selling Stockholders" in the
Prospectus is complete and accurate in all material
respects.
(ix) As to each Selling Stockholder that beneficially owns more
than 50,000 shares of Stock or is an officer or director of
the Company, the sale of the Stock by such Selling
Stockholder pursuant hereto is not prompted by any
information concerning the Company or its subsidiaries which
is not set forth in the Registration Statement.
(x) As to Xx. Xxxx and Xx. Xxxx, to the knowledge of such Seller
Stockholder (A) the Registration Statement and any amendment
thereto do not contain, and will not contain, any untrue
statement of a material fact and do not omit, and will not
omit, to state any
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material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) the
Prospectus and any amendments and supplements thereto do not
contain, and will not contain, any untrue statement of
material fact and do not omit, and will not 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.
3. Purchase by, and Sale and Delivery to, Underwriters--Closing Dates. On
the basis of the representations, warranties, covenants and agreements
herein contained, but subject to the terms and conditions herein set
forth, the Company and the Selling Stockholders agree, severally and
not jointly, to sell to the Underwriters the Firm Stock, with the
number of shares to be sold by the Company and each Selling
Stockholder being the number of Shares set opposite his, her or its
name in Schedule B; 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 being set opposite its name in Schedule
A, subject to adjustment in accordance with Section 12 hereof. The
number of shares of Stock to be purchased by each Underwriter from
each Selling Stockholder hereunder shall bear the same proportion to
the total number of shares of Stock to be purchased by such
Underwriter hereunder as the number of shares of Stock being sold by
each Selling Stockholder bears to the total number of shares of Stock
being sold by all Selling Stockholders, subject to adjustment by the
Representatives to eliminate fractions.
The purchase price per share to be paid by the Underwriters to the
Company and the Selling Stockholders will be the price per share set
forth in the table on the cover page of the Prospectus under the
heading "Proceeds to Company" (the "Purchase Price").
The Company and the Selling Stockholders will deliver 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 and the Selling Stockholders 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 Cowen may designate (solely for the purpose of
administrative convenience) and in such denominations as Cowen may
determine), against payment of the aggregate Purchase Price therefor
by certified or official bank check or checks in immediately available
funds (same day funds), payable to the order of the Company and Xxxxxx
Trust and Savings Bank as Custodian for the Selling Stockholders, all
at the offices of Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000. The time and date of the delivery and closing shall
be at 10:00 A.M., New York Time, on ________________, 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 First Closing Date and the location of delivery of, and the
form of payment for, the Firm Stock may be varied by agreement among
the Company, the Selling Stockholders and Cowen. The First Closing
Date may be postponed pursuant to the provisions of Section 12.
The Company and the Selling Stockholders shall make the certificates
for 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 offices of
Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
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It is understood that Cowen or other Representatives, individually and
not as Representatives of the several Underwriters, may (but shall not
be obligated to) make payment to the Company or to the Selling
Stockholders on behalf of any Underwriter or Underwriters, for the
Stock to be purchased by such Underwriter or Underwriters. Any such
payment by Cowen or other Representatives shall not relieve such
Underwriter or Underwriters from any of its or their other obligations
hereunder.
The several Underwriters agree to make an initial public offering of
the Firm Stock at the initial public offering price as soon after the
effectiveness of the Registration Statement as in their judgment is
advisable. The Representatives shall promptly advise the Company and
the Selling Stockholders of the making of the initial 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, the Company and each of the Selling Stockholders hereby
grants to the Underwriters an option to purchase, severally and not
jointly, up to the aggregate number of shares of Optional Stock set
forth opposite the Company's and each such Selling Stockholder's
respective names on Schedule B hereto, for an aggregate of up to
390,000 shares. 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 the Company.
The option granted hereby may be exercised by the Underwriters by
giving written notice from Cowen to the Company 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.") All purchases of
Optional Stock from the Company and Selling Stockholders shall be made
on a pro rata basis. 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 B
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, the Company and Selling
Stockholders agree 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 herein set forth, to purchase the number of such shares
determined as aforesaid.
The Company and the Selling Stockholders 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 the Company 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 Cowen
may designate (solely for the purpose of administrative convenience)
and in such denominations as Cowen may determine, against payment of
the aggregate Purchase Price therefor by certified or official bank
check or checks in Clearing House funds (next day funds), payable to
the order of the Company and as Custodian for the Selling Stockholders
all at the offices of Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx
Xxxx, Xxxxxxxxxx 00000. The Company and the Selling Stockholders shall
make the certificates for the Optional Stock available to the
Underwriters for examination not later than 10:00 A.M., New York
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Time, on the business day preceding the Option Closing Date at the
offices of Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. The Option Closing Date and the location of delivery of, and
the form of payment for, the Option Stock may be varied by agreement
among the Company, the Selling Stockholders and Cowen. The Option
Closing Date may be postponed pursuant to the provisions of Section
12.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with the several Underwriters that:
(a) The Company will (i) if the Company and the Representatives
have determined not to proceed pursuant to Rule 430A of the
of the Rules and Regulations, use its best efforts to cause
the Registration Statement to become effective, (ii) if the
Company and the Representatives have determined to proceed
pursuant to Rule 430A of the Rules and Regulations, 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 (iii) 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
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.
(b) 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.
(c) 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 or any of its
subsidiaries 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.
(d) 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
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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, 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.
(e) The Company will make generally available to its
stockholders 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.
(f) 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 U.S., Canadian and foreign
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.
(g) The Company will furnish to its stockholders 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, as soon as they
are available, copies of each annual report of the Company
and each other report furnished by the Company to its
stockholders and will deliver to the Representatives, (i) as
soon as they are available, copies of any other reports
(financial or other) which the Company shall publish or
otherwise make available to any of its stockholders as such,
(ii) as soon as they are available, copies of any reports
and financial statements furnished to or filed with the
Commission or the Nasdaq National Market and (iii) 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
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accounts of the Company and its subsidiaries are
consolidated in reports furnished to its Stockholders
generally.
(h) The Company will use its best efforts to list the Stock,
subject to official notice of issuance, on the Nasdaq
National Market concurrently with the effectiveness of the
Registration Statement.
(i) The Company will maintain a transfer agent and registrar for
its Common Stock.
(j) For a period of one year after the date hereof, 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.
(k) 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 180 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 and the Company's issuance of Common Stock
upon the exercise of warrants and stock options which are
presently outstanding and described in the Prospectus.
(l) The Company will file with the Commission any reports on
Form SR required pursuant to Rule 463 of Rules and
Regulations and will deliver promptly to the Representatives
a signed copy of each report on Form SR filed by it with the
Commission.
(m) The Company will apply the net proceeds from the sale of the
Stock as set forth in the description under "Use of
Proceeds" in the Prospectus, which description complies in
all respects with the requirements of Item 504 of Regulation
S-B.
(n) 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.
(o) Prior to each of the Closing Dates the Company will furnish
to you, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the
Company and its subsidiaries for any periods subsequent to
the periods covered by the consolidated financial statements
appearing in the Registration Statement and the Prospectus.
(p) Prior to each of 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 or
any of its subsidiaries, the financial condition, results of
operations, business, prospects, assets or liabilities of
any of them, or the offering of the Stock, without your
prior written consent, which shall not be unreasonably
withheld.
(q) During the period of five (5) years hereafter, the Company
will furnish to the Representatives, and upon request of the
Representatives, to each of the Underwriters: (i) as soon as
practicable after the end of each fiscal year, copies of the
Annual Report of the Company containing the balance sheet of
the Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash flows
for the year then ended and the report thereon of the
Company's independent public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-KSB, Quarterly Report on
Form 10-QSB, Report on Form 8-K or other report filed by the
Company with the Commission, or the NASD or Nasdaq National
Market; and (iii) as soon as available, copies of any report
or communication of the Company mailed generally to holders
of its Common Stock.
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5. Payment of Expenses. (a) The Company will pay (directly or by
reimbursement) all costs, fees and expenses incurred in connection
with expenses incident to the performance of the obligations of the
Company 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 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 and sale of the Stock to the Underwriters; (vi) fees and
expenses of the Company's counsel and the Company's 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 Selling
Stockholders' Powers of Attorney, the Custody Agreement, the Blue Sky
memoranda (including related fees and expenses of counsel to the
Underwriters) and this Agreement; (viii) all costs and expenses (other
than legal costs and expenses) incurred in connection with the
printing, filing, shipping and distribution of the "Agreement Among
Underwriters" between the Representatives and the Underwriters, the
Master Selected Dealers' Agreement, the Underwriters' Questionnaire;
(ix) all filing fees, attorneys' fees and expenses incurred by the
Company 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; (x) all fees and expenses paid or incurred in connection
with filings made with the NASD; and (xi) all other costs and expenses
incident to the performance of their obligations hereunder which are
not otherwise specifically provided for in this Section.
(b) Each Selling Stockholder will pay (directly or by
reimbursement) all fees and expenses incident to the
performance of such Selling Stockholder's obligations under
this Agreement which are not otherwise specifically provided
for herein, including but not limited to any fees and
expenses of counsel for such Selling Stockholder, such
Selling Stockholder's pro rata share of fees and expenses of
the Attorneys-in-fact and the Custodian and all expenses and
taxes incident to the sale and delivery of the Stock to be
sold by such Selling Stockholder to the Underwriters
hereunder.
(c) In addition to their other obligations under Section 6(a)
hereof, the Company and each Selling Stockholder jointly and
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,
(ii) any act or failure to act or any alleged act or failure
to act or (iii) any breach or inaccuracy in their
representations and warranties, they will reimburse each
Underwriter on a quarterly basis for all reasonable legal or
other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the
Company's and each Selling Stockholder's obligation to
reimburse each Underwriter for such expenses and the
possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so
held to have been improper, each Underwriter shall promptly
return it to the Company and each Selling Stockholder, 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 timed by Citibank, N.A.,
New York, New York (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Underwriter
in a timely manner as provided below shall bear interest at
the Prime Rate from the due date for such
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reimbursement. This expense reimbursement agreement will be
in addition to any other liability which the Company or any
Selling Stockholder may otherwise have. The request for
reimbursement will be sent to the Company with a copy to
each Selling Stockholder. In the event that the Company
fails to make such reimbursement payment within thirty (30)
days of the reimbursement request, the Representatives shall
notify the Selling Stockholders of their obligation to make
such reimbursement payments within fifteen (15) days;
provided, however, that each Selling Stockholder other than
Xx. Xxxx and Xx. Xxxx shall be required to advance at such
time only its pro rata portion of the reimbursement payment.
To the extent that any Selling Stockholder fails to pay its
pro rata portion in timely response to the Underwriters'
request, Xx. Xxxx and Xx. Xxxx shall be jointly and
severally liable for such reimbursement payment and each
shall render such payment to the Representatives within
fifteen (15) days of written demand therefor by the
Representatives.
(d) In addition to its other obligations under Section 6(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 6(b) hereof
which relates to information furnished to the Company
pursuant to Section 6(c) hereof, it will reimburse the
Company (and, to the extent applicable, each officer,
director, controlling person or Selling Stockholder) on a
quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to
the extent applicable, each officer, director, controlling
person or Selling Stockholder) for such expenses and the
possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so
held to have been improper, the Company (and, to the extent
applicable, each officer, director, controlling person or
Selling Stockholder) shall promptly return it to the
Underwriters together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company
within thirty (30) days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set
forth in paragraph (c) and/or (d) of this Section 5,
including the amounts of any requested reimbursement
payments and the method of determining such amounts, shall
be settled by arbitration conducted under the provisions of
the Constitution and Rules of the Board of Governors of the
New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must
be commenced by service of a written demand for arbitration
or written notice of intention to arbitrate, therein
electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an
arbitration tribunal in such demand or notice, then the
party responding to said demand or notice is authorized to
do so. Such an arbitration would be limited to the operation
of the interim reimbursement provisions contained in
paragraph (c) and/or (d) of this Section 5 and would not
resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the
provisions of Section 6.
6. Indemnification and Contribution. (a) The Company agrees 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
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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 of investigating and defending against any claims
therefor and 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, (i) 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, (ii) for any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in
any manner to, the Stock or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim,
damage, liability or expense arising out of or based upon matters
covered by clause (i) above (provided that the Company shall not be
liable under this clause (ii) to the extent that it is determined in a
final judgment by a court of competent jurisdiction that such loss,
claim, damage, or liability or expense resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct), or
(iii) that arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company
contained herein or any failure of the Company to perform its
obligations hereunder. In no case is the Company to be liable with
respect to any claims made against any Underwriter Indemnified Party
against whom the action is brought unless such Underwriter Indemnified
Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information
of the nature of the claim shall have been served upon the Underwriter
Indemnified Party, but failure to notify the Company of such claim
shall not relieve it from any liability that it may have to any
Underwriter Indemnified Party otherwise than on account of its
indemnity contained in this paragraph. The Company will 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 the Company elects to assume the defense, such defense shall be
conducted by counsel chosen by it and reasonably acceptable to the
Underwriters. In the event the Company elects 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 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 at law or in equity 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, in which case
the Company shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such
counsel. The Company shall not be liable to indemnify any Underwriter
Indemnified Party for any settlement of any such claim effected
without the Company's consent, which shall not be unreasonably
withheld. This indemnity agreement is not exclusive and will be in
addition to any liability which the Company 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 Selling Stockholder agrees to indemnify and hold
harmless each Underwriter Indemnified Party against any
losses, claims, damages, liabilities or expenses (including,
unless such Selling Stockholder elects to assume the
defense, the reasonable cost of investigating and defending
against any claims therefor and counsel fees incurred in
connection therewith), which may be based upon the
Securities Act, or any other statute or at common law, (i)
on the ground or alleged ground that any Preeffective
Prospectus, the Registration Statement or the Prospectus
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(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 under which they were
made, not misleading, but only insofar as such statement or
omission was made in reliance upon, and in conformity with,
written information furnished to the Company by such Selling
Stockholder, directly or indirectly, specifically for use in
the preparation thereof, or (ii) that arise out of or are
based in whole or in part on any inaccuracy in the
representations and warranties of the Selling Stockholders
contained herein or any failure of the Selling Stockholders
to perform their obligations hereunder. Such Selling
Stockholder shall be entitled to participate at his 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 Selling Stockholder elects to assume the
defense, such defense shall be conducted by counsel chosen
by it. In the event that any Selling Stockholder elects to
assume the defense of any such suit and retain such counsel,
the 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) such
Selling Stockholder shall have specifically authorized the
retaining of such counsel or (ii) the parties to such suit
include such Underwriter Indemnified Parties and such
Selling Stockholder and such Underwriter Indemnified Parties
have been advised by counsel that one or more legal defenses
may be available to it or them which may not be available to
such Selling Stockholder, in which case such Selling
Stockholder shall not be entitled to assume the defense of
such suit notwithstanding its obligation to bear the fees
and expenses of such counsel. This indemnity agreement is
not exclusive and will be in addition to any liability which
such Selling Stockholder 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. In no event, however, shall the liability
of any Selling Stockholder under this Section 6(b) exceed
the proceeds received by such Selling Stockholder from the
Underwriters in the offering. The Company and the Selling
Stockholders may agree, as among themselves and without
limiting the rights of the Underwriters under this
Agreement, as to their respective amounts of such liability
for which they each shall be responsible.
(c) Each Underwriter severally and not jointly 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 each
Selling Stockholder and each person, if any, who controls a
Selling Stockholder within the meaning of the Securities Act
(collectively, the "Stockholder 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. For all
purposes of this Agreement, the syndicate information and
the amount of selling concessions and reallowance set forth
in the Prospectus constitute the only information relating
to any Underwriter furnished in writing to the Company by
the Representatives specifically for
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use in any Preeffective Prospectus, the Registration
Statement or the Prospectus. In no case is such Underwriter
to be liable with respect to any claims made against any
Company Indemnified Party or Stockholder Indemnified Party
against whom the action is brought unless such Company
Indemnified Party or Stockholder Indemnified Party shall
have notified such Underwriter in writing within a
reasonable time after the summons or other first legal
process giving information of the nature of the claim shall
have been served upon the Company Indemnified Party or
Stockholder Indemnified Party, but failure to notify such
Underwriter of such claim shall not relieve it from any
liability which it may have to any Company Indemnified Party
or Stockholder Indemnified Party otherwise than on account
of its indemnity agreement contained in this paragraph. 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. In the
event that any Underwriter elects to assume the defense of
any such suit and retain such counsel, the Company
Indemnified Parties or Stockholder 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. 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, which shall not be unreasonably
withheld. 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 Stockholder Indemnified Party.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified
party under subsection (a), (b) or (c) 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 and the Selling
Stockholders bear to the total underwriting discounts and
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 the Company, the 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,
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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 (d), 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.
7. 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 Selling Stockholders, the
Company or any of its officers or directors or any controlling person,
and shall survive delivery of and payment for the Stock until all
applicable statutes of limitation have expired.
8. 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 each of the Closing Dates, of the representations and
warranties made herein by the Company and the Selling Stockholders, to
compliance at and as of each of the Closing Dates by the Company and
the Selling Stockholders with their covenants and agreements herein
contained and other provisions hereof to be satisfied at or prior to
each of the Closing Dates, and to the following additional conditions:
(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 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, on a consolidated basis,
prior to each of the Closing Dates in the condition
(financial or otherwise), properties, business, management,
prospects, net worth or results of operations of the Company
and its subsidiaries considered as a whole, or any change in
the capital stock, short-term or long-term debt of the
Company and its subsidiaries considered as a whole, 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 unpracticable in the
reasonable judgment of the Representatives to proceed with
the public offering or purchase the Stock as contemplated
hereby.
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(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 or the Selling
Stockholders' ability to perform their 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 Price Waterhouse
LLP, independent certified public accountants, a letter,
dated the date hereof, in form and substance satisfactory to
the Underwriters. In addition, the Representatives shall
have received from such accountants a letter stating that
their review of the Company's internal accounting controls,
to the extent they deemed necessary in establishing the
scope of their examination of the Company's financial
statements as of December 31, 1996, did not disclose any
weakness in internal controls that they considered to be
material weaknesses.
(e) The Representatives shall have received from Price
Waterhouse LLP, independent certified public accountants,
letters, dated each of the Closing Dates, to the effect that
such accountants reaffirm, as of each of the Closing Dates,
and as though made on each of the Closing Dates, the
statements made in the letter furnished by such accountants
pursuant to paragraph (d) of this Section 8.
(f) The Representatives shall have received from Venture Law
Group, counsel for the Company, opinions, dated each of the
Closing Dates, to the effect set forth in Exhibit I hereto.
(g) The Representatives shall have received from counsel for
each of the Selling Stockholders an opinion dated each of
the Closing Dates to the effect set forth in Exhibit III
hereto.
(h) The Representatives shall have received from Xxxxxxxx &
Xxxxxxxx LLP, counsel for the Underwriters, their opinions
dated each of the Closing Dates with respect to the
incorporation of the Company, the validity of the Stock, the
Registration Statement and the Prospectus and such other
related matters as it may reasonably request, and the
Company and the Selling Stockholders shall have furnished to
such counsel such documents as they may request for the
purpose of enabling them to pass upon such matters.
(i) The Representatives shall have received certificates, dated
each of the Closing Dates, of the chief executive officer or
the President 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
knowledge of the signatories 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 not misleading.
(iii) The representations and warranties of the Company
in this Agreement are true and correct in all
material respects at and as of each of the Closing
Dates, and the Company has complied in all
material respects with all the covenants and
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, (A) 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, net worth or results of
operations of the Company and the Company has not
entered into any material transactions not in the
ordinary course of business; (B) the business and
operations conducted by the Company and its
subsidiaries 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; (C) no
legal or governmental action, suit or proceeding
is pending or threatened against the Company which
is material to the Company, whether or not arising
from transactions in the ordinary course of
business, or which may materially and adversely
affect the transactions contemplated by this
Agreement; (D) the Company has not incurred any
material liability or obligation, direct,
contingent or indirect, 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
(E) 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 each of the Closing
Dates.
(j) The Company and each of 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 each of the Closing Dates, of the
representations and warranties made herein by them
and as to compliance at and as of each of the
Closing Dates by them with their covenants and
agreements herein contained and other provisions
hereof to be satisfied at or prior to each of the
Closing Dates, and as to satisfaction of the other
conditions to the obligations of the Underwriters
hereunder.
(k) Cowen shall have received the written agreements,
substantially in the form of Exhibit II hereto, of
all the officers, directors and holders of Common
Stock of the Company that each will not offer,
sell, assign, transfer, encumber, contract to
sell, grant an option to purchase or otherwise
dispose of any shares of Common Stock (including,
without limitation, Common Stock which may be
deemed to be beneficially owned by such officer,
director or holder in accordance with the Rules
and Regulations) during the 180 days following the
effective date of the Registration Statement,
except for the Stock being sold hereunder by the
Selling Stockholders.
(l) The Nasdaq National Market shall have approved the
stock for listing, subject only to official notice
of issuance.
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 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 of such termination in
writing or by telegram at or prior to each of the Closing Dates, but
Cowen, on behalf of the Representatives, shall be entitled to waive
any of such conditions.
9. Effective Date. This Agreement shall become effective immediately as
to Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16 and 17 and, as to all
other provisions, at 11:00 a.m. New York City time on the first full
business day following the effectiveness of the Registration Statement
or at such earlier time after the
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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 9, 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 (a) advising Underwriters that
the shares of Stock are released for public offering or (b) offering
the Stock for sale to securities dealers, whichever may occur first.
10. Termination. This Agreement (except for the provisions of Section 5)
may be terminated by the Company at any time before it becomes
effective in accordance with Section 9 by notice to the
Representatives and may be terminated by the Representatives at any
time before it becomes effective in accordance with Section 9 by
notice to the Company. 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 5, 6 and 11 and other than
as provided in Section 12 as to the liability of defaulting
Underwriters.
This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the
First Closing Date trading in securities on any of the New York Stock
Exchange, American Stock Exchange or Nasdaq National Market System
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 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 material and adverse 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 Stock 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 any of its subsidiaries or the transactions contemplated by
this Agreement, which, in the judgment of the Representatives, makes
it impracticable or inadvisable to offer or deliver the Stock 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 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 Stock on the terms
contemplated by the Prospectus.
11. Reimbursement of Underwriters. Notwithstanding any other provisions
hereof, if this Agreement shall not become effective by reason of any
election of the Company or the Selling Stockholders pursuant to the
first paragraph of Section 10 or shall be terminated by the
Representatives under Section 8 or Section 10, the Company will bear
and pay the expenses specified in Section 5 hereof and, in addition to
its obligations pursuant to Section 6 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.
12. 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 shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase does not
exceed ten percent
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(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 12,
(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 12 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 5 and except for the provisions of Section 6.
13. 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 6 hereof shall be sent to such
Underwriter at the address furnished by the Representatives or, if
sent to the Company, shall be mailed, delivered or telegraphed and
confirmed c/o AccelGraphics, Inc., 0000 Xxxxxx Xxxx, Xxx Xxxx,
Xxxxxxxxxx 00000, Attention: President.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company and 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 any Selling
Stockholders within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act.
15. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
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16. 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 Cowen, as Representative, will be
binding on all the Underwriters; and any action taken under this
Agreement by any of the Attorneys-in-fact will be binding on all the
Selling Stockholders.
17. 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.
18. 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 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.
19. 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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Any person executing and delivering this Agreement as Attorney-in-fact
for the Selling Stockholders represents by so doing that the
individual has been duly appointed as Attorney-in-fact by such Selling
Stockholder pursuant to a validly existing and binding Power of
Attorney which authorizes such Attorney-in-fact to take such action.
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,
ACCELGRAPHICS, INC.
By:____________________________
President
SELLING STOCKHOLDERS LISTED
IN SCHEDULE B
By:____________________________
Attorney-in-Fact
Acting on [his] [her] own behalf
and on behalf of the Selling
Stockholders listed in Schedule B.
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Accepted and delivered in
o as of
the date first above written.
XXXXX & COMPANY
XXXXXXXXX, XXXXXXXX & COMPANY LLC
SOUNDVIEW FINANCIAL GROUP, INC.
Acting on their own behalf and as Representatives of several Underwriters
referred to in the foregoing Agreement.
By: XXXXX & COMPANY
By: Cowen Incorporated,
its general partner
By: ______________________________
Xxxx X. Xxxxxx
Managing Director - Syndicate
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SCHEDULE A
Number Number of
of Firm Optional
Shares Shares
to be to be
Name Purchased Purchased
Xxxxx & Company . . . . . . . . . . .
Xxxxxxxxx, Xxxxxxxx & Company LLC . . . . . .
SoundView Financial Group, Inc. . . . . . . .
Total 2,600,000 390,000
SCHEDULE A
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SCHEDULE B
Number of Number of
Firm Optional
Shares to Shares to
be Sold be Sold
---------- ----------
AccelGraphics, Inc. 2,145,000
SELLING STOCKHOLDERS
Kubota Corporation 113,464
Advanced Technology Venturers IV, L.P. 85,958
Xxxx X. Xxxxxxx 3,375
Xxxx X. Xxxxxxxxx 4,312
AVI Capital L.P.
Associated Ventures Investors II, L.P.
AVI Partners Growth Fund, L.P.
AVI Silicon Valley Partners, L.P.
STF II, L.P. 69,864
Asset Management Associates 1996, L.P. 33,333
Xxxxxxx X. Xxxx 23,064
Xxxxxxx X. Xxxxxxxx 11,015
Xxxxx X. Xxxx 7,125
Xxx X. Xxxxxxx 5,622
Xxxxx Xxxxxx 3,000
------------ ------------
Total 2,600,000 390,000
============ ============
SCHEDULE B
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[Form of Opinion of Issuer's Counsel] Exhibit I
[Date]
Xxxxx & Company
Xxxxxxxxx, Xxxxxxxx & Company LLC
SoundView Financial Group, Inc.
As representatives of the
several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: AccelGraphics, Inc.
2,600,000 Shares of Common Stock
Dear Sirs:
We have acted as counsel for AccelGraphics, Inc., a Delaware corporation (the
"Company"), in connection with the sale by the Company and purchase of ____
shares of Common Stock, par value $.001 per share, of the Company (the "Shares")
by the several Underwriters listed in Schedule A to the Underwriting Agreement,
dated ____, among the Company, Xxxxx & Company, Xxxxxxxxx, Xxxxxxxx & Company,
LLC and SoundView Financial Group, Inc., as representatives of the several
Underwriters named therein, and the Selling Stockholders named in Schedule B
thereto (the "Underwriting Agreement"). This opinion is being furnished pursuant
to Section 8(f) of the Underwriting Agreement. All defined terms not defined
herein shall have the meanings ascribed to them in the Underwriting Agreement.
We are of the opinion that:
1. The Company and each of its subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation, to our knowledge are duly qualified
to do business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification, and have all
power and authority necessary to own or hold their respective properties and
conduct the businesses in which they are engaged;
2. The Company has an authorized capitalization as set forth in the Prospectus
as of the dates set forth therein, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued, are fully paid
and non-assessable and all of the Shares to be issued and sold by the Company
and the Selling Stockholders to the Underwriters pursuant to the Underwriting
Agreement have been duly and validly authorized and, when issued and delivered
against payment therefor as provided for in the Underwriting Agreement, shall be
duly and validly issued, fully paid and non-assessable; and all of the issued
shares of capital stock of each subsidiary of the Company have been duly and
validly authorized and issued and are fully paid, non-assessable and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
3. There are no preemptive or other rights to subscribe for or to purchase, nor
any restriction upon the voting or transfer of, any of the Shares pursuant to
the Company's Certificate of Incorporation or By-Laws or to our knowledge any
agreement or other instrument;
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4. To our knowledge, other than as described in the Prospectus there are no
legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company or any
of its Subsidiaries is the subject which, if determined adversely to the Company
or any of its subsidiaries, could have a material adverse effect on the Company
and its subsidiaries; and, to the best of our knowledge, no such proceedings are
threatened or contemplated by governmental authorities or other third parties;
5. The Company has full corporate power and authority to enter into the
Underwriting Agreement and to perform its obligations thereunder (including to
issue, sell and deliver the Shares), and the Underwriting 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 indemnification
and contribution thereunder may be limited by federal or state securities laws
or the public policy underlying such laws;
6. To our knowledge, the execution, delivery and performance of the Underwriting
Agreement and the consummation of the transactions therein contemplated other
than performance of the Company's indemnification obligations under the
Underwriting Agreement, concerning which we express no opinion, 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 or any of its subsidiaries is a
party or by which any of them or any of their properties is or may be bound, the
Certificate of Incorporation, By-laws or other organizational documents of the
Company or any of its subsidiaries, or any law, order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or result in the creation of a
lien; provided, however, that we express no opinion or belief with respect to
state securities or blue sky laws;
7. 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 the Underwriting 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 Shares by
the Underwriters;
8. To our knowledge, the Company and each of its subsidiaries are in compliance
with, and conduct their businesses in conformity with, all applicable federal,
state, local and foreign laws, rules and regulations, including, but not limited
to, those of any governmental agency, court or tribunal; to our knowledge, no
prospective change in any of such federal, state, local or foreign laws, rules
or regulations has been adopted which, when made effective, would have a
material adverse effect on the operations of the Company and its subsidiaries.
9. The Registration Statement was declared effective under the Securities Act as
of __________, 1997, the Prospectus was filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations on __________, 1997 and no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose is pending or, to the best of our knowledge,
threatened by the Commission;
10. The Registration Statement and the Prospectus and any amendments or
supplements thereto comply as to form in all respects with the requirements of
the Securities Act and the Rules and Regulations.
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11. To our knowledge, there are no contracts or other documents which are
required by the Securities Act or by the Rules and Regulations to be described
in the Prospectus or filed as exhibits to the Registration Statement which have
not been described in the Prospectus or filed as exhibits to the Registration
Statement or incorporated therein by reference as permitted by the Rules and
Regulations;
12. To our knowledge, other than as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right (other than rights which have been waived or
satisfied) to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to this Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act;
l3. To our knowledge, the descriptions in the Registration Statement and
Prospectus of statutes, rules, regulations, legal or governmental proceedings,
contracts and other documents are accurate and such descriptions fairly present
the information required to be disclosed by the Securities Act and the Rules and
Regulations; and to our knowledge, there are no legal or governmental
proceedings, statutes, ruler or regulations, or any contracts or documents of a
character required to be described in the Registration Statement or Prospectus
or to be filed as exhibits to the Registration Statement which are not described
and filed as required;
14. To our knowledge, the statements under the captions "Risk Factors," to the
extent they reflect matters of federal law arising under the federal laws of the
United States or legal conclusions relating to such law, accurately summarize
and fairly present the legal and regulatory matters described therein;
15. The Company has complied with all provisions of Section 517.075 of the
Florida Statutes (Chapter 92-198; Laws of Florida); and
The foregoing opinion is limited to matters governed by the Federal laws of the
United States of America, the general corporate law of the State of Delaware and
the laws of the State of California.
We have acted as counsel to the Company on a regular basis, have acted as
counsel to the Company in connection with previous financing transactions and
have acted as counsel to the Company in connection with the preparation and
filing of the Registration Statement and the Prospectus, and based on the
foregoing and except with respect to any matters related to intellectual
property or the financial statements and related schedules set forth in the
Registration Statement, no facts have come to our attention which lead us to
believe that the Registration Statement or any amendment thereto, as of the
Effective Date, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, or that the Prospectus contains any
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.
Very truly yours,
[Signatory]
By: ________________________
Name:
Title:
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[Form of Lock-Up Agreement] Exhibit II
[Date]
Xxxxx & Company
Xxxxxxxxx, Xxxxxxxx & Company
SoundView Financial Group, Inc.
As representatives of the
several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: AccelGraphics, Inc.
____ Shares of Common Stock
Dear Sirs:
In order to induce Xxxxx & Company ("Cowen"), Xxxxxxxxx Xxxxxxxx & Company, and
SoundView Financial Group, Inc. (together with Cowen, the "Representatives"), to
enter in to a certain underwriting agreement with AccelGraphics, Inc., a
California corporation (the "Company"), with respect to the public offering of
shares of the Company's Common Stock ("Common Stock"), the undersigned hereby
agrees that from the date hereof until 180 days following the date of the final
prospectus filed by the Company with the Securities and Exchange Commission in
connection with such public offering, the undersigned will not, without the
prior written consent of Cowen, directly or indirectly, (i) offer, sell, assign,
transfer, encumber, pledge, contract to sell, grant an option to purchase or
otherwise dispose of, other than by operation of law, any shares of Common Stock
(including, without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations promulgated under the Securities Act of 1933, as the same may be
amended or supplemented from time to time (such shares, the "Beneficially Owned
Shares")) or (ii) enter into any swap or similar agreement that transfers, in
whole or in part, the economic risk of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise, and
whether any such transaction relates to Common Stock now owned or hereafter
acquired by the undersigned.
Anything contained herein to the contrary notwithstanding, any person to whom
shares of Common Stock or Beneficially Owned Shares are transferred from the
undersigned shall be bound by the terms of this Agreement.
In order to enable the aforesaid covenants to be enforced, the undersigned
hereby consents to the placing of legends and/or stop-transfer orders with the
transfer agent of the Common Stock with respect to any shares of Common Stock or
Beneficially Owned Shares.
Very truly yours,
[Signatory]
By: _____________________
Name:
Title:
1
34
[Form of Opinion of Selling Stockholders' Counsel] Exhibit III
[Date]
Xxxxx & Company Xxxxxxxxx, Xxxxxxxx & Company LLC SoundView Financial Group,
Inc.
As representatives of the
several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: AccelGraphics, Inc.
2,600,000 Shares of Common Stock
Dear Sirs:
We have acted as counsel for certain Selling Stockholders (the "Selling
Stockholders") in connection with the sale by the Selling Stockholders and
purchase of ________ shares (the "Shares") of Common Stock of AccelGraphics,
Inc., a Delaware corporation (the "Company"), par value $.001 per share, by the
several Underwriters listed in Schedule A to the Underwriting Agreement, dated
________, among the Company, Xxxxx & Company, Xxxxxxxxx, Xxxxxxxx & Company LLC
, and SoundView Financial Group, Inc., as representatives of the several
Underwriters named therein, and the Selling Stockholders named in Schedule B
thereto (the "Underwriting Agreement"). This opinion is being furnished pursuant
to Section 8(g) of the Underwriting Agreement. All defined terms not defined
herein shall have the meaning ascribed to them in the Underwriting Agreement.
We are of the opinion that:
1. To our knowledge each Selling Stockholder has all right, power and authority
to sell, transfer, assign and deliver the Shares being sold by it pursuant to
the Underwriting Agreement, and, upon delivery of the payment for such Shares
thereunder, each of the several Underwriters will acquire valid and marketable
title to such stock being sold to the Underwriters by it free and clear of any
liens, encumbrances, equities, claims or restrictions on transfer, assuming that
the Underwriters are acquiring such Shares in good faith and without notice of
any adverse claim with respect to the Shares;
2. Each Selling Stockholder has full power and authority to enter into the
Underwriting Agreement and the applicable Custody Agreement and Power of
Attorney and to perform its obligations thereunder and, by execution and
delivery of the Underwriting Agreement and the applicable Custody Agreement and
Power of Attorney, has created a valid and binding obligation of such Selling
Stockholder in accordance with their terms, except to the extent that rights to
indemnity and contribution thereunder may be limited by federal or state
securities laws or the public policy underlying such laws;
3. To our knowledge the execution and delivery of the Underwriting Agreement and
the applicable Custody Agreement and Power of Attorney by each Selling
Stockholder and the consummation of the transactions
1
35
contemplated thereby will not conflict with or violate any law, rule, or
regulation applicable to Selling Stockholder; and
4. The sale of the Shares to the Underwriters by each Selling Stockholder
pursuant to the Underwriting Agreement, the compliance by such Selling
Stockholder with the provisions of the Underwriting Agreement and the applicable
Custody Agreement and Power of Attorney, and the consummation of the
transactions contemplated therein, do not (a) require the consent, approval,
authorization, registration, or qualification of or with any governmental
authority, except such as have been obtained and such as may be required under
state securities or "Blue Sky" laws, or (b) to our knowledge, conflict with or
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, lease or
other material agreement or instrument to which such Selling Stockholder is a
party or by which the Selling Stockholder or any of its properties, are bound,
or any statute, rule or regulation or any judgment, decree or order of any court
or other governmental authority or any arbitrator applicable to such Selling
Stockholder.
Very truly yours,
[Signatory]
By: ____________________
Name:
Title:
