Exhibit 1.1
APROPOS TECHNOLOGY, INC.
3,200,000 Shares/1/
Common Stock
UNDERWRITING AGREEMENT
----------------------
, 2000
CHASE SECURITIES INC.
XX XXXXX SECURITIES CORPORATION
U.S. BANCORP XXXXX XXXXXXX INC.
c/o Chase Securities Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Apropos Technology, Inc., an Illinois corporation (herein called the
Company), proposes to issue and sell 3,200,000 shares of its authorized but
unissued Common Shares, $0.01 par value (herein called the Common Stock), (said
3,200,000 shares of Common Stock being herein called the Underwritten Stock).
The Company proposes to grant to the Underwriters (as hereinafter defined) an
option to purchase up to 240,000 additional shares of Common Stock (herein
called the Company Option Stock) and the shareholder of the Company named in
Schedule II hereto (herein called the Selling Securityholder) proposes to grant
to the Underwriters an option to purchase up to 240,000 additional shares of
Common Stock (herein called the Selling Securityholder Option Stock, together
with the Company Option Stock, herein collectively called the Option Stock and
the Option Stock, together with the Underwritten Stock, herein collectively
called the Stock). The Common Stock is more fully described in the Registration
Statement and the Prospectus hereinafter mentioned. Chase Securities Inc.
(herein called Chase) has agreed to reserve a portion of the Underwritten Stock
to be purchased by it under this Agreement for sale to the Company's directors,
officers, employees and business associates and other parties related to the
Company (herein collectively called Participants), as set forth in the
Prospectus under the heading "Underwriting" (such program herein called the
Directed Share Program). The Shares to be sold by Chase pursuant to the Directed
Share Program are referred to hereinafter as the Directed Shares. Any Directed
Shares not orally confirmed for purchase by any Participants by the
----------------
/1/ Plus an option to purchase from the Company up to 240,000 additional
shares and from the Selling Securityholder up to 240,000 additional shares to
cover over-allotments.
end of the business day on which this Agreement is executed will be offered to
the public by the Underwriters as set forth in the Prospectus.
The Company and the Selling Securityholder severally hereby confirm the
agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent and
warrant that you have been authorized by each of the other Underwriters to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
1. Registration Statement. The Company has filed with the Securities
and Exchange Commission (herein called the Commission) a registration statement
on Form S-1 (No. 333-90873), including the related preliminary prospectus, for
the registration under the Securities Act of 1933, as amended (herein called the
Securities Act) of the Stock. Copies of such registration statement and of each
amendment thereto, if any, including the related preliminary prospectus (meeting
the requirements of Rule 430A of the rules and regulations of the Commission)
heretofore filed by the Company with the Commission have been delivered to you.
The term Registration Statement as used in this agreement shall mean such
registration statement, including all exhibits and financial statements, all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended (including any Rule 462(b) registration
statement). The term Prospectus as used in this Agreement shall mean the
prospectus relating to the Stock first filed with the Commission pursuant to
Rule 424(b) and Rule 430A (or if no such filing is required, as included in the
Registration Statement) and, in the event of any supplement or amendment to such
prospectus after the Effective Date, shall also mean (from and after the filing
with the Commission of such supplement or the effectiveness of such amendment)
such prospectus as so supplemented or amended. The term Preliminary Prospectus
as used in this Agreement shall mean each preliminary prospectus included in
such registration statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. Representations and Warranties of the Company and the Selling
Securityholder.
(a) The Company hereby represents and warrants as follows:
(i) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has full corporate power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement and the Prospectus and as being
conducted, and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property
owned or leased or the nature of the business transacted by it makes
qualification necessary (except where the failure to be so qualified
would not have a material adverse effect on the business, properties,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole).
(ii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been a
Material Adverse Change (as defined below), other than as set forth in
the Registration Statement and the Prospectus, and since such dates,
except in the ordinary course of business, neither the Company nor any of
its subsidiaries has entered into any material transaction not referred
to in the Registration Statement and the Prospectus. As used herein,
Material Adverse Change shall mean a materially adverse change in the
business, properties, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business.
(iii) The Registration Statement and the Prospectus comply, and on the
Closing Date (as hereinafter defined) and any later date on which Option
Stock is to be purchased, the Prospectus will comply, in all material
respects, with the provisions of the Securities Act and the rules and
regulations of the Commission thereunder; on the Effective Date, the
Registration Statement did not contain any untrue statement of a material
fact and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date the Prospectus did not and, on the
Closing Date and any later date on which Option Stock is to be purchased,
will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that none of the representations and
warranties in this subparagraph (iii) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made in
reliance upon and in conformity with information herein or otherwise
furnished in writing to the Company by or on behalf of the Underwriters
for use in the Registration Statement or the Prospectus.
Each of the Registration Statement and any Rule 462(b) registration
statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) registration statement has been issued under the Securities Act
and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the Commission,
and
any request on the part of the Commission for additional information has
been complied with.
(iv) The Stock is duly and validly authorized, is (or, in the case of
shares of the Stock to be sold by the Company, will be, when issued and
sold to, and paid for by, the Underwriters as provided herein) duly and
validly issued, fully paid and nonassessable and conforms to the
description thereof in the Prospectus. No further approval or authority
of the shareholders or the Board of Directors of the Company will be
required for the transfer and sale of the Stock to be sold by the Selling
Securityholder or the issuance and sale of the Stock as contemplated
herein.
(v) Prior to the Closing Date the Stock to be issued and sold by the
Company and the Stock to be sold by the Selling Securityholder will be
authorized for listing by the Nasdaq National Market upon official notice
of issuance.
(vi) Ernst & Young LLP, the accountants who certified the consolidated
financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required by
the Securities Act and the rules and regulations promulgated thereunder.
(vii) The consolidated financial statements included in the
Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly, in all material respects, the
financial position of the Company at the dates indicated and the results
of its operations and its cash flows for the periods specified. Such
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles (herein called GAAP) applied on
a consistent basis throughout the periods involved. The supporting
schedules included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The
selected consolidated financial data and the summary consolidated
financial data included in the Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that of
the audited consolidated financial statements included in the
Registration Statement.
(viii) Each subsidiary of the Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Change; except as otherwise disclosed in
the Registration Statement, all of the issued and outstanding capital
stock of each such subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of capital stock of any subsidiary was issued in
violation of the preemptive or similar rights of any
securityholder of such subsidiary. The only subsidiaries of the Company are
the subsidiaries listed on Exhibit 21 to the Registration Statement.
(ix) The information set forth under the caption "Capitalization" in the
Prospectus is true and correct in all material respects. All of the Stock
conforms in all material respects to the description thereof contained in the
Registration Statement. The form of certificates for the Stock conforms to the
legal requirements of the State of Illinois.
(x) 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 insofar as indemnification and contribution
provisions may be limited by applicable law or equitable principles and except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
(xi) Neither the Company nor any of its subsidiaries is in violation of its
Articles of Incorporation or By-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any subsidiary is
subject (herein called the Agreements and Instruments) except for such
defaults that would not result in a Material Adverse Change; and the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated in this Agreement and in the Registration
Statement (including the issuance and sale of the Stock and the use of the
proceeds from the sale of the Stock as described in the Prospectus under the
caption "Use of Proceeds") and compliance by the Company with its obligations
under this Agreement have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach of, or
default or, except as set forth in the Registration Statement, Repayment Event
(as defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would
not result in a Material Adverse Change), nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or any
subsidiary or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any subsidiary or
any of their assets, properties or operations. As used herein, a Repayment
Event means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment
of all or a portion of such indebtedness by the Company or any subsidiary.
(xii) No material labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent, and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or any subsidiary's principal suppliers,
manufacturers, customers or contractors, which, in either case, may reasonably
be expected to result in a Material Adverse Change.
(xiii) There is no action, suit, proceeding, inquiry or investigation before
or brought by any court or governmental agency or body, domestic or foreign,
now pending, or, to the knowledge of the Company, threatened, against or
affecting the Company or any subsidiary, which is required to be disclosed in
the Registration Statement (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Change, or which might
reasonably be expected to materially and adversely affect the consummation of
the transactions contemplated in this Agreement or the performance by the
Company of its obligations hereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a party or
of which any of their respective property or assets is the subject which are
not described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Change.
(xiv) There are no contracts or documents which are required to be described
in the Registration Statement or the Prospectus or to be filed as exhibits
thereto which have not been so described and filed as required.
(xv) To its knowledge and except as described in the Registration Statement or
the Prospectus, the Company together with its subsidiaries owns and possesses
all right, title and interest in and to, or has duly licensed from third
parties a valid, enforceable right to use, all patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (herein called Patent
and Proprietary Rights) currently or proposed to be employed by it in
connection with its business. Except as described in the Registration
Statement or the Prospectus, neither the Company nor any of its subsidiaries
has received any notice of or has any knowledge of any infringement or
misappropriation of or conflict with asserted rights of others with respect to
any Patent or Proprietary Rights, or of any facts which would render any
Patent or Proprietary Rights invalid or inadequate to protect the interest of
the Company or its subsidiaries therein, and which infringement,
misappropriation or conflict or invalidity or inadequacy, individually or in
the aggregate, would reasonably be expected to result in a Material Adverse
Change.
(xvi) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority
or agency is necessary or required for the performance by the Company of its
obligations under this Agreement, in connection with the offering, issuance or
sale of the Stock hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have
been already obtained or as may be required under the Securities Act, or
the rules and regulations promulgated thereunder, or state or foreign
securities laws or pursuant to the regulations of the National
Association of Securities Dealers, Inc. (the NASD).
(xvii) The Company and its subsidiaries possess all material permits,
licenses, approvals, consents and other authorizations (herein called
Governmental Licenses) issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business
now operated by them; the Company and its subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate,
result in Material Adverse Change; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not result in a Material Adverse Change;
and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Change.
(xviii) Neither the Company nor its subsidiaries owns any real property.
The Company and its subsidiaries have good and marketable title to all
other properties and assets owned by them and reflected in the financial
statements, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectus (b) are reflected
in the financial statements included in the Prospectus, or (c) do not,
singly or in the aggregate, materially and adversely affect the value of
such property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries; and all
of the leases and subleases material to the business of the Company and
its subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Prospectus, are in full force and effect, and neither the Company nor any
subsidiary has any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any subsidiary
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(xix) Except as described in the Registration Statement and except as
would not, singly or in the aggregate, result in a Material Adverse
Change, (A) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof currently in effect, including
any judicial or administrative order, consent decree or judgment,
relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (herein called Hazardous Materials) or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (herein called
Environmental Laws), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or, to the knowledge of the Company, threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against
the Company or any of its subsidiaries and (D) to the knowledge of the
Company, there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or
agency, against or affecting the Company or any of its subsidiaries
relating to Hazardous Materials or any Environmental Laws.
(xx) Except with respect to the registration rights of the holders of the
Company's Series A Preferred Shares, Series B Preferred Shares and Series
C Preferred Shares and the warrant holders as described in the
Registration Statement, which registration rights have been waived by
such holders, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or, except as disclosed in the Prospectus,
otherwise registered by the Company under the Securities Act.
(xxi) The Company and each of its subsidiaries have filed all necessary
federal, state, local and foreign income, payroll, franchise and other
tax returns (after giving effect to extensions) and have paid all taxes
shown as due thereon or with respect to any of its properties, and there
is no tax deficiency that has been, or to the knowledge of the Company is
likely to be, asserted against the Company, any of its subsidiaries or
any of their properties or assets that would result in a Material Adverse
Change.
(xxii) The Company and each of its subsidiaries is insured by insurers of
national recognition against such losses and risks and in such amounts as
the Company believes is customary for companies engaged in the Company's
business.
(xxiii) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (C)
access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxiv) To the best of the Company's knowledge, neither the Company nor
any employee or agent of the Company has made any payment of funds of the
Company or received or retained any funds in violation of any law, rule
or regulation, including, without limitation, the Foreign Corrupt
Practices Act.
(xxv) To the best of the Company's knowledge, the Company has paid all
material tariff, custom, import, export and other duties required to be
paid by it (if any) in connection with the exportation of products from
the country of manufacture, the importation of products into the United
States, the exportation of products from the United States and the
importation of products into another country and has provided all
appropriate authorities with the requisite information, all of which, to
the best of the Company's knowledge, is true and correct, necessary for
the proper determination of the foregoing.
(xxvi) The Company and each member of its Control Group (as defined
below) is in compliance in all material respects with all presently
applicable provisions of the U.S. Employee Retirement Income Security Act
of 1974, as amended (herein called ERISA), and the regulations and
published interpretations thereunder; no "reportable event" (as defined
in ERISA and the regulations and published interpretations thereunder)
has occurred with respect to any material "pension plan" (as defined in
ERISA and the regulations and published interpretations thereunder)
established or maintained by the Company or any member of its Control
Group; neither the Company nor any member of its Control Group has
incurred nor expects to incur any material liability under (i) Title IV
of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Section 412 or 4971 of the U.S. Internal Revenue Code of
1986, as amended (hereinafter called the Code); and each material
"pension plan" established or maintained by the Company that is intended
to be qualified under Section 401(a) of the Code is so qualified in all
material respects and has received a favorable determination letter as to
its qualification and nothing has occurred, whether by action or failure
to act, which would cause the loss of such qualification. For purposes of
this subsection, "Control Group" is defined to include any entity which
is part of a group which includes the Company and is treated as a single
employer under Section 414 of the Code.
(xxvii) The Stock has been approved for listing on the Nasdaq National
Market.
(xxviii) The Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions contemplated
hereby.
(xxix) The Registration Statement, the Prospectus and any Preliminary
Prospectus comply, and any amendments or supplements thereto will comply,
with any applicable laws or regulations of foreign jurisdictions in which
the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, is distributed by the Company in connection with the
Directed Share Program.
(xxx) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency, other than those
already obtained, is required in connection with the offering of the
Directed Shares in any jurisdiction where the Directed Shares are being
offered by the Company.
(xxxi) The Company has not offered, or caused Chase to offer, Stock to
any person pursuant to the Directed Share Program with the intent to
unlawfully influence (i) a customer or supplier of the Company to alter
the customer's or supplier's level or type of business with the Company,
or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
(b) The Selling Securityholder hereby represents and warrants as
follows:
(i) The Registration Statement and the Prospectus comply, and on the
Closing Date (as hereinafter defined) and any later date on which Option
Stock is to be purchased, the Prospectus will comply, in all material
respects, with the provisions of the Securities Act and the rules and
regulations of the Commission thereunder; on the Effective Date, the
Registration Statement did not contain any untrue statement of a material
fact and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date the Prospectus did not and, on the
Closing Date and any later date on which Option Stock is to be purchased,
will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that none of the representations and
warranties in this subparagraph (i) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made in
reliance upon and in conformity with information herein or otherwise
furnished in writing to the Company by or on behalf of the Underwriters
for use in the Registration Statement or the Prospectus.
(ii) Such Selling Securityholder has good and marketable title to all the
shares of Stock to be sold by such Selling Securityholder hereunder, free
and clear of all liens, encumbrances, equities, security interests and
claims whatsoever, with full right and authority to deliver the same
hereunder, subject, in the case of such Selling Securityholder, to the
rights of [ ], as Custodian (herein called the Custodian), and that upon
the delivery of and payment for such shares of the Stock hereunder, the
several Underwriters will receive good and marketable title thereto, free
and clear of all liens, encumbrances, equities, security interests and
claims whatsoever.
(iii) Certificates in negotiable form for the shares of the Stock to be
sold by such Selling Securityholder have been placed in custody under a
Custody Agreement for delivery under this Agreement with the Custodian;
such Selling Securityholder specifically agrees that the shares of the
Stock represented by the certificates so held in custody for such Selling
Securityholder are subject to the interests of the several Underwriters
and the Company, that the arrangements made by such Selling
Securityholder
for such custody, including the Power of Attorney provided for in such
Custody Agreement, are to that extent irrevocable, and that the obligations
of such Selling Securityholder shall not be terminated by any act of such
Selling Securityholder or by operation of law, whether by the death or
incapacity of such Selling Securityholder or the occurrence of any other
event; if any such death, incapacity or other such event should occur
before the delivery of such shares of the Stock hereunder, certificates for
such shares of the Stock shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such death,
incapacity or other event had not occurred, regardless of whether the
Custodian shall have received notice of such death, incapacity or other
event.
3. Purchase of the Stock by the Underwriters.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
3,200,000 shares of the Underwritten Stock to the several Underwriters, and each
of the Underwriters agrees to purchase from the Company the respective aggregate
number of shares of Underwritten Stock set forth opposite its name in Schedule
I. The price at which such shares of Underwritten Stock shall be sold by the
Company and purchased by the several Underwriters shall be $[ ] per
share. The obligation of each Underwriter to the Company shall be to purchase
from the Company that number of shares of the Underwritten Stock which
represents the same proportion of the total number of shares of the Underwritten
Stock to be sold by the Company and pursuant to this Agreement as the number of
shares of the Underwritten Stock set forth opposite the name of such Underwriter
in Schedule I hereto represents of the total number of shares of the
Underwritten Stock to be purchased by all Underwriters pursuant to this
Agreement, as adjusted by you in such manner as you deem advisable to avoid
fractional shares. In making this Agreement, each Underwriter is contracting
severally and not jointly; except as provided in paragraphs (b) and (c) of this
Section 3, the agreement of each Underwriter is to purchase only the respective
number of shares of the Underwritten Stock specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company shall immediately give notice thereof
to you, and the non-defaulting Underwriters shall have the right within 24 hours
after the receipt by you of such notice to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any part of the shares of the Stock which such
defaulting Underwriter or Underwriters agreed to purchase. If the non-
defaulting Underwriters fail so to make such arrangements with respect to all
such shares, the number of shares of the Stock which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the shares which the
defaulting Underwriter or Underwriters agreed to purchase; provided, however,
that the non-defaulting Underwriters shall not be
obligated to purchase the shares which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such shares of the
Stock exceeds 10% of the total number of shares of the Stock which all
Underwriters agreed to purchase hereunder. If the total number of shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
above referred to, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such shares on the terms herein set forth.
In any such case, either you or the Company shall have the right to postpone the
Closing Date determined as provided in Section 5 hereof for not more than seven
business days after the date originally fixed as the Closing Date pursuant to
said Section 5 in order that any necessary changes in the Registration
Statement, the Prospectus or any other documents or arrangements may be made. If
neither the non-defaulting Underwriters nor the Company shall make arrangements
within the 24-hour periods stated above for the purchase of all the shares of
the Stock which the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall be terminated without further act or deed and
without any liability on the part of the Company or the Selling Securityholder
to any non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company or the Selling Securityholder. Nothing
in this paragraph (b), and no action taken hereunder, shall relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
grants an option to the several Underwriters to purchase, severally and not
jointly, up to 240,000 shares in the aggregate of the Company Option Stock from
the Company at the same price per share as the Underwriters shall pay for the
Underwritten Stock, and the Selling Securityholder grants an option to the
several Underwriters to purchase, severally and not jointly, up to 240,000
shares in the aggregate of the Selling Securityholder Option Stock from the
Selling Securityholder at the same price per share as the Underwriters shall pay
for the Underwritten Stock. Said option may be exercised only to cover over-
allotments in the sale of the Underwritten Stock by the Underwriters and may be
exercised in whole or in part at any time (but not more than once) on or before
the thirtieth day after the date of this Agreement upon written or telegraphic
notice by you to the Company setting forth the aggregate number of shares of the
Option Stock as to which the several Underwriters are exercising the option. If
the underwriters exercise the option for less than all of the shares of Option
Stock, the Underwriters shall purchase from each of the Company and the Selling
Securityholder an equal number of shares of Option Stock. Delivery of
certificates for the shares of Option Stock, and payment therefor, shall be made
as provided in Section 5 hereof. The number of shares of the Option Stock to be
purchased by each Underwriter shall be the same percentage of the total number
of shares of the Option Stock to be purchased by the several Underwriters as
such Underwriter is purchasing of the Underwritten Stock, as adjusted by you in
such manner as you deem advisable to avoid fractional shares.
4. Offering by Underwriters.
(a) The terms of the initial public offering by the Underwriters of the
Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth under "Underwriting" in the Registration
Statement, any Preliminary Prospectus and the Prospectus relating to the Stock
filed by the Company (insofar as such information relates to the Underwriters)
constitutes the only information furnished by the Underwriters to the Company
for inclusion in the Registration Statement, any Preliminary Prospectus, and the
Prospectus, and you on behalf of the respective Underwriters represent and
warrant to the Company that the statements made therein are correct.
5. Delivery of and Payment for the Stock.
(a) Delivery of certificates for the shares of the Underwritten Stock
and the Option Stock (if the option granted by Section 3(c) hereof shall have
been exercised not later than 7:00 a.m., San Francisco time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of XxXxxxxxx, Will & Xxxxx, 000 X. Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, at 8:00 a.m., Chicago time, on the fourth business day after the
date of this Agreement, or at such time on such other day, not later than seven
full business days after such fourth business day, as shall be agreed upon in
writing by the Company and you. The date and hour of such delivery and payment
(which may be postponed as provided in Section 3(b) hereof) are herein called
the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of XxXxxxxxx, Will & Xxxxx, 000 X.
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, at 8:00 a.m., Chicago time, on the third
business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made to
the Company or its order, and payment for any Stock purchased from the Selling
Securityholder shall be made to the Custodian, for the account of the Selling
Securityholder, in each case by one or more certified or official bank check or
checks in same day funds. Such payment shall be made upon delivery of
certificates for the Stock to you for the respective accounts of the several
Underwriters against receipt therefor signed by you. Certificates for the Stock
to be delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least one business day before the
Closing Date, in the case of Underwritten Stock, and at least one business day
prior to the purchase thereof, in the case of the Option Stock. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of Lewco Securities Corporation, 0 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 on the business day prior to the Closing Date or, in the
case of the Option Stock, by 3:00 p.m., New York time, on the business day
preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholder for Stock to be purchased by any Underwriter
whose check shall not have been received by you on the Closing Date or any later
date on which Option Stock is purchased for the account of such Underwriter. Any
such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.
6. Further Agreements of the Company and the Selling Securityholder.
Each of the Company and the Selling Securityholder respectively covenants and
agrees as follows:
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A and
(ii) not file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished
with a copy or to which you shall have reasonably objected in writing or which
is not in compliance with the Securities Act or the rules and regulations of the
Commission.
(b) The Company will promptly notify each Underwriter in the event of
(i) the request by the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company will
make every reasonable effort to prevent the issuance of such a stop order and,
if such an order shall at any time be issued, to obtain the withdrawal thereof
at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you a
signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each post-
effective amendment, if any, to the Registration Statement (together with, in
each case, all exhibits thereto unless previously furnished to you) and will
also deliver to you, for distribution to the Underwriters, a sufficient number
of additional conformed copies of each of the foregoing (but without exhibits)
so that one copy of each may be distributed to each Underwriter, (ii) as
promptly as possible deliver to you and send to the several Underwriters, at
such office or offices as you may designate, as many copies of the Prospectus as
you may reasonably request, and (iii) thereafter from time to time during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, likewise send to the Underwriters as many additional
copies of the Prospectus and as many copies of any supplement to the Prospectus
and of any amended prospectus, filed by the Company with the Commission, as you
may reasonably request for the purposes contemplated by the
Securities Act.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the opinion of counsel
for the Company or of counsel for the Underwriters, to supplement or amend the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser of the Stock,
the Company will forthwith prepare and file with the Commission a supplement to
the Prospectus or an amended prospectus so that the Prospectus as so
supplemented or amended will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time such Prospectus
is delivered to such purchaser, not misleading. If, after the initial public
offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, in
keeping such qualifications in good standing under said securities or blue sky
laws; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. The Company will, from time to
time, prepare and file such statements, reports, and other documents as are or
may be required to continue such qualifications in effect for so long a period
as you may reasonably request for distribution of the Stock.
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to
shareholders of the Company and of all information, documents and reports filed
with the Commission.
(h) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the Effective Date, the Company
will make generally available to its security holders an earnings statement in
accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.
(i) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, including all costs and
expenses incident to (i) the preparation, printing and filing with the
Commission and the National Association of Securities Dealers, Inc. (herein
called the NASD) of the Registration Statement, any Preliminary Prospectus and
the Prospectus, (ii) the furnishing to the Underwriters of copies of any
Preliminary Prospectus and of the several documents required by paragraph (c) of
this Section 6 to be so furnished, (iii) the printing of this Agreement and
related documents delivered to the Underwriters, (iv) the preparation, printing
and filing of all supplements and amendments to the Prospectus referred to in
paragraph (d) of this Section 6, (v) the furnishing to you and the Underwriters
of the reports and information referred to in paragraph (g) of this Section 6
and (vi) the printing and issuance of stock certificates, including the transfer
agent's fees. The Selling Securityholder will pay any transfer taxes incident to
the transfer to the Underwriters of the shares the Stock being sold by such
Selling Securityholder.
(j) The Company agrees to reimburse you, for the account of the several
Underwriters, for blue sky fees and related disbursements (including counsel
fees and disbursements and cost of printing memoranda for the Underwriters) paid
by or for the account of the Underwriters or their counsel in qualifying the
Stock under state securities or blue sky laws and in the review of the offering
by the NASD; provided, however, that such reimbursement shall not exceed $20,000
in the aggregate.
(k) The Company agrees to pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share Program and
stamp duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
(l) The provisions of paragraphs (i), (j) and (k) of this Section are
intended to relieve the Underwriters from the payment of the expenses and costs
which the Company and the Selling Securityholder hereby agree to pay and shall
not affect any agreement which the Company and the Selling Securityholder may
make, or may have made, for the sharing of any such expenses and costs.
(m) The Company and the Selling Securityholder hereby irrevocably agree
that neither the Company nor such Selling Securityholder, as the case may be,
will, directly or indirectly, sell, offer, contract to sell, sell any option,
right or warrant to purchase, transfer the economic risk or ownership in, make
any short sale, pledge, lend or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock, or any
securities convertible into or exchangeable or exercisable for or any
other rights to purchase or acquire Common Stock, without the prior
written consent of Chase Securities Inc., acting alone, or of each of the
Representatives of the Underwriters, acting jointly, for a period of 180
days following the effective date of the Registration Statement. The
foregoing sentence shall not apply to (A) the Stock to be sold to the
Underwriters pursuant to this Agreement, (B) shares of Common Stock
issued by the Company upon the exercise of options granted under the
stock option plans and stock purchase plan of the Company (the "Option
Plans") or upon the exercise of warrants outstanding as of the date
hereof, all as described in "Capitalization" in the Preliminary
Prospectus, and (C) options to purchase Common Stock granted under the
Option Plans.
(n) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to
or affecting the Company shall occur as a result of which in your opinion
the market price for the Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company
will, after written notice from you advising the Company to the effect
set forth above, forthwith prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event, unless in the opinion of counsel for the
Company, the dissemination of such press release or other public
statement would violate applicable securities laws.
(o) The Company is familiar with the Investment Company Act of 1940, as
amended, and has in the past conducted its affairs, and will in the
future conduct its affairs, in such a manner to ensure that the Company
was not and will not be an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, and the rules and regulations thereunder.
(p) The Company will place stop transfer orders on any Directed Shares
that have been sold to Participants subject to the three month
restriction on sale, transfer, assignment, pledge or hypothecation
imposed by the NASD under its Interpretative Material 2110-1(d).
(q) The Company will comply with all applicable securities and other
applicable laws, rules and regulations in each jurisdiction in which the
Directed Shares are offered in connection with the Directed Share
Program.
7. Indemnification and Contribution.
(a) Subject to the provisions of paragraph (f) of this Section 7, the
Company and the Selling Securityholder jointly and severally agree to indemnify
and hold harmless each Underwriter and each person (including each partner or
officer thereof) who controls any Underwriter within the meaning of Section 15
of the Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Securities Exchange Act of
1934, as amended (herein called the Exchange Act), or the common law or
otherwise, and
the Company and the Selling Securityholder jointly and severally agree to
reimburse each such Underwriter and controlling person for any legal or other
expenses (including, except as otherwise hereinafter provided, reasonable fees
and disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that (1) the indemnity agreements of the Company
and the Selling Securityholder contained in this paragraph (a) shall not apply
to any such losses, claims, damages, liabilities or expenses if such statement
or omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company by
or on behalf of any Underwriter for use in any Preliminary Prospectus or the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, (2) the indemnity agreement contained in this paragraph (a)
with respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Stock which is the subject thereof (or to
the benefit of any person controlling such Underwriter) if at or prior to the
written confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof, and (3) the Selling
Securityholder shall only be liable under this paragraph with respect to (A)
information pertaining to such Selling Securityholder furnished by or on behalf
of such Selling Securityholder expressly for use in any Preliminary Prospectus
or the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto or (B) facts that would constitute a breach of any
representation or warranty of such Selling Securityholder set forth in Section
2(b) hereof. The indemnity agreements of the Company and the Selling
Securityholder contained in this paragraph (a) and the representations and
warranties of the Company and the Selling Securityholder contained in Section 2
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its officers who signs the Registration Statement on his own
behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Securities Act, and the Selling Securityholder from and against any
and all losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or the common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any Rule
462(b) registration statement) or any post-effective amendment thereto
(including any Rule 462(b) registration statement) or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, if such statement or omission was made in reliance upon
and in conformity with information furnished as herein stated or otherwise
furnished in writing to the Company by or on behalf of such indemnifying
Underwriter for use in the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto. The indemnity agreement of each
Underwriter contained in this paragraph (b) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provisions of paragraphs (a) and
(b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties
from any liability which it or they may have to the indemnified party for
contribution or otherwise than on account of such indemnity agreement, except as
specifically provided in paragraph (d) of this Section. Any indemnifying party
shall be entitled at its own expense to participate in the defense of any
action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(herein called the Notice of Defense) to the indemnified party, to assume (alone
or in conjunction with any other indemnifying party or parties) the entire
defense of such action, suit, investigation, inquiry or proceeding, in which
event such defense shall be conducted, at the expense of the indemnifying party
or parties, by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties; provided, however,
that (i) if the indemnified party or parties reasonably determine that there may
be a conflict between the positions of the indemnifying party or parties and of
the indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties and (ii) in any event, the
indemnified party or parties shall be entitled to have counsel chosen by such
indemnified party or parties participate in, but not conduct, the defense. It is
understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Chase, in the
case of parties indemnified pursuant to paragraph (a) of this Section 7, and by
the Company, in the case of parties indemnified pursuant to paragraph (b) of
this Section 7. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
paragraphs (a) through (c) of this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding, except that
(A) the indemnifying party or parties shall bear the legal and other expenses
incurred in connection with the conduct of the defense as referred to in clause
(i) of the proviso to the preceding sentence and (B) the indemnifying party or
parties shall bear such other expenses as it or they have authorized to be
incurred by the indemnified party or parties. If, within a reasonable time after
receipt of the Notice, no Notice of Defense has been given, the indemnifying
party or parties shall be responsible for any legal or other expenses incurred
by the indemnified party or parties in connection with the defense of the
action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under paragraph (a) or (b)
of
this Section 7, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in paragraph (a) or (b) of this Section 7 (i) in such proportion as
is appropriate to reflect the relative benefits received by each indemnifying
party from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each indemnifying party in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Securityholder on the one hand and the Underwriters on the other shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Stock received by the Company and the Selling
Securityholder and the total underwriting discount received by the Underwriters,
as set forth in the table on the cover page of the Prospectus, bear to the
aggregate public offering price of the Stock. Relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by each indemnifying party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities, or actions in respect thereof, referred to in the first sentence
of this paragraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigation,
preparing to defend or defending against any action or claim which is the
subject of this paragraph (d). Notwithstanding the provisions of this paragraph
(d), no Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Stock purchased by such Underwriter. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this paragraph (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a summons
or other initial legal process upon it in any action instituted against it in
respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought. No contribution provided for hereunder shall be available to any party
who shall fail to give such written notice if the party to whom such notice was
not given was unaware of the legal proceeding to which the notice would have
related and was
prejudiced by the failure to give notice, but the omission so to notify such
party or parties of any such service shall not relieve such party or parties
from whom contribution may be sought from any liability which it or they may
have to each party entitled to contribution or otherwise (except as specifically
provided in paragraph (c) of this Section 7).
(e) Neither the Company nor the Selling Securityholder will, without the
prior written consent of each Underwriter, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of such Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding.
(f) The liability of the Selling Securityholder under such Selling
Securityholder's representations and warranties contained in paragraph (b) of
Section 2 hereof and under the indemnity and reimbursement agreements contained
in the provisions of this Section 7 and Section 12 hereof shall be limited to an
amount equal to the initial public offering price of the Stock sold by such
Selling Securityholder to the Underwriters. The Company and the Selling
Securityholder may agree, as among themselves and without limiting the rights of
the Underwriters under this Agreement, as to the respective amounts of such
liability for which they each shall be responsible.
8. Directed Share Program Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless Chase and each
person, if any, who controls Chase within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act (herein called the Chase
Entities), from and against any and all losses, claims, damages or liabilities
(i) caused by any untrue statement or alleged untrue statement of a material
fact contained in any material prepared by or with the consent of the Company
for distribution to Participants in connection with the Directed Share Program,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (ii) caused by the failure of any Participant to pay for and accept
delivery of Directed Shares that the Participant has agreed to purchase; or
(iii) related to, arising out of, or in connection with the Directed Share
Program, including those arising out of any violation or alleged violation of
the Act or out of any rescission right of any person in respect thereof, other
than losses, claims, damages or liabilities (or expenses relating thereto) that
are finally judicially determined to have resulted from the bad faith or gross
negligence of Chase Entities.
(b) Upon the service of a summons or other initial legal process upon
any Chase Entity in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceeding against, it in respect of which indemnity may be sought pursuant
to
Section 8(a), the Chase Entity seeking indemnity will promptly give Notice of
such service or notification to the Company. No indemnification provided for in
Section 8(a) shall be available to any Chase Entity who shall fail so to give
the Notice to the Company if the Company was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
the Company of any such service or notification shall not relieve the Company
from any liability shich it may have to any such Chase Entity for contribution
or otherwise than on account of such indemnity agreement in Section 8(a) (except
as specifically provided in paragraph (c) of this Section 8). Any Chase Entity
shall be entitled at its own expense to participate in the defense of any
action, suit or proceeding against, or investigation or inquiry of, such Chase
Entity. The Company shall be entitled, if it so elects within a reasonable time
after receipt of the Notice by giving a Notice of Defense to any such Chase
Entity, to assume the entire defense of such action, suit, investigation,
inquiry or proceeding, in which event such defense shall be conducted, at the
expense of the Company, by counsel chosen by the Company and reasonably
satisfactory to such Chase Entity; provided, however, that (i) if any such Chase
Entity reasonably determines that there may be a conflict between the positions
of the Company and of any such Chase Entity in conducting the defense of such
action, suit, investigation, inquiry or proceeding or that there may be legal
defenses available to such Chase Entity different from or in addition to those
available to the Company, then counsel for such Chase Entity shall be entitled
to conduct the defense to the extent reasonably determined by such counsel to be
necessary to protect the interests of such Chase Entity and (ii) in any event,
the Chase Entity shall be entitled to have counsel chosen by such Chase Entity
participate in, but not conduct, the defense. It is understood that the Company
shall not, in respect of the legal expenses of any such Chase Entity in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such Chase Entities and that all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by such Chase Entity. If, within a reasonable time after receipt of
the Notice, the Company gives a Notice of Defense in connection with this
Section 8 and the counsel chosen by the Company is reasonably satisfactory to
the Chase Entity, the Company will not be liable under this Section 8 for any
legal or other expenses subsequently incurred by any such Chase Entity in
connection with the defense of the action, suit, investigation, inquiry or
proceeding, except that (A) the Company shall bear the legal and other expenses
incurred in connection with the conduct of the defense as referred to in clause
(i) of the proviso to the preceding sentence and (B) the Company shall bear such
other expenses as it or they have authorized to be incurred by any such Chase
Entity. If, within a reasonable time after receipt of the Notice, no Notice of
Defense has been given, the Company shall be responsible for any legal or other
expenses incurred by any such Chase Entity in connection with the defense of the
action, suit, investigation, inquiry or proceeding.
(c) If the indemnification provided for in Section 8(a) is unavailable or
insufficient to hold harmless a Chase Entity under Section 8(a), then the
Company, in lieu of indemnifying the Chase Entity, shall contribute to the
amount
paid or payable by the Chase Entity as a result of the losses, claims, damages
or liabilities referred to in Section 8(a) (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Chase Entities on the other hand from the offering of the Directed
Shares or (ii) if the allocation provided by clause 8(c)(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 8(c)(i) above but also the
relative fault of the Company on the one hand and of the Chase Entities on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, or actions in respect thereof, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and of the Chase Entities on the other hand in
connection with the offering of the Directed Shares shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Directed Shares (before deducting expenses) and the total underwriting discounts
and commissions received by the Chase Entities for the Directed Shares, bear to
the aggregate public offering price of the Directed Shares. Relative fault of
the Company on the one hand and the Chase Entities on the other hand shall be
determined by reference to, among other things, whether the statement, act or
omission that resulted in losses, claims, damages or liabilities relates to
statements, acts or omissions by the Company or by the Chase Entities and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statements, acts or omissions.
(d) The Company and the Chase Entities agree that it would not be just
and equitable if contributions pursuant to this Section 8 were determined by pro
rata allocation (even if the Chase Entities were treated as one entity for such
purpose) or by any other method of allocation which does not take account the
equitable considerations referred to in Section 8(c). The amount paid by the
Chase Entities as a result of the losses, claims, damages or liabilities, or
actions in respect thereof, referred to in the immediately preceding paragraph
shall be deemed to include any legal or other expenses reasonably incurred by
the Chase Entities in connection with investigating, preparing to defend or
defending against any action or claim which is the subject of Section 8(c).
Notwithstanding the provisions of this Section 8, no Chase Entity shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Directed Shares distributed to the public. 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.
Each party entitled to contribution agrees that upon the service of a summons
or other initial legal process upon it in any action instituted against it in
respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought. No contribution provided for hereunder shall be available to any party
who shall fail to give such written notice if the party to whom such notice was
not given was unaware of the legal proceeding to which the notice would have
related and was prejudiced by the failure to give notice, but the omission so to
notify such party or parties of any such service shall not relieve such party or
parties from whom contribution may be sought from any liability which it or they
may have to each
party entitled to contribution or otherwise (except as specifically provided in
this Section 8).
(e) The indemnity and contribution provisions contained in this Section
8 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Chase Entity or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Directed Shares.
9. Termination. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company and the
Selling Securityholder if after the date of this Agreement trading in the Common
Stock shall have been suspended, or if there shall have occurred (a) the
engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States on
or after the date hereof, (b) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change in economic or
political conditions in the financial markets of the United States would, in the
Underwriters' reasonable judgment, make the offering or delivery of the Stock
impracticable, (c) suspension of trading in securities generally or a material
adverse decline in value of securities generally on the New York Stock Exchange,
the American Stock Exchange, or The Nasdaq Stock Market, or limitations on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such exchange or system, (d) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (e)
declaration of a banking moratorium by either federal or New York State
authorities or (f) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 9, there shall be no liability of the Company or the Selling
Securityholder to the Underwriters and no liability of the Underwriters to the
Company or the Selling Securityholder; provided, however, that in the event of
any such termination the Company and the Selling Securityholder agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Securityholder under this Agreement, including all costs and expenses referred
to in paragraphs (i), (j) and (k) of Section 6.
10. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company and by the Selling Securityholder of all their
respective obligations to be performed hereunder at or prior to the Closing Date
or any later date on which Option Stock is to be purchased, as the case may be,
and
to the following further conditions:
(a) The Registration Statement shall have become effective; and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock hereunder and
the validity and form of the certificates representing the Stock, all
corporate proceedings and other legal matters incident to the foregoing,
and the form of the Registration Statement and of the Prospectus (except
as to the financial statements contained therein), shall have been
approved at or prior to the Closing Date by Xxxxx Xxxx & Xxxxxxxx,
counsel for the Underwriters.
(c) You shall have received from XxXxxxxxx, Will & Xxxxx, counsel for the
Company, Xxxxxx & Xxxxxxxx LLC, counsel for the Selling Securityholder,
and from Xxxxxxx & Xxxxxx LLP, patent counsel for the Company, opinions,
addressed to the Underwriters and dated the Closing Date, covering the
matters set forth in Annex X-0, Xxxxx X-0 and Annex B hereto,
respectively, and if Option Stock is purchased at any date after the
Closing Date, additional opinions from each such counsel, addressed to
the Underwriters and dated such later date, confirming that the
statements expressed as of the Closing Date in such opinions remain
valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were
true and correct and neither the Registration Statement nor the
Prospectus omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein,
respectively, not misleading, (ii) since the Effective Date, no event has
occurred which should have been set forth in a supplement or amendment to
the Prospectus which has not been set forth in such a supplement or
amendment, (iii) since the respective dates as of which information is
given in the Registration Statement in the form in which it originally
became effective and the Prospectus contained therein, there has not been
any material adverse change or any development involving a prospective
material adverse change in or affecting the business, properties,
financial condition or results of operations of the Company, whether or
not arising from transactions in the ordinary course of business, and,
since such dates, except in the ordinary course of business, the Company
has not entered into any material transaction not referred to in the
Registration Statement in the form in which it originally became
effective and the Prospectus contained therein, (iv) the Company does not
have any material contingent obligations which are not disclosed in the
Registration Statement and the Prospectus, (v) there are not any pending
or known threatened legal proceedings to which the Company or any of its
subsidiaries is a party or of which property of the Company or any of its
subsidiaries is the subject which are material and which are not
disclosed in the Registration Statement and the Prospectus, (vi) there
are not any franchises, contracts, leases or other documents which are
required to be filed as exhibits to the Registration Statement which have
not been filed as required, (vii) the representations and warranties of
the Company
herein are true and correct in all material respects as of the Closing
Date or any later date on which Option Stock is to be purchased, as the
case may be, and (viii) there has not been any material change in the
market for securities in general or in political, financial or economic
conditions from those reasonably foreseeable as to render it
impracticable in your reasonable judgment to make a public offering of
the Stock, or a material adverse change in market levels for securities
in general (or those of companies in particular) or financial or economic
conditions which render it inadvisable in your reasonable judgment to
proceed.
(e) You shall have received on the Closing Date and on any later date on
which Option Stock is purchased a certificate, dated the Closing Date or
such later date, as the case may be, and signed by the President and the
Chief Financial Officer of the Company, stating that the respective
signers of said certificate have carefully examined the Registration
Statement in the form in which it originally became effective and the
Prospectus contained therein and any supplements or amendments thereto,
and that the statements included in clauses (i) through (vii) of
paragraph (d) of this Section 9 are true and correct.
(f) You shall have received from Ernst & Young LLP, a letter or letters,
addressed to the Underwriters and dated the Closing Date and any later
date on which Option Stock is purchased, confirming that they are
independent public accountants with respect to the Company within the
meaning of the Securities Act and the applicable published rules and
regulations thereunder and based upon the procedures described in their
letter delivered to you concurrently with the execution of this Agreement
(herein called the Original Letter), but carried out to a date not more
than three business days prior to the Closing Date or such later date on
which Option Stock is purchased (i) confirming, to the extent true, that
the statements and conclusions set forth in the Original Letter are
accurate as of the Closing Date or such later date, as the case may be,
and (ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to
reflect any changes in the facts described in the Original Letter since
the date of the Original Letter or to reflect the availability of more
recent financial statements, data or information. The letters shall not
disclose any change, or any development involving a prospective change,
in or affecting the business or properties of the Company which, in your
sole judgment, makes it impractical or inadvisable to proceed with the
public offering of the Stock or the purchase of the Option Stock as
contemplated by the Prospectus.
(g) You shall have received from Ernst & Young LLP a letter stating that
their review of the Company's system of internal accounting controls, to
the extent they deemed necessary in establishing the scope of their
examination of the Company's financial statements as at [ , 2000],
did not disclose any weakness in internal controls that they considered
to be material weaknesses.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the
qualification
referred to in paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been duly authorized for listing by the Nasdaq
National Market upon official notice of issuance.
(j) On or prior to the Closing Date, you shall have received from all
directors, officers, and beneficial holders of more than 1% of the
outstanding Common Stock and all other securityholders of the Company
agreements, in form reasonably satisfactory to Chase, stating that such
party hereby irrevocably agrees that it will not, directly or indirectly,
sell, offer, contract to sell, sell any option, right or warrant to
purchase, transfer the economic risk or ownership in, make any short
sale, pledge, lend or otherwise transfer or dispose of directly or
indirectly, any shares of Common Stock, or any securities convertible
into or exchangeable or exercisable for or any other rights to purchase
or acquire Common Stock, without the prior written consent of Chase,
acting alone, or of each of the Representatives of the Underwriters,
acting jointly, for a period of 180 days following the effective date of
the Registration Statement. The foregoing sentence shall not apply to (A)
the Stock to be sold to the Underwriters pursuant to this Agreement, (B)
shares of Common Stock issued by the Company upon the exercise of options
granted under the stock option plans and stock purchase plan of the
Company (the Option Plans) or upon the exercise of warrants outstanding
as of the date hereof, all as described in the Preliminary Prospectus,
and (C) options to purchase Common Stock granted under the Option Plans.
All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters,
shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 10 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Selling Securityholder. Any such termination shall be
without liability of the Company or the Selling Securityholder to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholder; provided, however, that (i) in the event of such
termination, the Company and the Selling Securityholder agree to indemnify and
hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Securityholder
under this Agreement, including all costs and expenses referred to in paragraphs
(i), (j) and (k) of Section 6 hereof, and (ii) if this Agreement is terminated
by you because of any refusal, inability or failure on the part of the Company
or the Selling Securityholder to perform any agreement herein, to fulfill any of
the conditions herein, or to comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the transactions contemplated hereby.
11. Conditions of the Obligation of the Company and the Selling
Securityholder. The obligation of the Company and the Selling Securityholder to
deliver the Stock shall be subject to the conditions that (a) the Registration
Statement shall have become effective and (b) no stop order suspending the
effectiveness thereof shall be in effect and no proceedings therefor shall be
pending or threatened by the Commission.
In case either of the conditions specified in this Section 11 shall not
be fulfilled, this Agreement may be terminated by the Company by giving notice
to you. Any such termination shall be without liability of the Company and the
Selling Securityholder to the Underwriters and without liability of the
Underwriters to the Company or the Selling Securityholder; provided, however,
that in the event of any such termination the Company and the Selling
Securityholder jointly and severally agree to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company and the Selling Securityholder under this Agreement,
including all costs and expenses referred to in paragraphs (i), (j) and (k) of
Section 6 hereof.
12. Reimbursement of Certain Expenses. In addition to their other
obligations under Sections 7 and 8 of this Agreement (and subject, in the case
of the Selling Securityholder, to the provisions of paragraph (f) of Section 7),
the Company and the Selling Securityholder hereby jointly and severally agree to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Sections 7 and 8 of this Agreement, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
obligations under this Section 12 and the possibility that such payments might
later be held to be improper; provided, however, that (i) to the extent any such
payment is ultimately held to be improper, the persons receiving such payments
shall promptly refund them to the Company or the Selling Securityholder, as the
case may be, and (ii) such persons shall provide to the Company or the Selling
Securityholder, as the case may be, upon request, reasonable assurances of their
ability to effect any refund, when and if due.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of the Company, the Selling Securityholder and the several
Underwriters and, with respect to the provisions of Sections 7 and 8 hereof, the
several parties (in addition to the Company, the Selling Securityholder and the
several Underwriters) indemnified under the provisions of said Sections 7 and 8,
and their respective personal representatives, successors and assigns. Nothing
in this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
14. Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be
mailed, telegraphed or delivered to Chase Securities Inc., Xxx Xxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000; and if to the Company, shall be mailed,
telegraphed or delivered to it at its office, Xxx Xxxxx Xxxx, 00/xx/ Xxxxx,
Xxxxxxxx Terrace, Illinois, Attention: Xxxxx X. Xxxxx, with a copy to XxXxxxxxx,
Will & Xxxxx, 000 X. Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X.
Xxxxx, P.C. and Xxxx X. Xxxxxxxx; and if to the Selling Securityholder, shall be
mailed, telegraphed or delivered to the Selling Securityholder in care of
Xxxxxxxxx Xxxxxx Xxxxx at [ ], with a copy to Xxxxxx
& Xxxxxxxx LLC, Suite 3600, 000 X. Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxx X. Xxxxxxxx. All notices given by telegraph shall be promptly
confirmed by letter.
15. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or the Selling Securityholder or their respective directors or
officers, and (c) delivery and payment for the Stock under this Agreement;
provided, however, that if this Agreement is terminated prior to the Closing
Date, the provisions of paragraphs (m) and (n) of Section 6 hereof shall be of
no further force or effect.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California.
Please sign and return to the Company and to the Selling Securityholder
in care of the Company the enclosed duplicates of this letter, whereupon this
letter will become a binding agreement among the Company, the Selling
Securityholder and the several Underwriters in accordance with its terms.
Very truly yours,
APROPOS TECHNOLOGY, INC.
By
------------------------
Name: Xxxxx X. Xxxxx
Title: President
SELLING SECURITYHOLDER:
Xxxxxxxxx Xxxxxx Xxxxx
By
------------------------
Name:
Title:
as Attorney-in-Fact acting on behalf
of the Selling Securityholder named
in Schedule II hereto.
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
CHASE SECURITIES INC.
XX XXXXX SECURITIES CORPORATION
U.S. BANCORP XXXXX XXXXXXX INC.
By Chase Securities Inc.
By
---------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
SCHEDULE I
UNDERWRITERS
Number of
Shares
to be
Underwriters Purchased
------------ ---------
Chase Securities Inc.
XX Xxxxx Securities Corporation
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Total
SCHEDULE II
SELLERS OF OPTION STOCK
Maximum
Number of
Shares
Name to be Sold
---- ----------
Apropos Technology, Inc.
Xxx Xxxxx Xxxx, 00/xx/ Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Xxxxxxxxx Xxxxxx Xxxxx
[Address ]
Total
ANNEX A-1
Matters to be Covered in the Opinion of XxXxxxxxx, Will & Xxxxx
Counsel for the Company
(i) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified as a foreign corporation
and in good standing in each state of the United States of America in which its
ownership or leasing of property requires such qualification (except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole), and has full corporate power
and authority to own or lease its properties and conduct its business as
described in the Registration Statement; all the issued and outstanding capital
stock of each of the subsidiaries of the Company has been duly authorized and
validly issued and is fully paid and nonassessable, and is owned by the Company
free and clear of all liens, encumbrances and security interests, and to the
best of such counsel's knowledge, no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in such
subsidiaries are outstanding (it being understood that the opinion set forth in
this subsection (i) regarding the Company's subsidiary may be delivered by the
Company's English counsel, which must be satisfactory in the reasonable judgment
of the Underwriters);
(ii) the authorized capital stock of the Company consists of [ ]
Preferred Shares, of which there are outstanding [ ] shares,
and [ ] Common Shares, $0.01 par value, of which there are
outstanding [ ] shares (including the Underwritten Stock plus the
number of shares of Option Stock issued on the date hereof) [and such additional
number of shares, if any, as may have been issued after [ ] and
prior to the Closing Date, pursuant to [ ]]; proper corporate
proceedings have been taken validly to authorize such authorized capital stock;
all of the outstanding shares of such capital stock (including the Underwritten
Stock and the shares of Option Stock issued, if any) have been duly and validly
issued and are fully paid and nonassessable; any Option Stock purchased after
the Closing Date, when issued and delivered to and paid for by the Underwriters
as provided in the Underwriting Agreement, will have been duly and validly
issued and be fully paid and nonassessable; and no preemptive rights of, or
rights of refusal in favor of, shareholders exist with respect to the Stock, or
the issue and sale thereof, pursuant to the Articles of Incorporation or Bylaws
of the Company and, to the knowledge of such counsel, there are no contractual
preemptive rights that have not been waived, rights of first refusal or rights
of co-sale which exist with respect to the Stock being sold by the Selling
Securityholder or the issue and sale of the Stock;
(iii) the Registration Statement has become effective under the
Securities Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus is in effect and no proceedings for that
purpose have been instituted or are pending or contemplated by the Commission;
(iv) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained therein,
as to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and with the rules
and regulations of the Commission thereunder;
(v) nothing has come to such counsel's attention that would cause such
counsel to believe that the Registration Statement (except as to the financial
statements and schedules and other financial data contained or incorporated by
reference therein, as to which such counsel need not express any opinion or
belief) at the Effective Date contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Prospectus (except as
to the financial statements and schedules and other financial data contained or
incorporated by reference therein, as to which such counsel need not express any
opinion or belief) as of its date or at the Closing Date (or any later date on
which Option Stock is purchased), contained or contains any untrue statement of
a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading;
(vi) the information required to be set forth in the Registration
Statement in answer to Items 9, 10 (insofar as it relates to such counsel) and
11(c) (except that any proceeding being handled by other counsel may be
addressed in a separate opinion of such counsel) of Form S-1 is to the best of
such counsel's knowledge accurately and adequately set forth therein in all
material respects or no response is required with respect to such Items, and, to
the best of such counsel's knowledge, the description of the Company's stock
option plans and the options granted and which may be granted thereunder and the
options granted otherwise than under such plans set forth in the Prospectus
accurately and fairly presents in all material respects the information required
to be shown with respect to said plans and options to the extent required by the
Securities Act and the rules and regulations of the Commission thereunder;
(vi) such counsel do not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion of
such counsel are of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement, which are not described and filed as required;
(vi) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(ix) the issue and sale by the Company of the shares of Stock sold by
the Company as contemplated by the Underwriting Agreement will not conflict
with, or result in a breach of the Articles of Incorporation or Bylaws of the
Company or any of its subsidiaries, or a breach of any agreement or instrument
known to such counsel which are listed on an attached schedule and which have
been identified to such counsel as all of the agreements and instruments which
are material to the business or financial condition of the Company or any of its
subsidiaries, to which the Company or any of its subsidiaries is a party, which
breach would be material to the Company and its subsidiaries taken as a whole,
or any applicable law or regulation, or so far as is known to such counsel, any
order, writ, injunction or
decree, of any jurisdiction, court or governmental instrumentality;
(x) all holders of securities of the Company having rights under the
agreements set forth on an attached schedule of the Company certifying that such
schedule includes all such agreements, to the registration of shares of Common
Stock, or other securities, because of the filing of the Registration Statement
by the Company have waived such rights or such rights have expired by reason of
lapse of time following notification of the Company's intent to file the
Registration Statement;
(xi) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated in the Underwriting Agreement, except such as have been obtained
under the Securities Act and such as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the Stock by
the Underwriters;
(xii) the Stock issued and sold by the Company and the Stock sold by the
Selling Securityholder has been duly authorized for listing by the Nasdaq
National Market upon official notice of issuance.
ANNEX A-2
Matters to be Covered in the Opinion of Xxxxxx & Xxxxxxxx LLC
Counsel for the Selling Securityholder
(i) the Underwriting Agreement has been duly executed and delivered by
or on behalf of the Selling Securityholder and the Custody Agreement between the
Selling Securityholder and [ ], as Custodian, and the
Power of Attorney referred to in such Custody Agreement have been duly executed
and delivered by the several Selling Securityholder;
(ii) good and marketable title to the shares of Stock sold by the
Selling Securityholder under the Underwriting Agreement, free and clear of all
liens, encumbrances, equities, security interests and claims, has been
transferred to the Underwriters who have severally purchased such shares of
Stock under the Underwriting Agreement, assuming for the purpose of this opinion
that the Underwriters purchased the same in good faith without notice of any
adverse claims;
ANNEX B
Matters to be Covered in the Opinion of Xxxxxxx & Xxxxxx LLP
Patent Counsel for the Company
Such counsel represents and has represented the Company in connection with
patent preparation and procurement matters and other patent-related counseling
matters. In connection with such representations, we have become familiar with
certain technology used by the Company in its business and the manner of its use
and have read the portions of the Registration Statement and the Prospectus
referring to patents, trade secrets, trademarks, service marks or other
proprietary information or materials and:
(i) The statements in the Registration Statement and the Prospectus under
the captions "Risk Factors -- Infringement of our proprietary rights could
affect our competitive position, harm our reputation or cost us money", "Risk
Factors -- Infringement claims could adversely affect us", "Business --
Intellectual Property and Other Proprietary Rights" and "Business -- Legal
Proceedings", to the best of such counsel's knowledge and belief, are accurate
and complete statements or summaries of the matters therein set forth and
nothing has come to such counsel's attention that causes such counsel to believe
that the above-described portions of the Registration Statement and the
Prospectus contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(ii) to the best of such counsel's knowledge and except as set forth in
the Prospectus under the caption "Risk Factors -- Infringement claims could
adversely affect us", there are no legal or governmental proceedings pending
relating to patent rights, trade secrets, trademarks, service marks or other
proprietary information or materials of the Company, and to the best of such
counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or others;
(iii) such counsel do not know of any contracts or other documents,
relating to governmental regulation affecting the Company or the Company's
patents, trade secrets, trademarks, service marks or other proprietary
information or materials of a character required to be filed as an exhibit to
the Registration Statement or required to be described in the Registration
Statement or the Prospectus that are not filed or described as required;
(iv) except as set forth in the Prospectus, to the best of such counsel's
knowledge, the Company is not infringing or otherwise violating any patents,
trade secrets, trademarks, service marks or other proprietary information or
materials, of others, and to the best of such counsel's knowledge there are no
infringements by others of any of the Company's patents, trade secrets,
trademarks, service marks or other proprietary information or materials which in
the judgment of such counsel could affect materially the use thereof by the
Company; and
(v) to the best of such counsel's knowledge, the Company owns or possesses
sufficient licenses or other rights to use all patents, trade secrets,
trademarks, service marks or other proprietary information or materials
necessary to conduct the business now being or proposed to be conducted by the
Company as described in the Prospectus.
In addition, Xxxxxxx & Xxxxxx LLP shall deliver to counsel for the
Underwriters legal opinions in the form previously agreed covering various
matters relating to the Company's proprietary technology.
