Exhibit 1.1
Draft of July 6, 1998
_______________ SHARES
SCIENTIFIC LEARNING CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
DATED AUGUST ___, 1998
TABLE OF CONTENTS
SECTION 1. Representations and Warranties............................................2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................2
COMPLIANCE WITH REGISTRATION REQUIREMENTS..............................2
OFFERING MATERIALS FURNISHED TO UNDERWRITERS...........................3
DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY.......................3
THE UNDERWRITING AGREEMENT.............................................3
AUTHORIZATION OF THE COMMON SHARES.....................................3
NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS.....................3
NO MATERIAL ADVERSE CHANGE.............................................3
PREPARATION OF THE FINANCIAL STATEMENTS................................4
INCORPORATION AND GOOD STANDING OF THE COMPANY.........................4
CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS.........................4
STOCK EXCHANGE LISTING.................................................4
USE OF PROCEEDS........................................................5
NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER AUTHORIZATIONS
OR APPROVALS REQUIRED...............................................5
NO MATERIAL ACTIONS OR PROCEEDINGS.....................................5
INTELLECTUAL PROPERTY RIGHTS...........................................5
ALL NECESSARY PERMITS, ETC.............................................6
TITLE TO PROPERTIES....................................................6
TAX LAW COMPLIANCE.....................................................6
COMPANY NOT AN "INVESTMENT COMPANY."...................................6
INSURANCE..............................................................6
NO PRICE STABILIZATION OR MANIPULATION.................................7
RELATED PARTY TRANSACTIONS.............................................7
NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS............................7
COMPANY'S ACCOUNTING SYSTEM............................................7
REPRESENTATION AND WARRANTIES OF THE SELLING STOCKHOLDERS.................7
THE UNDERWRITING AGREEMENT.............................................7
THE CUSTODY AGREEMENT AND POWER OF ATTORNEY............................8
TITLE TO OPTIONAL COMMON SHARES TO BE SOLD; ALL AUTHORIZATIONS
OBTAINED............................................................8
DELIVERY OF THE OPTIONAL COMMON SHARES TO BE SOLD......................8
NON-CONTRAVENTION; NO FURTHER AUTHORIZATIONS OR APPROVALS REQUIRED.....8
NO REGISTRATION OR OTHER SIMILAR RIGHTS................................9
NO FURTHER CONSENTS, ETC...............................................9
DISCLOSURE MADE BY SUCH SELLING STOCKHOLDER IN THE PROSPECTUS..........9
NO PRICE STABILIZATION OR MANIPULATION.................................9
CONFIRMATION OF COMPANY REPRESENTATIONS AND WARRANTIES.................9
SECTION 2. Purchase, Sale and Delivery of the Common Shares.........................10
THE FIRM COMMON SHARES...................................................10
THE FIRST CLOSING DATE...................................................10
THE OPTIONAL COMMON SHARES; THE SECOND CLOSING DATE......................10
PUBLIC OFFERING OF THE COMMON SHARES.....................................11
PAYMENT FOR THE COMMON SHARES............................................11
DELIVERY OF THE COMMON SHARES............................................12
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TABLE OF CONTENTS
(CONTINUED)
DELIVERY OF PROSPECTUS TO THE UNDERWRITERS...............................12
SECTION 3. Additional Covenants.....................................................12
COVENANTS OF THE COMPANY.................................................12
REPRESENTATIVES' REVIEW OF PROPOSED AMENDMENTS AND SUPPLEMENTS........12
SECURITIES ACT COMPLIANCE.............................................12
AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES
ACT MATTERS........................................................13
COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS............13
BLUE SKY COMPLIANCE...................................................13
TRANSFER AGENT........................................................13
EARNINGS STATEMENT....................................................14
PERIODIC REPORTING OBLIGATIONS........................................14
AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES..................14
FUTURE REPORTS TO THE REPRESENTATIVES.................................14
COVENANTS OF THE SELLING STOCKHOLDERS....................................14
AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES..................14
DELIVERY OF FORMS W-8 AND W-9.........................................15
SECTION 4. Payment of Expenses......................................................15
SECTION 5. Conditions of the Obligations of the Underwriters........................16
ACCOUNTANTS' COMFORT LETTER...........................................16
COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER; NO
OBJECTION FROM NASD................................................16
NO MATERIAL ADVERSE CHANGE............................................17
OPINION OF COUNSEL FOR THE COMPANY....................................17
OPINION OF COUNSEL FOR THE UNDERWRITERS...............................17
OFFICERS' CERTIFICATE.................................................17
BRING-DOWN COMFORT LETTER.............................................17
OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS.......................18
SELLING STOCKHOLDERS' CERTIFICATE.....................................18
SELLING STOCKHOLDERS' DOCUMENTS.......................................18
LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF THE COMPANY
OTHER THAN SELLING STOCKHOLDERS....................................18
ADDITIONAL DOCUMENTS..................................................18
SECTION 6. Reimbursement of Underwriters' Expenses..................................19
SECTION 7. Effectiveness of this Agreement..........................................19
SECTION 8. Indemnification..........................................................19
INDEMNIFICATION OF THE UNDERWRITERS...................................19
INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS AND
THE SELLING STOCKHOLDERS...........................................21
NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES....................22
SETTLEMENTS...........................................................23
SECTION 9. Contribution.............................................................23
SECTION 10. Default of One or More of the Several Underwriters.......................25
SECTION 11. Termination of this Agreement............................................25
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TABLE OF CONTENTS
(CONTINUED)
SECTION 12. Representations and Indemnities to Survive Delivery......................26
SECTION 13. Notices..................................................................26
SECTION 14. Successors...............................................................27
SECTION 15. Partial Unenforceability.................................................27
SECTION 16. Governing Law Provisions.................................................27
CONSENT TO JURISDICTION...............................................27
WAIVER OF IMMUNITY....................................................28
SECTION 17. Failure of One or More of the Selling Stockholders to Sell and Deliver
Optional Common Shares................................................28
SECTION 18. General Provisions.......................................................28
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UNDERWRITING AGREEMENT
August __, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BANCAMERICA XXXXXXXXX XXXXXXXX
PACIFIC GROWTH EQUITIES, INC.
As Representatives of the several Underwriters
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Scientific Learning Corporation, a Delaware corporation (the "Company),
proposes to issue and sell to the several underwriters named in SCHEDULE A
(the "Underwriters") an aggregate of [___] shares (the "Firm Common Shares")
of its Common Stock, par value $[___] per share (the "Common Stock"). In
addition, the Company has granted to the Underwriters an option to purchase
up to an additional [____] shares of Common Stock and the Selling
Stockholders have severally granted to the Underwriters an option to purchase
up to an additional [____] shares of Common Stock, each Selling Stockholder
selling up to the amount set forth opposite such Selling Stockholder's name
in SCHEDULE B, all as provided in Section 2. The additional [____] shares to
be sold by the Company and the additional [____] shares to be sold by the
Selling Stockholders pursuant to such option are collectively called the
"Optional Common Shares". The Firm Common Shares and, if and to the extent
such option is exercised, the Optional Common Shares are collectively called
the "Common Shares." NationsBanc Xxxxxxxxxx Securities LLC, BancAmerica
Xxxxxxxxx Xxxxxxxx and Pacific Growth Equities, Inc. have agreed to act as
representatives of the several Underwriters (in such capacity, the
"Representatives") in connection with the offering and sale of the Common
Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-56545) which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration
statement, as amended, including the financial statements, exhibits and
schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (collectively, the "Securities Act"),
including any information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430A or Rule 434 under the Securities Act, is
called the "Registration Statement." Any registration statement filed by the
Company pursuant to Rule 462(b) under the Securities Act is called the "Rule
462(b) Registration Statement," and from and after the date and time of
filing of the Rule 462(b) Registration Statement the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. Such
prospectus, in the form first used by the Underwriters to confirm sales of
the Common Shares, is called the "Prospectus;" provided, however, if the
Company has, with the consent of NationsBanc
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Xxxxxxxxxx Securities LLC, elected to rely upon Rule 434 under the Securities
Act, the term "Prospectus" shall mean the Company's prospectus subject to
completion (each, a "preliminary prospectus") dated [___] (such preliminary
prospectus is called the "Rule 434 preliminary prospectus"), together with
the applicable term sheet (the "Term Sheet") prepared and filed by the
Company with the Commission under Rules 434 and 424(b) under the Securities
Act and all references in this Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus, the Prospectus or the Term Sheet, or any amendments or
supplements to any of the foregoing, shall include any copy thereof filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System ("XXXXX").
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents, warrants and covenants to each Underwriter as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has
complied to the Commission's satisfaction with all requests of the
Commission for additional or supplemental information. No stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best knowledge of
the Company, are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed
complied in all material respects with the Securities Act and, if filed
by electronic transmission pursuant to XXXXX (except as may be permitted
by Regulation S-T under the Securities Act), was identical to the copy
thereof delivered to the Underwriters for use in connection with the
offer and sale of the Common Shares. Each of the Registration Statement,
any Rule 462(b) Registration Statement and any post-effective amendment
thereto, at the time it became effective and at all subsequent times
through the Prospectus Delivery Period (as defined), complied and, as
amended or supplemented, will comply in all material respects with the
Securities Act and did not and, as amended or supplemented, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, as amended or
supplemented, as of its date and at all subsequent times through the
Prospectus Delivery Period (as defined), did not and, as amended or
supplemented, will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties set forth
in the two immediately preceding sentences do not apply to statements in
or omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance
upon and in conformity with information relating to any Underwriter
furnished to the Company by the Representatives
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expressly for use therein. There are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to
the Registration Statement which have not been described or filed as
required.
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company
has delivered to each of the Representatives one complete manually
signed copy of the Registration Statement and of each consent and
certificate of experts filed as a part thereof, and conformed copies of
the Registration Statement (without exhibits) and preliminary
prospectuses and the Prospectus, as amended or supplemented, in such
quantities and at such places as the Representatives have reasonably
requested for each of the Underwriters.
(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The
Company has not distributed and will not distribute, prior to the later
of the Second Closing Date (as defined below) and the completion of the
Underwriters' distribution of the Common Shares, any offering material
in connection with the offering and sale of the Common Shares other than
a preliminary prospectus, the Prospectus or the Registration Statement.
(d) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company and is a valid and
binding agreement of the Company, enforceable in accordance with its
terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(e) AUTHORIZATION OF THE COMMON SHARES. The Common Shares to be
purchased by the Underwriters from the Company have been duly authorized
for issuance and sale pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement, will be validly
issued, fully paid and nonassessable.
(f) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. There
are no persons with registration or other similar rights to have any
equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by this Agreement,
except for such rights as have been duly waived.
(g) NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed in
the Prospectus, subsequent to the respective dates as of which
information is given in the Prospectus: (i) there has been no material
adverse change in the financial condition, earnings, business,
operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company (any such change is called a
"Material Adverse Change") or any development that could reasonably be
expected to result in a Material Adverse Change; (ii) the Company has
not incurred any material liability or obligation, indirect, direct or
contingent, not in the ordinary course of business nor entered into any
material transaction or agreement not in the ordinary course of
business; and (iii) there has been no dividend or distribution of any
kind declared, paid or made by the Company.
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(h) PREPARATION OF THE FINANCIAL STATEMENTS. The financial
statements filed with the Commission as a part of the Registration
Statement and included in the Prospectus present fairly the financial
position of the Company as of and at the dates indicated and the results
of their operations and cash flows for the periods specified. The
supporting schedules included in the Registration Statement present
fairly the information required to be stated therein. Such financial
statements and supporting schedules have been prepared in conformity
with generally accepted accounting principles as applied in the United
States, applied on a consistent basis throughout the periods involved,
except as may be expressly stated in the related notes thereto. No other
financial statements or supporting schedules are required to be included
in the Registration Statement. The financial data set forth in the
Prospectus under the captions "Prospectus Summary--Summary Selected
Financial Data," "Selected Financial Data" and "Capitalization" fairly
present the information set forth therein on a basis consistent with
that of the audited financial statements contained in the Registration
Statement.
(i) INCORPORATION AND GOOD STANDING OF THE COMPANY. The Company
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation
and has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus
and to enter into and perform its obligations under this Agreement. The
Company is duly qualified as a foreign corporation to transact business
and is in good standing in the State of California and each other
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except for such jurisdictions (other than the State of California) where
the failure to so qualify or to be in good standing would not,
individually or in the aggregate, result in a Material Adverse Change.
The Company does not own or control, directly or indirectly, any
corporation, association or other entity.
(j) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. The
authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization" (other
than for subsequent issuances, if any, pursuant to employee benefit
plans described in the Prospectus or upon exercise of outstanding
options or warrants described in the Prospectus). The Common Stock
(including the Common Shares) conforms in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in
compliance with federal and state securities laws. None of the
outstanding shares of Common Stock were issued in violation of any
preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights
of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any
capital stock of the Company other than those accurately described in
the Prospectus. The description of the Company's stock option, stock
bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, set forth in the Prospectus accurately and
fairly presents the information required to be shown with respect to
such plans, arrangements, options and rights.
(k) STOCK EXCHANGE LISTING. The Common Shares have been approved
for listing on the Nasdaq National Market, subject only to official
notice of issuance.
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(l) USE OF PROCEEDS. The Company currently plans to apply the
net proceeds from the sale of the Common Shares sold by it in the manner
described under the caption "Use of Proceeds" in the Prospectus.
(m) NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER
AUTHORIZATIONS OR APPROVALS REQUIRED. The Company is not in violation of
its charter or by-laws or in default (or, with the giving of notice or
lapse of time, would be in default) ("Default") under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or
other instrument to which the Company is a party or by which it may be
bound, or to which any of the property or assets of the Company is subject
(each, an "Existing Instrument"), except for such Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change. The
Company's execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby and by the Prospectus
(i) have been duly authorized by all necessary corporate action and will
not result in any violation of the provisions of the charter or by-laws of
the Company, (ii) will not conflict with or constitute a breach of, or
Default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company pursuant to, or
require the consent of any other part to, any Existing Instrument, except
for such conflicts, breaches, Defaults, liens, charges or encumbrances or
failures to obtain consents as would not, individually or in the
aggregate, result in a Material Adverse Change and (iii) will not result
in any violation of any law, administrative regulation or administrative
or court decree applicable to the Company, except as would not result in a
Material Adverse Change. No material consent, approval, authorization or
other order of, or registration or filing with, any court or other
governmental or regulatory authority or agency, is required for the
Company's execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby and by the
Prospectus, except such as have been obtained or made by the Company and
are in full force and effect under the Securities Act, applicable state
securities or blue sky laws and from the National Association of
Securities Dealers, Inc. (the "NASD").
(n) NO MATERIAL ACTIONS OR PROCEEDINGS. There are no legal or
governmental actions, suits or proceedings pending or, to the best of
the Company's knowledge, threatened (i) against or affecting the
Company, (ii) which has as the subject thereof any officer or director
of, or property owned or leased by, the Company or (iii) relating to
environmental or discrimination matters, where in any such case (A)
there is a reasonable expectation that such action, suit or proceeding
might be determined adversely to the Company and (B) any such action,
suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement. No
material labor dispute exists with the employees of the Company, nor is
the Company aware of any material labor disputes with the employees of
any principal supplier of the Company, nor, to the best of the Company's
knowledge, are any such labor disputes threatened or imminent.
(o) INTELLECTUAL PROPERTY RIGHTS. The Company owns or possesses
sufficient rights to trademarks, trade names, patent rights, copyrights,
licenses, approvals, trade secrets and other similar rights
(collectively, "Intellectual Property Rights") reasonably necessary to
conduct its business as now conducted. The Company has not
5
received any notice of infringement or conflict with asserted
Intellectual Property Rights of others, which infringement or conflict,
if the subject of an unfavorable decision, would reasonably be expected
to result in a Material Adverse Change.
(p) ALL NECESSARY PERMITS, ETC. The Company possesses such valid
and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct its business, and the Company has not received any
written or, to its knowledge, oral notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such
certificate, authorization or permit which, singly or in the aggregate,
the failure to obtain or if the subject of an unfavorable decision,
ruling or finding, would reasonably be expected to result in a Material
Adverse Change.
(q) TITLE TO PROPERTIES. The Company has good and marketable
title to all the properties and assets reflected as owned in the
financial statements referred to in Section 1(i) above (or elsewhere in
the Prospectus), in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects,
except such as would not, individually or in the aggregate, result in a
Material Adverse Change. The real property, improvements, equipment and
personal property held under lease by the Company are held under valid
and enforceable leases, with such exceptions as would not, individually
or in the aggregate, result in a Material Adverse Change.
(r) TAX LAW COMPLIANCE. The Company has filed all necessary
federal, state and foreign income and franchise tax returns or has
properly requested extensions thereof and has paid all taxes required to
be paid by it and, if due and payable, any related or similar
assessment, fine or penalty levied against it except as may be being
contested in good faith and by appropriate proceedings. The Company has
made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(i) above in respect of all federal,
state and foreign income and franchise taxes for all periods covered by
such financial statements as to which the tax liability of the Company
has not been finally determined.
(s) COMPANY NOT AN "INVESTMENT COMPANY." The Company has been
advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company (a) is
primarily engaged in a business or businesses other than that of
investing, reinvesting, owning, holding or trading in securities, (b) is
not engaged and does not propose to engage in the business of issuing
face-amount certificates of the installment type, and has not been
engaged in such business and does not have any such certificate
outstanding, and (c) is not engaged and does not propose to engage in
the business of investing, reinvesting, owning, holding or trading in
securities, and does not own or propose to acquire investment securities
(as defined in Section 3(a) of the Investment Company Act) having a
value exceeding 40 percent of the value of its total assets (exclusive
of government securities and cash items) on an unconsolidated basis. The
Company is not required to file on Form N-1A.
(t) INSURANCE. The Company is insured by recognized, financially
sound and reputable institutions with policies in such amounts and with
such deductibles and covering such risks as are generally deemed
adequate and customary for its business including, but not limited to,
policies covering real and personal property owned or
6
leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against. The Company
has no reason to believe that it will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to
obtain comparable coverage from similar institutions as may be necessary
or appropriate to conduct its business as now conducted and at a cost
that would not result in a Material Adverse Change. The Company has not
been denied any insurance coverage which it has sought or for which it
has applied.
(u) NO PRICE STABILIZATION OR MANIPULATION. The Company has not
taken and will not take, directly or indirectly, any action designed to
or that might be reasonably expected to cause or result in stabilization
or manipulation of the price of the Common Stock to facilitate the sale
or resale of the Common Shares.
(v) RELATED PARTY TRANSACTIONS. There are no business
relationships or related-party transactions involving the Company or any
other person required to be described in the Prospectus which have not
been described as required.
(w) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. Neither the
Company nor, to the best of the Company's knowledge, any employee or
agent of the Company, has made any contribution or other payment to any
official of, or candidate for, any federal, state or foreign office in
violation of any law or of the character required to be disclosed in the
Prospectus.
(x) COMPANY'S ACCOUNTING SYSTEM. The Company maintains a system
of accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles as applied in the United States and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
Any certificate signed by an officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the
matters set forth therein.
B. REPRESENTATION AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder severally and not jointly represents, warrants and
covenants to each Underwriter as follows:
(a) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling
Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles.
7
(b) THE CUSTODY AGREEMENT AND POWER OF ATTORNEY. Each of the (i)
Custody Agreement signed by such Selling Stockholder and [___], as
custodian (the "Custodian"), relating to the optional deposit of the
Optional Common Shares to be sold by such Selling Stockholder (the "Custody
Agreement") and (ii) Power of Attorney appointing certain individuals named
therein as such Selling Stockholder's attorneys-in-fact (each, an
"Attorney-in-Fact") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus (the "Power of
Attorney"), of such Selling Stockholder has been duly authorized, executed
and delivered by such Selling Stockholder and is a valid and binding
agreement of such Selling Stockholder, enforceable in accordance with its
terms, except as rights to indemnification thereunder may be limited by
applicable law and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(c) TITLE TO OPTIONAL COMMON SHARES TO BE SOLD; ALL AUTHORIZATIONS
OBTAINED. Such Selling Stockholder has, and on the Second Closing Date (as
defined below) will have, good and valid title to all of the Optional
Common Shares which may be sold by such Selling Stockholder pursuant to
this Agreement on such date and the legal right and power, and all
authorizations and approvals required by law [and under its charter or
by-laws,] [partnership agreement,] [trust agreement] [or other
organizational documents] to enter into this Agreement and its Custody
Agreement and Power of Attorney, to sell, transfer and deliver all of the
Optional Common Shares which may be sold by such Selling Stockholder
pursuant to this Agreement and to comply with its other obligations
hereunder and thereunder.
(d) DELIVERY OF THE OPTIONAL COMMON SHARES TO BE SOLD. Delivery of
the Optional Common Shares which are sold by such Selling Stockholder
pursuant to this Agreement will pass good and valid title to such Optional
Common Shares, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or other claim.
(e) NON-CONTRAVENTION; NO FURTHER AUTHORIZATIONS OR APPROVALS
REQUIRED. The execution and delivery by such Selling Stockholder of, and
the performance by such Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement and the Power of Attorney will not
contravene or conflict with, result in a breach of, or constitute a Default
under, or require the consent of any other party to, the charter or
by-laws, [partnership agreement,] [trust agreement] or other organizational
documents of such Selling Stockholder or any other material agreement or
instrument to which such Selling Stockholder is a party or by which it is
bound or under which it is entitled to any right or benefit, any provision
of applicable law or any judgment, order, decree or regulation applicable
to such Selling Stockholder of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over such
Selling Stockholder, except for such contraventions, conflicts, breaches,
defaults or failures to obtain a consent as would not, individually or in
the aggregate materially adversely affect the offering and sale of the
Optional Common Shares. No consent, approval, authorization or other order
of, or registration or filing with, any court or other governmental
authority or agency, is required for the consummation by such Selling
Stockholder of the transactions contemplated in this Agreement, except such
as have been obtained or made and are in full force and effect under the
Securities Act, applicable state securities or blue sky laws and from the
NASD
8
or as would not materially adversely affect the offering and sale of
the Optional Common Shares.
(f) NO REGISTRATION OR OTHER SIMILAR RIGHTS. Such Selling
Stockholder does not have any registration or other similar rights to have
any equity or debt securities registered for sale by the Company under the
Registration Statement or included in the offering contemplated by this
Agreement, except for such rights as are described in the Prospectus under
"Shares Eligible for Future Sale."
(g) NO FURTHER CONSENTS, ETC. Except for the consent of such
Selling Stockholder to the respective number of Optional Common Shares to
be sold by each of the Selling Stockholders pursuant to this Agreement, no
consent, approval or waiver is required under any instrument or agreement
to which such Selling Stockholder is a party or by which it is bound or
under which it is entitled to any right or benefit, in connection with the
offering, sale or purchase by the Underwriters of any of the Optional
Common Shares which may be sold by such Selling Stockholder under this
Agreement or the consummation by such Selling Stockholder of any of the
other transactions contemplated hereby, except as would not materially
adversely affect the offering and sale of the Optional Common Shares.
(h) DISCLOSURE MADE BY SUCH SELLING STOCKHOLDER IN THE PROSPECTUS.
All information furnished by or on behalf of such Selling Stockholder in
writing expressly for use in the Registration Statement and Prospectus is,
and on the Second Closing Date will be, true, correct and complete in all
material respects, and does not, and on the Second Closing Date, as amended
or supplemented, will not, contain any untrue statement of a material fact
or omit to state any material fact necessary to make such information not
misleading. Such Selling Stockholder confirms as accurate the number of
shares of Common Stock set forth opposite such Selling Stockholder's name
in the Prospectus under the caption "Principal and Selling Stockholders"
(both prior to and after giving effect to the sale of the Common Shares).
(i) NO PRICE STABILIZATION OR MANIPULATION. Such Selling
Stockholder has not taken and will not take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Common Shares.
(j) CONFIRMATION OF COMPANY REPRESENTATIONS AND WARRANTIES. Such
Selling Stockholder has no reason to believe that the representations and
warranties of the Company contained in Section 1(A) hereof are not true
and correct, is familiar with the Registration Statement and the
Prospectus and has no knowledge of any material fact, condition or
information not disclosed in the Registration Statement or the Prospectus
which has had or would reasonably be expected to have a Material Adverse
Change and is not prompted to sell shares of Common Stock by any material
information concerning the Company which is required to be and is not set
forth in the Registration Statement and the Prospectus.
Any certificate signed by or on behalf of any Selling Stockholder and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Stockholder to each
Underwriter as to the matters covered thereby.
9
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES. THE
FIRM COMMON SHARES. The Company agrees to issue and sell to the several
Underwriters the Firm Common Shares upon the terms herein set forth. On the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase from the Company
the respective number of Firm Common Shares set forth opposite their names on
SCHEDULE A. The purchase price per Firm Common Share to be paid by the
several Underwriters to the Company shall be $[___] per share.
THE FIRST CLOSING DATE. Delivery of certificates for the Firm
Common Shares to be purchased by the Underwriters and payment therefor shall
be made at the offices of NationsBanc Xxxxxxxxxx Securities LLC, 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such other place as may be
agreed to by the Company and the Representatives) at 6:00 a.m. San Francisco
time, on [___], (1) or such other time and date not later than 10:30 a.m. San
Francisco time, on [___] (2) as the Representatives shall designate by notice
to the Company (the time and date of such closing are called the "First
Closing Date"). The Company hereby acknowledges that circumstances under
which the Representatives may provide notice to postpone the First Closing
Date as originally scheduled include, but are in no way limited to, any
determination by the Company and the Representatives to recirculate to the
public copies of an amended or supplemented Prospectus or a delay as
contemplated by the provisions of Section 10.
THE OPTIONAL COMMON SHARES; THE SECOND CLOSING DATE. In addition,
on the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Company and the Selling Stockholders hereby grant an option to the
several Underwriters to purchase, severally and not jointly, up to an
aggregate of [___] Optional Common Shares from the Company and the Selling
Stockholders at the purchase price per share to be paid by the Underwriters
for the Firm Common Shares. The option granted hereunder is for use by the
Underwriters solely in covering any over-allotments in connection with the
sale and distribution of the Firm Common Shares. The option granted hereunder
may be exercised at any time (but not more than once) upon notice by the
Representatives to the Company and the Selling Stockholders, which notice may
be given at any time within 30 days from the date of this Agreement. Such
notice shall set forth (i) the aggregate number of Optional Common Shares as
to which the Underwriters are exercising the option, (ii) the names and
denominations in which the certificates for the Optional Common Shares are to
be registered and (iii) the time, date and place at which such certificates
will be delivered (which time and date may be simultaneous with, but not
earlier than, the First Closing Date; and in such case the term "First
Closing Date" shall refer to the time and date of delivery of certificates
for the Firm Common Shares and the Optional Common Shares). Such time and
date of delivery, if subsequent to the
_________________________
(1) Typically, insert the fourth full business day after the date of
this Agreement, unless the pricing occurs at a time earlier than 4:30 p.m., EAST
COAST TIME, in which case insert the third full business day after the date of
this Agreement. In certain instances, such as when the Underwriters do not plan
to begin to release the Common Shares for sale to the public immediately
following execution of this Agreement, a later settlement date may be agreed to
by the Representative and the Company. (SEE Rule 15c6-1 under the Exchange Act.)
(2) Insert a date ten business days following the original
contemplated First Closing Date.
10
First Closing Date, is called the "Second Closing Date" and shall be
determined by the Representatives and shall not be earlier than three nor
later than five full business days after delivery of such notice of exercise.
If any Optional Common Shares are to be purchased, (a) each Underwriter
agrees, severally and not jointly, to purchase the number of Optional Common
Shares (subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Optional Common Shares to be purchased as the number of Firm Common
Shares set forth on SCHEDULE A opposite the name of such Underwriter bears to
the total number of Firm Common Shares and (b) the Company and each Selling
Stockholder agrees, severally and not jointly, to sell the number of Optional
Common Shares (subject to such adjustments to eliminate fractional shares as
the Representatives may determine) that bears the same proportion to the
total number of Option Common Shares to be sold as the number of Optional
Common Shares set forth in SCHEDULE B opposite the name of each such Selling
Stockholder or, in the case of the Company, as the number of Optional Common
Shares to be sold by the Company as set forth in the introductory paragraph
of this Agreement. The Representatives may cancel the option at any time
prior to its expiration by giving written notice of such cancellation to the
Company and the Selling Stockholders.
PUBLIC OFFERING OF THE COMMON SHARES. The Representatives hereby
advise the Company and the Selling Stockholders that the Underwriters intend
to offer for sale to the public, as described in the Prospectus, their
respective portions of the Common Shares as soon after this Agreement has
been executed and the Registration Statement has been declared effective as
the Representatives, in their sole judgment, have determined is advisable and
practicable.
PAYMENT FOR THE COMMON SHARES. Payment for the Common Shares to be
sold by the Company shall be made at the First Closing Date (and, if
applicable, at the Second Closing Date) by wire transfer of immediately
available funds to the order of the Company. Payment for the Optional Shares
to be sold by the Selling Stockholders, if applicable, shall be made at the
Second Closing Date by wire transfer of immediately available funds to the
order of the Custodian.
It is understood that the Representatives have been authorized, for
their own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Common Shares and any Optional Common Shares the Underwriters have
agreed to purchase. NationsBanc Xxxxxxxxxx Securities LLC, individually and
not as one of the Representatives of the Underwriters, may (but shall not be
obligated to) make payment for any Common Shares to be purchased by any
Underwriter whose funds shall not have been received by the Representatives
by the First Closing Date or the Second Closing Date, as the case may be, for
the account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
Each Selling Stockholder hereby agrees that (i) it will pay all
stock transfer taxes, stamp duties and other similar taxes, if any, payable
upon the sale or delivery of the Common Shares to be sold by such Selling
Stockholder to the several Underwriters, or otherwise in connection with the
performance of such Selling Stockholder's obligations hereunder and (ii) the
Custodian is authorized to deduct for such payment any such amounts from the
proceeds to such Selling Stockholder hereunder and to hold such amounts for
the account of such Selling Stockholder with the Custodian under the Custody
Agreement.
11
DELIVERY OF THE COMMON SHARES. The Company shall deliver, or cause
to be delivered, to the Representatives for the accounts of the several
Underwriters certificates for the Firm Common Shares at the First Closing
Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. The Company
and the Selling Stockholders shall also deliver, or cause to be delivered, to
the Representatives for the accounts of the several Underwriters,
certificates for the Optional Common Shares the Underwriters have agreed to
purchase from them at the First Closing Date or the Second Closing Date, as
the case may be, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor.
The certificates for the Common Shares shall be in definitive form and
registered in such names and denominations as the Representatives shall have
requested at least two full business days prior to the First Closing Date (or
the Second Closing Date, as the case may be) and shall be made available for
inspection on the business day preceding the First Closing Date (or the
Second Closing Date, as the case may be) at a location in New York City as
the Representatives may designate. If the Representatives so elect, delivery
of the Firm Common Shares and the Optional Common Shares, if applicable, may
be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the Representatives. Time shall be of
the essence, and delivery at the time and place specified in this Agreement
is a further condition to the obligations of the Underwriters.
DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than 12:00
p.m. on the second business day following the date the Common Shares have
been released by the Underwriters for sale to the public, the Company shall
delivery or cause to be delivered copies of the Prospectus in such quantities
and at such places as the Representatives shall request.
SECTION 3. ADDITIONAL COVENANTS.
A. COVENANTS OF THE COMPANY. The Company further covenants and
agrees with each Underwriter as follows:
(a) REPRESENTATIVES' REVIEW OF PROPOSED AMENDMENTS AND SUPPLEMENTS.
During such period beginning on the date hereof and ending on the later of
the First Closing Date or such date, as in the opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be delivered
in connection with sales by an Underwriter or dealer (the "Prospectus
Delivery Period"), prior to amending or supplementing the Registration
Statement (including any registration statement filed under Rule 462(b)
under the Securities Act) or the Prospectus, the Company shall furnish to
the Representatives for review a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed amendment or
supplement to which the Representatives reasonably object.
(b) SECURITIES ACT COMPLIANCE. After the date of this Agreement,
the Company shall promptly advise the Representatives in writing (i) of
the receipt of any comments of, or requests for additional or supplemental
information from, the Commission with respect to the Registration
Statement, (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to
any preliminary prospectus or the Prospectus, (iii) of the time and date
that any post-effective amendment to the Registration Statement becomes
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of
12
the Registration Statement or any post-effective amendment thereto or of
any order preventing or suspending the use of any preliminary prospectus
or the Prospectus, or of any proceedings to remove, suspend or terminate
from listing or quotation the Common Stock from any securities exchange
upon which the it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any
of such purposes. If the Commission shall enter any such stop order at any
time, the Company will use its best efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Company agrees
that it shall comply with the provisions of Rules 424(b), 430A and 434, as
applicable, under the Securities Act and will use its reasonable efforts
to confirm that any filings made by the Company under such Rule 424(b)
were received in a timely manner by the Commission.
(c) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER
SECURITIES ACT MATTERS. If, during the Prospectus Delivery Period, any
event shall occur or condition exist as a result of which it is necessary
to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if in the reasonable opinion
of the Representatives or counsel for the Underwriters it is otherwise
necessary to amend or supplement the Prospectus to comply with law, the
Company agrees to promptly prepare (subject to Section 3(A)(a) hereof),
file with the Commission and furnish at its own expense to the
Underwriters and to dealers, amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented
will not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus, as
amended or supplemented, will comply with law.
(d) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS.
The Company agrees to furnish the Representatives, without charge, during
the Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto as the Representatives may reasonably
request.
(e) BLUE SKY COMPLIANCE. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Common Shares for sale under (or obtain exemptions from the application of)
the or state securities or blue sky laws or Canadian provincial Securities
laws of those jurisdictions designated by the Representatives, shall comply
with such laws and shall continue such qualifications, registrations and
exemptions in effect so long as required for the distribution of the Common
Shares. The Company shall not be required to qualify as a foreign
corporation or to take any action that would subject it to general service
of process in any such jurisdiction where it is not presently qualified or
where it would be subject to taxation as a foreign corporation. The Company
will advise the Representatives promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the
Common Shares for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain
the withdrawal thereof at the earliest possible moment.
(f) TRANSFER AGENT. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Stock.
13
(g) EARNINGS STATEMENT. As soon as practicable, the Company will
make generally available to its security holders and to the
Representatives an earnings statement (which need not be audited) covering
the twelve-month period ending [___] that satisfies the provisions of
Section 11(a) of the Securities Act.
(h) PERIODIC REPORTING OBLIGATIONS. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and
the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act.
(i) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. During
the period of 180 days following the date of the Prospectus, the Company
will not, without the prior written consent of NationsBanc Xxxxxxxxxx
Securities LLC (which consent may be withheld at the sole discretion of
NationsBanc Xxxxxxxxxx Securities LLC), directly or indirectly, sell,
offer, contract or grant any option to sell, pledge, transfer or establish
an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Exchange Act, or otherwise dispose of or transfer, or announce
the offering of, or file any registration statement under the Securities
Act in respect of, any shares of Common Stock, options or warrants to
acquire shares of the Common Stock or securities exchangeable or
exercisable for or convertible into shares of Common Stock (other than as
contemplated by this Agreement with respect to the Common Shares);
provided, however, that the Company may issue shares of its Common Stock
or options to purchase its Common Stock, or Common Stock upon exercise of
options, pursuant to any stock option, stock bonus or other stock plan or
arrangement described in the Prospectus, but only if the holders of such
shares, options, or shares issued upon exercise of such options, agree in
writing not to sell, offer, dispose of or otherwise transfer any such
shares or options during such 180 day period without the prior written
consent of NationsBanc Xxxxxxxxxx Securities LLC (which consent may be
withheld at the sole discretion of the NationsBanc Xxxxxxxxxx
Securities LLC).
(j) FUTURE REPORTS TO THE REPRESENTATIVES. During the period of
three years hereafter the Company will furnish to the Representatives at
000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000, Attention: Xxxx Xxxxxxx:
(i) as soon as practicable after the end of each fiscal year, copies of the
Annual Report of the Company; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other material
report filed by the Company with the Commission, the NASD or any securities
exchange; and (iii) as soon as available, copies of any report or
communication of the Company mailed generally to holders of its capital
stock.
B. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling Stockholder
further covenants and agrees with each Underwriter:
(a) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. Such
Selling Stockholder will not, without the prior written consent of
NationsBanc Xxxxxxxxxx Securities LLC (which consent may be withheld in its
sole discretion), directly or indirectly, sell, offer, contract or grant
any option to sell (including without limitation any short sale), pledge,
transfer, establish an open "put equivalent position" within the meaning of
Rule 16a-1(h) under the Exchange Act, or otherwise dispose of any shares of
Common Stock, options or warrants to acquire shares of Common Stock, or
securities
14
exchangeable or exercisable for or convertible into shares of Common Stock
currently or hereafter owned either of record or beneficially
(as defined in Rule 13d-3 under Securities Exchange Act of 1934, as
amended) by the undersigned, or publicly announce the undersigned's
intention to do any of the foregoing, for a period commencing on the date
hereof and continuing through the close of trading on the date 180 days
after the date of the Prospectus.
(b) DELIVERY OF FORMS W-8 AND W-9. To deliver to the
Representative prior to the First Closing Date a properly completed and
executed United States Treasury Department Form W-8 (if the Selling
Stockholder is a non-United States person) or Form W-9 (if the Selling
Stockholder is a United States Person).
NationsBanc Xxxxxxxxxx Securities LLC, on behalf of the several
Underwriters, may, in its sole discretion, waive in writing the
performance by any of the Company or the Selling Stockholder of any one or
more of the foregoing covenants or extend the time for their performance.
SECTION 4. PAYMENT OF EXPENSES. The Company and the Selling
Stockholders, jointly and severally, agree to pay in such proportions as they
may agree upon among themselves all costs, fees and expenses incurred in
connection with the performance of their obligations hereunder and in
connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Common Shares to the Underwriters, (iv) all fees and
expenses of the Company's counsel, independent public or certified public
accountants and other advisors, (v) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution
of the Registration Statement (including financial statements, exhibits,
schedules, consents and certificates of experts), each preliminary prospectus
and the Prospectus, and all amendments and supplements thereto, and this
Agreement, (vi) all filing fees, attorneys' fees and expenses incurred by the
Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any
part of the Common Shares for offer and sale under the state securities or
blue sky laws or the provincial securities laws of Canada, and, if requested
by the Representatives, preparing and printing a "Blue Sky Survey" or
memorandum, and any supplements thereto, advising the Underwriters of such
qualifications, registrations and exemptions, (vii) the filing fees incident
to, and the reasonable fees and expenses of counsel for the Underwriters in
connection with, the NASD's review and approval of the Underwriters'
participation in the offering and distribution of the Common Shares, (viii)
the fees and expenses associated with listing the Common Shares on the Nasdaq
National Market, and (ix) all other fees, costs and expenses referred to in
Item 13 of Part II of the Registration Statement. Except as provided in this
Section 4, Section 6, Section 8 and Section 9 hereof, the Underwriters shall
pay their own expenses, including the fees and disbursements of their counsel.
The Selling Stockholders further agree with each Underwriter to pay
(directly or by reimbursement) all fees and expenses incident to the
performance of their obligations under this Agreement which are not otherwise
specifically provided for herein, including but not limited to (i) fees and
expenses of counsel and other advisors for such Selling Stockholders, (ii)
fees and expenses of the Custodian and (iii) expenses and taxes incident to
the sale and delivery of the
15
Optional Common Shares to be sold by such Selling Stockholders to the
Underwriters hereunder (which taxes, if any, may be deducted by the Custodian
under the provisions of Section 2 of this Agreement).
This Section 4 shall not affect or modify any separate, valid
agreement relating to the allocation of payment of expenses between the
Company, on the one hand, and the Selling Stockholders, on the other hand.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Common
Shares as provided herein on the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Stockholders set forth in Section 1(A) and 1(B) hereof as of the
date hereof and as of the First Closing Date as though then made and, with
respect to the Optional Common Shares, as of the Second Closing Date as
though then made, to the timely performance by the Company and the Selling
Stockholders of their respective covenants and other obligations hereunder,
and to each of the following additional conditions:
(a) ACCOUNTANTS' COMFORT LETTER. On the date hereof, the
Representatives shall have received from Ernst & Young LLP, independent
public or certified public accountants for the Company, a letter dated the
date hereof addressed to the Underwriters, in form and substance
satisfactory to the Representatives, containing statements and information
of the type ordinarily included in accountant's "comfort letters" to
underwriters, delivered according to Statement of Auditing Standards
No. 72 (or any successor bulletin), with respect to the audited and
unaudited financial statements and certain financial information contained
in the Registration Statement and the Prospectus (and the Representatives
shall have received an additional six (6) conformed copies of such
accountants' letter for each of the several Underwriters).
(b) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER; NO
OBJECTION FROM NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date:
i. the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed
a post-effective amendment to the Registration Statement containing
the information required by such Rule 430A, and such post-effective
amendment shall have become effective; or, if the Company elected to
rely upon Rule 434 under the Securities Act and obtained the
Representatives' consent thereto, the Company shall have filed a Term
Sheet with the Commission in the manner and within the time period
required by such Rule 424(b);
ii. no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or
any post-effective amendment to the Registration Statement, shall be
in effect and no proceedings for such purpose shall have been
instituted or threatened by the Commission; and
16
iii. the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(c) NO MATERIAL ADVERSE CHANGE. For the period from and after the
date of this Agreement and prior to the First Closing Date and, with
respect to the Optional Common Shares, the Second Closing Date, in the
judgment of the Representatives there shall not have occurred any Material
Adverse Change.
(d) OPINION OF COUNSEL FOR THE COMPANY. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of Xxxxxx Godward LLP, counsel for the
Company, dated as of such Closing Date, the form of which is attached as
EXHIBIT A (and the Representatives shall have received an additional six
(6) conformed copies of such counsel's legal opinion for each of the
several Underwriters).
(e) OPINION OF COUNSEL FOR THE UNDERWRITERS. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel
for the Underwriters, dated as of such Closing Date, in form and substance
satisfactory to the Representatives (and the Representatives shall have
received an additional six (6) conformed copies of such counsel's legal
opinion for each of the several Underwriters).
(f) OFFICERS' CERTIFICATE. On each of the First Closing Date and
the Second Closing Date the Representatives shall have received a written
certificate executed by the Chairman of the Board, Chief Executive Officer
or President of the Company and the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of such Closing Date, to the
effect set forth in subsections (b)(ii) and (c)(ii) of this Section 5, and
further to the effect that:
i. for the period from and after the date of this Agreement and
prior to such Closing Date, there has not occurred any material
adverse change in the business, financial condition or results of
operations of the Company;
ii. the representations, warranties and covenants of the Company
set forth in Section 1(A) of this Agreement are true and correct with
the same force and effect as though expressly made on and as of such
Closing Date;and
iii. the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to such Closing Date.
(g) BRING-DOWN COMFORT LETTER. On each of the First Closing Date
and the Second Closing Date the Representatives shall have received from
Ernst & Young LLP, independent public or certified public accountants for
the Company, a letter dated such date, in form and substance satisfactory
to the Representatives, to the effect that they reaffirm the statements
made in the letter furnished by them pursuant to subsection (a) of this
Section 5, except that the specified date referred to therein for the
carrying out of procedures shall be no more than three business days prior
to the First Closing Date or Second Closing Date, as the case may be (and
the Representatives shall
17
have received an additional six (6) conformed copies of such accountants'
letter for each of the several Underwriters).
(h) OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS. On the Second
Closing Date, the Representatives shall have received the favorable opinion
of counsel for the Selling Stockholders, dated as of such Closing Date, the
form of which is attached as EXHIBIT B (and the Representatives shall have
received an additional six (6) conformed copies of such counsel's legal
opinion for each of the several Underwriters).
(i) SELLING STOCKHOLDERS' CERTIFICATE. On the Second Closing Date,
the Representatives shall received a written certificate executed by the
Attorney-in-Fact of each Selling Stockholder, dated as of the Second
Closing Date, to the effect that:
i. the representations, warranties and covenants of such Selling
Stockholder set forth in Section 1(B) of this Agreement are true and
correct with the same force and effect as though expressly made by
such Selling Stockholder on and as of the Second Closing Date; and
ii. such Selling Stockholder has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Second Closing Date.
(j) SELLING STOCKHOLDERS' DOCUMENTS. On the date hereof, the
Company and the Selling Stockholders shall have furnished for review by the
Representative copies of the Powers of Attorney and Custody Agreements
executed by each of the Selling Stockholders and such further information,
certificates and documents as the Representative may reasonably request.
(k) LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF THE COMPANY
OTHER THAN SELLING STOCKHOLDERS. On the date hereof, the Company shall have
furnished to the Representatives an agreement in the form of EXHIBIT D
hereto from each director, officer and each beneficial owner of Common
Stock (as defined and determined according to Rule 13d-3 under the Exchange
Act, except that a one hundred eighty day period shall be used rather than
the sixty day period set forth therein) listed on EXHIBIT C, and such
agreement shall be in full force and effect on each of the First Closing
Date and the Second Closing Date.
(l) ADDITIONAL DOCUMENTS. On or before each of the First Closing
Date and the Second Closing Date, the Representatives and counsel for the
Underwriters shall have received such information, documents and opinions
as they may reasonably require for the purposes of enabling them to pass
upon the issuance and sale of the Common Shares as contemplated herein, or
in order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements,
herein contained.
If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Stockholders at any
time on or prior to the First Closing Date and, with respect to the Optional
Common Shares, at any time prior to the Second Closing Date, which
18
termination shall be without liability on the part of any party to any other
party, except that Section 4, Section 6, Section 8 and Section 9 shall at all
times be effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this
Agreement is terminated by the Representatives pursuant to Section 5 or
Section 11, or if the sale to the Underwriters of the Common Shares on the
First Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company or the Selling Stockholders to perform any
agreement herein or to comply with any provision hereof, the Company agrees
to reimburse the Representatives and the other Underwriters (or such
Underwriters as have terminated this Agreement with respect to themselves),
severally, upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by the Representatives and the Underwriters in connection
with the proposed purchase and the offering and sale of the Common Shares,
including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall
not become effective until the later of (i) the execution of this Agreement
by the parties hereto and (ii) notification by the Commission to the Company
and the Representatives of the effectiveness of the Registration Statement
under the Securities Act.
Prior to the effectiveness of the Registration Statement, this
Agreement may be terminated by any party by notice to each of the other
parties hereto, and any such termination shall be without liability on the
part of (a) the Company or the Selling Stockholders to any Underwriter,
except that the Company and the Selling Stockholders shall be obligated to
reimburse the expenses of the Representatives and the Underwriters to the
extent required by Sections 4 and 6 hereof, (b) of any Underwriter to the
Company or the Selling Stockholders or (c) of any party hereto to any other
party except that the provisions of Section 8 and Section 9 shall at all
times be effective and shall survive such termination.
SECTION 8. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE UNDERWRITERS.
(i) The Company agrees to indemnify and hold harmless each
Underwriter, its officers and employees, and each person, if any, who
controls any Underwriter within the meaning of the Securities Act and the
Exchange Act against any loss, claim, damage, liability or expense, as
reasonably incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof
as contemplated below) arises out of or is based (i) upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule 434
under the Securities Act, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii) upon any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
19
prospectus or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and to reimburse each
Underwriter and each such controlling person for any and all reasonable
expenses (including , except as otherwise herein provided, the reasonable
fees and disbursements of counsel chosen by NationsBanc Xxxxxxxxxx
Securities LLC) as such expenses are reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; PROVIDED, HOWEVER, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability
or expense to the extent, but only to the extent, arising out of or based
upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives expressly for
use in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and PROVIDED,
FURTHER, that with respect to any preliminary prospectus, the foregoing
indemnity agreement shall not inure to the benefit of any Underwriter from
whom the person asserting any loss, claim, damage, liability or expense
purchased Common Shares, or any person controlling such Underwriter, if
copies of the Prospectus were timely delivered to the Underwriter pursuant
to Section 2 and a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto)
was not sent or given by or on behalf of such Underwriter to such person,
if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense. The
indemnity agreement set forth in this Section 8(a) shall be in addition to
any liabilities that the Company may otherwise have.
(ii) Each of the Selling Stockholders, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter, its officers and
employees, and each person, if any, who controls any Underwriter within
the meaning of the Securities Act and the Exchange Act against any loss,
claim, damage, liability or expense, as reasonably incurred, to which such
Underwriter or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory law
or regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of
the Company), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is
based (i) upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment
thereto, including any information deemed to be a part thereof pursuant to
Rule 430A or Rule 434 under the Securities Act, any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, but only to the extent that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with any information
furnished to the Company by the Selling Stockholder for use therein; or
(ii) in whole or in part upon any inaccuracy in the representations and
warranties of such Selling Stockholder contained herein; and to reimburse
each Underwriter and each such controlling person for any and all
reasonable
20
expenses (including, except as otherwise herein provided, the
reasonable fees and disbursements of counsel chosen by NationsBanc
Xxxxxxxxxx Securities LLC) as such expenses are reasonably incurred by
such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of
or based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written
information furnished to such Selling Stockholder by the Representatives
expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
provided, further, that with respect to any preliminary prospectus, the
foregoing indemnity agreement shall not inure to the benefit of any
Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Common Shares, or any person controlling
such Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Common Shares
to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage,
liability or expense. 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. In addition to its other obligations under this
Section 8(a)(ii), the Selling Stockholders agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, or any inaccuracy in the
representations and warranties of the Selling Stockholders herein or
failure to perform its obligations hereunder, all as described in this
Section 8(a)(ii), 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 Selling
Stockholders' obligation to reimburse each Underwriter for such expenses
and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each
Underwriter shall promptly return it to the Selling Stockholders together
with interest, compounded daily, determined on the basis of the Prime
Rate. Any such interim reimbursement payments which are not made to an
Underwriter within 30 days of a request for reimbursement, shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which the Selling
Stockholders may otherwise have. Notwithstanding anything else herein, in
no event shall the liability of any Selling Stockholder for
indemnification under this Section 8(a)(ii) or for breach of
representations or warranties under this Agreement exceed the proceeds
received by such Selling Stockholder from the Underwriters in the
offering.
(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS AND
THE SELLING STOCKHOLDERS. Each Underwriter agrees, severally and not
jointly, to indemnify
21
and hold harmless the Company, each of its directors, each of its officers
who signed the Registration Statement, the Selling Stockholders and each
person, if any, who controls the Company or any Selling Stockholder within
the meaning of the Securities Act or the Exchange Act, against any loss,
claim, damage, liability or expense, as reasonably incurred, to which the
Company, or any such director, officer, Selling Stockholder or controlling
person may become subject, under the Securities Act, the Exchange Act, or
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of such Underwriter), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof
as contemplated below) arises out of or is based upon any untrue or
alleged untrue statement of a material fact contained in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto), or arises out of or is based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, any preliminary prospectus, the
Prospectus (or any amendment or supplement thereto), in reliance upon and
in conformity with written information furnished to the Company and the
Selling Stockholders by the Representatives expressly for use therein; and
to reimburse the Company, or any such director, officer, Selling
Stockholder or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. Each of the Company and each of the Selling Stockholders hereby
acknowledges that the only information that the Underwriters have
furnished to the Company and the Selling Stockholders expressly for use in
the Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) are the statements set forth (A)
as the paragraph on the inside front cover page of the Prospectus
concerning stabilization by the Underwriters and (B) in the table in the
first paragraph and as the second and seventh paragraphs under the caption
"Underwriting" in the Prospectus; and the Underwriters confirm that such
statements are correct. The indemnity agreement set forth in this Section
8(b) shall be in addition to any liabilities that each Underwriter may
otherwise have.
(c) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly
after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
for contribution or otherwise than under the indemnity agreement contained
in this Section 8 or to the extent it is not prejudiced as a proximate
result of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified
party and the
22
indemnifying party and the indemnified party shall have reasonably
concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from
the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall
have employed separate counsel in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate
counsel (together with local counsel), approved by the indemnifying party
(NationsBanc Xxxxxxxxxx Securities LLC in the case of Section 8(b) and
Section 9), representing the indemnified parties who are parties to such
action) or (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action, in
each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party.
(d) SETTLEMENTS. The indemnifying party under this Section 8 shall
not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 8(c) hereof, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement, and (iii) the indemnifying party shall not have objected in
writing to such reimbursement of fees and expenses as contemplated by
Section 8(c) hereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit
or proceeding in respect of which any indemnified party is or could have
been a party and indemnity was or could have been sought hereunder by such
indemnified party, unless such settlement, compromise or consent includes
an unconditional release of such indemnified party from all liability on
claims that are the subject matter of such action, suit or proceeding.
SECTION 9. CONTRIBUTION. If the indemnification provided for in
Section 8 is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable
by such indemnified party, as incurred, as a result of any losses, claims,
damages, liabilities or expenses
23
referred to therein (i) 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 hand, from the offering of
the Common Shares pursuant to this Agreement or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
and the Selling Stockholders, on the one hand, and the Underwriters, on the
other hand, in connection with the statements or omissions or inaccuracies in
the representations and warranties herein which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Selling Stockholders, on the one hand, and the Underwriters, on the other
hand, in connection with the offering of the Common Shares pursuant to this
Agreement shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Common Shares pursuant to this
Agreement (before deducting expenses) received by the Company and the Selling
Stockholders, and the total underwriting discount received by the
Underwriters, in each case as set forth on the front cover page of the
Prospectus (or, if Rule 434 under the Securities Act is used, the
corresponding location on the Term Sheet) bear to the aggregate initial
public offering price of the Common Shares as set forth on such cover. The
relative fault of the Company and the Selling Stockholders, on the one hand,
and the Underwriters, on the other hand, shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact or any
such inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Company or the Selling Stockholders, on the one
hand, or the Underwriters, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in Section 8(c), any
reasonable legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim, except as
would not have been reimbursable if indemnification had been available under
Section 8. The provisions set forth in Section 8(c) with respect to notice of
commencement of any action shall apply if a claim for contribution is to be
made under this Section 9; provided, however, that no additional notice shall
be required with respect to any action for which notice has been given under
Section 8(c) for purposes of indemnification.
The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 9 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 in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
commissions received by such Underwriter in connection with the Common Shares
underwritten by it and distributed to the public nor shall a Selling
Stockholder be required to contribute any amount in excess of the net
proceeds received by such Selling Stockholder in connection with the Common
Shares sold by such Selling Stockholder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
24
pursuant to this Section 9 are several, and not joint, in proportion to their
respective underwriting commitments as set forth opposite their names in
SCHEDULE A. For purposes of this Section 9, each officer and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights
to contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company with the meaning of the Securities
Act and the Exchange Act shall have the same rights to contribution as the
Company.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If,
on the First Closing Date or the Second Closing Date, as the case may be, any
one or more of the several Underwriters shall fail or refuse to purchase
Common Shares that it or they have agreed to purchase hereunder on such date,
and the aggregate number of Common Shares which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase does not exceed 10%
of the aggregate number of the Common Shares to be purchased on such date,
the other Underwriters shall be obligated, severally, in the proportions that
the number of Firm Common Shares set forth opposite their respective names on
SCHEDULE A bears to the aggregate number of Firm Common Shares set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as may be specified by the Representatives with the consent of
the non-defaulting Underwriters, to purchase the Common Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date. If, on the First Closing Date or the Second Closing
Date, as the case may be, any one or more of the Underwriters shall fail or
refuse to purchase Common Shares and the aggregate number of Common Shares
with respect to which such default occurs exceeds 10% of the aggregate number
of Common Shares to be purchased on such date, and arrangements satisfactory
to the Representatives and the Company for the purchase of such Common Shares
are not made within 48 hours after such default, this Agreement shall
terminate without liability of any party to any other party except that the
provisions of Section 4, Section 8 and Section 9 shall at all times be
effective and shall survive such termination. In any such case either the
Representatives or the Company shall have the right to postpone the First
Closing Date or the Second Closing Date, as the case may be, but in no event
for longer than seven days in order that the required changes, if any, to the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed
to include any person substituted for a defaulting Underwriter under this
Section 10. Any action taken under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the First
Closing Date this Agreement may be terminated by the Representatives by
notice given to the Company if at any time (i) trading or quotation in any of
the Company's securities shall have been suspended or limited by the
Commission or by the Nasdaq Stock Market, or trading in securities generally
on either the Nasdaq National Market or the New York Stock Exchange shall
have been suspended or limited, or minimum or maximum prices shall have been
generally established on any of such stock exchanges by the Commission or the
NASD; (ii) a general banking moratorium shall have been declared by any of
federal, New York, Delaware or California authorities; (iii) there shall have
occurred any outbreak or escalation of national or international hostilities
or any crisis or calamity, or any change in the United States or
international financial markets, or any substantial change or development
involving a prospective substantial change in United States' or
25
international political, financial or economic conditions, as in the judgment
of the Representatives is material and adverse and makes it impracticable to
market the Common Shares in the manner and on the terms described in the
Prospectus or to enforce contracts for the sale of securities; (iv) in the
judgment of the Representatives there shall have occurred any material
adverse change in the business, financial condition, results of operations or
prospects of the Company; or (v) the Company shall have sustained a loss by
strike, fire, flood, earthquake, accident or other calamity of such character
as in the judgment of the Representatives may interfere materially with the
conduct of the business and operations of the Company regardless of whether
or not such loss shall have been insured. Any termination pursuant to this
Section 11 shall be without liability on the part of (a) the Company or the
Selling Stockholders to any Underwriter, except that the Company and the
Selling Stockholders shall be obligated to reimburse the expenses of the
Representatives and the Underwriters to the extent required by Sections 4 and
6 hereof, (b) any Underwriter to the Company or the Selling Stockholders, or
(c) of any party hereto to any other party, except that the provisions of
Section 8 and Section 9 shall at all times be effective and shall survive
such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and
of the several Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or the Company or any of its or their
partners, officers or directors or any controlling person or the Selling
Stockholders, as the case may be, and will survive delivery of and payment
for the Common Shares sold hereunder and any termination of this Agreement.
SECTION 13. NOTICES. All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to
the parties hereto as follows:
If to the Representatives:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xx. Xxxx Xxxxxxx
with a copy to:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company:
Scientific Learning Corporation
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
26
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Selling Stockholders:
[Custodian]
[Address]
Facsimile: [_______]
Attention: [_______]
Any party hereto may change the address for receipt of
communications by giving written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 hereof, and to the benefit of the employees, officers
and directors and controlling persons referred to in Section 8 and Section 9,
and in each case their respective successors, and no other person will have
any right or obligation hereunder. The term "successors" shall not include
any purchaser of the Common Shares as such from any of the Underwriters
merely by reason of such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes)
as are necessary to make it valid and enforceable.
SECTION 16. GOVERNING LAW PROVISIONS.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) CONSENT TO JURISDICTION. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions
contemplated hereby ("Related Proceedings") may be instituted in the
federal courts of the United States of America located in the City and
County of San Francisco or the courts of the State of California in each
case located in the City and County of San Francisco (collectively, the
"Specified Courts"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the
enforcement of a judgment of any such court (a
27
"Related Judgment"), as to which such jurisdiction is non-exclusive) of
such courts in any such suit, action or proceeding. Service of any
process, summons, notice or document by mail to such party's address set
forth above shall be effective service of process for any suit, action or
other proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit,
action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court
that any such suit, action or other proceeding brought in any such court
has been brought in an inconvenient forum.
(c) WAIVER OF IMMUNITY. With respect to any Related Proceeding,
each party irrevocably waives, to the fullest extent permitted by
applicable law, all immunity (whether on the basis of sovereignty or
otherwise) from jurisdiction, service of process, attachment (both before
and after judgment) and execution to which it might otherwise be entitled
in the Specified Courts, and with respect to any Related Judgment, each
party waives any such immunity in the Specified Courts or any other court
of competent jurisdiction, and will not raise or claim or cause to be
pleaded any such immunity at or in respect of any such Related Proceeding
or Related Judgment, including, without limitation, any immunity pursuant
to the United States Foreign Sovereign Immunities Act of 1976, as amended.
SECTION 17. FAILURE OF ONE OR MORE OF THE SELLING STOCKHOLDERS TO
SELL AND DELIVER OPTIONAL COMMON SHARES. If one or more of the Selling
Stockholders shall fail to sell and deliver to the Underwriters the Optional
Common Shares to be sold and delivered by such Selling Stockholders pursuant
to this Agreement at the Second Closing Date, then the Underwriters shall
have the right, by written notice from the Representative to the Company and
the Selling Stockholders, to postpone the Second Closing Date, as the case
may be, but in no event for longer than seven days in order that the required
changes, if any, to the Registration Statement and the Prospectus or any
other documents or arrangements may be effected.
SECTION 18. GENERAL PROVISIONS. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be
executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement may not be amended or modified unless in
writing by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Table of Contents and the Section headings
herein are for the convenience of the parties only and shall not affect the
construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the
parties hereto further acknowledges that the provisions of Sections 8 and 9
hereto fairly allocate the risks in light of the ability of the parties to
investigate the Company, its affairs and its business in order to assure that
adequate disclosure has been made in the Registration Statement, any
preliminary prospectus and the Prospectus (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.
28
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
SCIENTIFIC LEARNING CORPORATION
By:____________________________
Xxxxxxx X. Xxxxxx
Chief Executive Officer
SELLING STOCKHOLDERS
By:____________________________
Attorney-in-Fact
29
The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Representatives in San Francisco, California as of the date
first above written.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BANCAMERICA XXXXXXXXX XXXXXXXX
PACIFIC GROWTH EQUITIES, INC.
Acting as Representatives of the
several Underwriters named in the
attached Schedule A.
By NATIONSBANC XXXXXXXXXX SECURITIES LLC
By:____________________________________
Authorized Signatory
Print Name:____________________________
Title:_________________________________
30
SCHEDULE A
NUMBER OF FIRM
COMMONSHARES
UNDERWRITERS TO BE PURCHASED
NationsBanc Xxxxxxxxxx Securities LLC ............................ [___]
BancAmerica Xxxxxxxxx Xxxxxxxx.................................... [___]
Pacific Growth Equities, Inc...................................... [___]
[___]............................................................. [___]
[___]............................................................. [___]
-----------
Total [___]
-----------
-----------
SCHEDULE B
NUMBER OF MAXIMUM NUMBER
FIRM COMMON OF OPTIONAL
SHARES TO BE COMMON SHARES TO
SELLING STOCKHOLDER SOLD BE SOLD
Selling Stockholder #1
[address]
Attention: [___] . . . . . . . [___] [___]
Selling Stockholder #2
[address]
Attention: [___] . . . . . . . [___] [___]
------------ ------------
Total: [___] [___]
------------ ------------
------------ ------------
EXHIBIT A
Opinion of counsel for the Company to be delivered pursuant to
Section 5(e) of the Underwriting Agreement. References to the Prospectus in
this EXHIBIT A at the Closing Date include any supplements thereto.
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Underwriting Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in the State of California and
to the best knowledge of such counsel in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except for such
jurisdictions where the failure to so qualify or to be in good standing
would not, individually or in the aggregate result in a Material Adverse
Change.
(iv) The authorized, issued and outstanding capital stock of the
Company (including the Common Stock) conforms to the description thereof
set forth in the Prospectus under the caption "Description of Capital
Stock." All of the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable. The form
of certificate used to evidence the Common Stock filed as an Exhibit to the
Registration Statement is in due and proper form and complies with all
applicable requirements of the charter and bylaws of the Company and the
General Corporation Law of the State of Delaware. The description of the
Company's equity incentive plans, and the options or other rights that may
be granted and exercised thereunder, set forth in the Prospectus is
accurate and summarizes the information required to be shown with respect
to such plans, arrangements, options and rights to the extent required by
the Act and Rules.
(v) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to
subscribe for or purchase from the Company securities of the Company
arising (i) by operation of the charter or bylaws of the Company or the
General Corporation Law of the State of Delaware or (ii) to the best
knowledge of such counsel, under any agreement to which the Company is a
party.
(vi) The Underwriting Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, except as rights to
indemnification and contribution thereunder may be limited by applicable
law and public policy and except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles and limitations on the availability of equitable
remedies.
(vii) The Firm Shares [or the Option Shares] from the Company have
been duly authorized for issuance and sale pursuant to the Underwriting
Agreement and, when
A-1
issued and delivered by the Company pursuant to the Underwriting Agreement
against payment of the consideration set forth therein, will be validly
issued, fully paid and nonassessable.
(viii) Each of the Registration Statement and the Rule 462(b)
Registration Statement, if any, has been declared effective by the
Commission under the Securities Act. To the best knowledge of such
counsel, no stop order suspending the effectiveness of either of the
Registration Statement or the Rule 462(b) Registration Statement, if any,
has been issued under the Securities Act and no proceedings for such
purpose have been instituted or are pending or threatened by the
Commission. Any required filing of the Prospectus and any supplement
thereto pursuant to the Rule 424(b) under the Securities Act has been made
in the manner and within the time period required by such Rule 424(b).
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, the Prospectus and each post-effective amendment
or supplement to the Registration Statement and the Prospectus as of their
respective effective or issue dates (other than the financial statements
and supporting schedules, other financial information and statistical
information derived therefrom included therein or in exhibits to or
excluded from the Registration Statement, as to which no opinion need be
rendered) comply as to form in all material respects with the applicable
requirements of the Securities Act.
(x) The Common Shares have been approved for listing on the Nasdaq
National Market subject to official notice of issuance.
(xi) The statements (i) in the Prospectus under the captions
"Description of Capital Stock," "Business-Intellectual Property," "Certain
Transactions," and "Shares Eligible for Future Sale" and (ii) in Item 14
and Item 15 of the Registration Statement, insofar as such statements
constitute matters of law, summaries of legal matters, the Company's
charter of bylaw provisions, documents or legal proceedings, or legal
conclusions, are accurate and summarize such matters to the extent
required by the Act and Rules.
(xii) To the best knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or threatened which are
required under the Act and Rules to be disclosed in the Registration
Statement other than those disclosed therein.
(xiii) To the best knowledge of such counsel, there are no Existing
Instruments required under the Act and Rules to be described or referred to
in the Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by
reference as exhibits thereto; and the descriptions thereof and references
thereto are correct in all material respects.
(xiv) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the Company's execution, delivery and performance
of the Underwriting Agreement and consummation of the transactions
contemplated thereby, except as required under the Securities Act,
applicable state securities or blue sky laws and from the NASD.
A-2
(xv) The execution and delivery of the Underwriting Agreement by the
Company and the performance by the Company of its obligations thereunder
(other than performance by the Company of its obligations under the
indemnification and contribution sections of the Underwriting Agreement,
as to which no opinion need be rendered) (i) have been duly authorized by
all necessary corporate action on the part of the Company; (ii) will not
result in any violation of the provisions of the charter or bylaws of the
Company; (iii) will not constitute a breach of, or Default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to any exhibit to the
Registration Statement; or (iv) to the best knowledge of such counsel,
will not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company.
(xvi) The Company is not, and after receipt of payment for the Common
Shares will not be, an "investment company" within the meaning of
Investment Company Act.
(xvii) Except as disclosed in the Prospectus under the caption
"Description of Capital Stock--Registration Rights" to the best knowledge
of such counsel, there are no persons with registration or other similar
rights to have any equity or debt securities registered for sale under the
Registration Statement or included in the offering contemplated by the
Underwriting Agreement, other than the Selling Stockholders, except for
such rights as have been duly waived.
(xviii) To the best knowledge of such counsel, the Company is not in
violation of its charter or bylaws or any law, administrative regulation
or administrative or court decree applicable to the Company or is in
Default in the performance or observance of any obligation, agreement,
covenant or condition contained in any exhibit to the Registration
Statement, except in each such case for such violations or Defaults as
would not, individually or in the aggregate, result in a Material Adverse
Change.
In addition, such counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Underwriters at which the
contents of the Registration Statement and the Prospectus, and any
supplements or post-effective amendments thereto, and related matters were
discussed and, although such counsel is not passing upon and does not assume
any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (other
than as specified in the first sentence of paragraph (iv) and paragraph (xi)
above), and any supplements or amendments thereto, on the basis of the
foregoing, nothing has come to their attention which would lead them to
believe that either the Registration Statement or any post-effective
amendments thereto, at the time the Registration Statement or such amendments
became effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its date
or at the First Closing Date or the Second Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no belief as to the financial
statements or schedules, other financial information or statistical data
derived therefrom, included in the Registration Statement or the Prospectus
of any post-effective amendments or supplements thereto).
A-3
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware, the General Corporation Law of the
State of California or the federal law of the United States, to the extent
they deem proper and specified in such opinion, upon the opinion (which shall
be dated the First Closing Date or the Second Closing Date, as the case may
be, shall be satisfactory in form and substance to the Underwriters, shall
expressly state that the Underwriters may rely on such opinion as if it were
addressed to them and shall be furnished to the Representatives) of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters; provided, however, that such
counsel shall further state that they believe that they and the Underwriters
are justified in relying upon such opinion of other counsel, and (B) as to
matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
A-4
EXHIBIT B
The opinion of such counsel pursuant to Section 5(h) shall be
rendered to the Representatives at the request of the Company and shall so
state therein. References to the Prospectus in this EXHIBIT B include any
supplements thereto at the Closing Date.
(i) The Underwriting Agreement has been duly authorized by such
Entity Selling Stockholder and has been executed and delivered by or on
behalf of, and is a valid and binding agreement of, such Selling
Stockholder, enforceable in accordance with its terms, except as rights to
indemnification and contribution thereunder may be limited by applicable
law and public policy and except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles and limitations on the availability of equitable
remedies.
(ii) [The execution and delivery by such Entity Selling Stockholder
of, and the performance by such Entity Selling Stockholder of its
obligations under, the Underwriting Agreement and its Custody Agreement
and its Power of Attorney will not contravene or conflict with, result in
a breach of, or constitute a default under, the charter or by-laws,
partnership agreement, trust agreement or other organizational documents,
as the case may be, of such Entity Selling Stockholder, or, to the best of
such counsel's knowledge, violate or contravene any provision of
applicable law or regulation (except for applicable state securities or
blue sky laws as to which such counsel need express no opinion) or
violate, result in a breach of or constitute a default under the terms of
any other agreement or instrument to which such Entity Selling Stockholder
is a party or by which it is bound, or any judgment, order or decree
applicable to such Entity Selling Stockholder of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over such Entity Selling Stockholder, except for such
contraventions, conflicts, breaches, defaults or failures to obtain a
consent as would not, individually or in the aggregate, materially
adversely affect the offering and sale of the Optional Common Shares] or
[To the best of such counsel's knowledge, the execution and delivery by
each Individual Selling Stockholder of, and the performance by such
Individual Selling Stockholder of its obligations under, the Underwriting
Agreement and its Custody Agreement and its Power of Attorney will not
violate or contravene any provision of applicable law or regulation
(except for applicable state securities or blue sky laws as to which such
counsel need express no opinion) or violate, result in a breach of or
constitute a default under the terms of any other agreement or instrument
to which such Individual Selling Stockholder is a party or by which it is
bound, or any judgment, order or decree applicable to such Individual
Selling Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Individual
Selling Stockholder, except for such contraventions, conflicts, breaches,
defaults or failures to obtain a consent as would not, individually or in
the aggregate, materially adversely affect the offering and sale of the
Optional Common Shares.]
(iii) Such Selling Stockholder has record title to all of the
Optional Common Shares which may be sold by such Selling Stockholder under
the Underwriting Agreement and each Entity Selling Stockholder has the
right and power [under its charter and by-laws,] [partnership agreement,]
[trust agreement] [or other organizational documents, as the case may be,]
to enter into the Underwriting Agreement and its
B-1
Custody Agreement and its Power of Attorney, to sell, transfer and deliver
all of the Optional Common Shares which may be sold by such Selling
Stockholder under the Underwriting Agreement and to comply with its other
obligations under the Underwriting Agreement, its Custody Agreement and
its Power of Attorney.
(iv) Each of the Custody Agreement and Power of Attorney of such
Entity Selling Stockholder has been duly authorized and each of the
Custody Agreement and Power of Attorney of such Selling Stockholder has
been executed and delivered by such Selling Stockholder and is a valid and
binding agreement of such Selling Stockholder, enforceable in accordance
with it terms, except as rights to indemnification thereunder may be
limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles and limitations on the availability of
equitable remedies.
(v) Assuming that the Underwriters purchase the Optional Common
Shares which are sold by such Selling Stockholder pursuant to the
Underwriting Agreement for value, in good faith and without notice of any
adverse claim, the delivery of the certificate representing such Optional
Common Shares, duly endorsed for transfer pursuant to the Underwriting
Agreement, will pass good and valid title to such Optional Common Shares,
free and clear of any adverse claim.
(vi) To the best of such counsel's knowledge, no consent, approval,
authorization or other order of, or registration or filing with, any court
or governmental authority or agency, is required for the consummation by
such Selling Stockholder of the transactions contemplated in the
Underwriting Agreement, except as required under the Securities Act,
applicable state securities or blue sky laws, and from the NASD.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
General Corporation Law of the State of Delaware, the General Corporation Law
of the State of California or the federal law of the United States, to the
extent they deem proper and specified in such opinion, upon the opinion
(which shall be dated the Second Closing Date, shall be satisfactory in form
and substance to the Underwriters, shall expressly state that the
Underwriters may rely on such opinion as if it were addressed to them and
shall be furnished to the Representatives) of other counsel of good standing
whom they believe to be reliable and who are satisfactory to counsel for the
Underwriters; PROVIDED, HOWEVER, that such counsel shall further state that
they believe that they and the Underwriters are justified in relying upon
such opinion of other counsel, and (B) as to matters of fact, to the extent
they deem proper, on certificates of the Selling Stockholders and public
officials.
B-2
EXHIBIT C
LIST OF STOCKHOLDERS
LOCKED-UP
EXHIBIT D
[Date]
NationsBanc Xxxxxxxxxx Securities LLC
BancAmerica Xxxxxxxxx Xxxxxxxx
Pacific Growth Equities, Inc.
As Representatives of the Several Underwriters
c/o NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: Scientific Learning Corporation (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain
shares of Common Stock of the Company ("Common Stock") or securities
convertible into or exchangeable or exercisable for Common Stock. The Company
proposes to carry out a public offering of Common Stock (the "Offering") for
which you will act as the representatives (the "Representatives") of the
underwriters. The undersigned recognizes that the Offering will be of benefit
to the undersigned and will benefit the Company by, among other things,
raising additional capital for its operations. The undersigned acknowledges
that you and the other underwriters are relying on the representations and
agreements of the undersigned contained in this letter in carrying out the
Offering and in entering into underwriting arrangements with the Company with
respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees
that the undersigned will not, without the prior written consent of
NationsBanc Xxxxxxxxxx Securities LLC (which consent may be withheld in its
sole discretion), directly or indirectly, sell, offer, contract or grant any
option to sell (including without limitation any short sale), pledge,
transfer, establish an open "put equivalent position" within the meaning of
Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, or
otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock, or securities exchangeable or exercisable for
or convertible into shares of Common Stock currently or hereafter owned
either of record or beneficially (as defined in Rule 13d-3 under Securities
Exchange Act of 1934, as amended) by the undersigned, or publicly announce
the undersigned's intention to do any of the foregoing, for a period
commencing on June 8, 1998 and continuing to a date 180 days after the first
date any of the Common Stock to be sold in the Offering is released by you
for sale to the public. The undersigned also agrees and consents to the entry
of stop transfer instructions with the Company's transfer agent and registrar
against the transfer of shares of Common Stock or securities convertible into
or exchangeable or exercisable for Common Stock held by the undersigned
except in compliance with the foregoing restrictions. In the event that the
Registration Statement shall not have been declared effective on or before
December 31, 1998, this Lock-Up Agreement shall be of no further force or
effect.
D-1
This agreement is irrevocable and will be binding on the
undersigned and the respective successors, heirs, personal representatives,
and assigns of the undersigned.
Dated:_____________________
_________________________________
Signature
_________________________________
Printed Name of Holder
D-2
