4,600,000 Shares
Bluestone Software, Inc.
Common Stock
($.001 Par Value)
UNDERWRITING AGREEMENT
_________ __, 1999
Deutsche Bank Securities Inc.
As Representative of the
Several Underwriters
c/o Deutsche Bank Securities Inc.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Gentlemen:
Bluestone Software, Inc. a Delaware corporation (the "Company"),
proposes to sell to the several underwriters (the "Underwriters") named in
SCHEDULE I hereto for whom you are acting as Representative (the
"Representative") an aggregate of 4,000,000 shares of the Company's Common
Stock, $.001 par value (the "Firm Shares"). The respective amounts of the Firm
Shares to be so purchased by the several Underwriters are set forth opposite
their names in SCHEDULE I hereto. Certain shareholders of the Company (the
"Selling Shareholders") also propose to sell at the Underwriters'option, an
aggregate of up to 600,000 additional shares of the Company's Common Stock (the
"Option Shares") as set forth below. The maximum number of Option Shares to be
sold by the Selling Shareholders is set forth opposite their respective names
in SCHEDULE II hereto. The Company and the Selling Shareholders are sometimes
referred to herein collectively as the "Sellers".
As the Representative, you have advised the Company and the Selling
Shareholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the number of Firm Shares set
forth opposite their respective names in SCHEDULE I, plus their pro rata portion
of the Option Shares, should you elect to exercise the over-allotment option in
whole or in part for the accounts of the several Underwriters. The Firm Shares
and the Option Shares (to the extent the aforementioned option is exercised) are
herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the
Underwriters as follows:
(a) A registration statement on Form S-1 (File No. 33- 82213)
with respect to the Shares has been carefully prepared by the Company
in conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder and has been filed with the Commission. The
Company has complied with the conditions for the use of Form S-1.
Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the
Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have
heretofore been delivered by the Company to you. Such registration
statement, together with any registration statement filed by the
Company pursuant to Rule 462(b) of the Act, herein referred to as the
"Registration Statement," which shall be deemed to include all
information omitted therefrom in reliance upon Rule 430A and contained
in the Prospectus referred to below, has become effective under the Act
and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. "Prospectus" means (a) the form
of prospectus first filed with the Commission pursuant to Rule 424(b)
or (b) the last preliminary prospectus included in the Registration
Statement filed prior to the time it becomes effective or filed
pursuant to Rule 424(a) under the Act that is delivered by the Company
to the Underwriters for delivery to purchasers of the Shares, together
with the term sheet or abbreviated term sheet filed with the Commission
pursuant to Rule 424(b)(7) under the Act. Each preliminary prospectus
included in the Registration Statement prior to the time it becomes
effective is herein referred to as a "Preliminary Prospectus." Any
reference herein to the Registration Statement, any Preliminary
Prospectus or to the Prospectus shall be deemed to refer to and include
any documents incorporated by reference therein, and, in the case of
any reference herein to any Prospectus, also shall be deemed to include
any documents incorporated by reference therein, and any supplements or
amendments thereto, filed with the Commission after the date of filing
of the Prospectus under Rules 424(b) or 430A, and prior to the
termination of the offering of the Shares by the Underwriters.
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(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement. The Company has no direct or indirect subsidiaries and is
duly qualified to transact business in all jurisdictions in which the
conduct of its business requires such qualification, except where the
failure to so qualify or be in good standing would not result in a
material adverse effect on the earnings, business, management,
properties, assets, rights, operations, condition (financial or
otherwise), or prospects of the Company, or a material adverse effect
on the ability of the Company to consummate the transactions
contemplated hereby (a "Material Adverse Effect").
(c) The outstanding shares of Common Stock of the Company,
including all shares to be sold by the Selling Shareholders, have been
duly authorized and validly issued and are fully paid and
non-assessable; the portion of the Shares to be issued and sold by the
Company have been duly authorized and, when issued and paid for as
contemplated herein, will be validly issued, fully paid and
non-assessable; and no preemptive rights of stockholders exist with
respect to any of the Shares or the issue and sale thereof. Neither the
filing of the Registration Statement nor the offering or sale of the
Shares as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or relating
to the registration of any shares of Common Stock except as set forth
in the Registration Statement.
(d) The information set forth under the caption
"Capitalization" in the Registration Statement is true and correct in
all material respects. All of the Shares conform to the description
thereof contained in the Registration Statement in all material
respects. The form of certificates for the Shares conforms to the
requirements of the corporate law of the jurisdiction of the Company's
incorporation. Except as described in or contemplated by the
Registration Statement, there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights
of any character obligating the Company to issue any shares of its
capital stock or any securities convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of such
stock.
(e) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering
of the Shares nor instituted proceedings for that purpose. The
Registration Statement contains, and the Prospectus and any amendments
or supplements thereto will contain, all statements which are required
to be stated therein by, and will conform to, the requirements of the
Act and the Rules and Regulations in all material respects. The
Registration Statement and any amendment thereto do not contain, and
will not contain, any untrue statement of a material fact and do not
omit, and will not omit, to state any material fact required to be
stated therein or necessary to make the statements
therein not misleading. The Prospectus and any amendments and
supplements thereto do not contain, and will not contain, any untrue
statement of material fact; and do not omit, and will not omit, to
state any material fact
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required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; PROVIDED, HOWEVER, that the Company makes no
representations or warranties as to information contained in or
omitted from the Registration Statement or the Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of any
Underwriter through the Representative, specifically for use in the
preparation thereof.
(f) The financial statements of the Company, together with
related notes and schedules as set forth in the Registration Statement,
present fairly the financial position and the results of operations and
cash flows of the Company, at the indicated dates and for the indicated
periods. Such financial statements and related schedules have been
prepared in accordance with generally accepted principles of
accounting, consistently applied throughout the periods involved,
except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary
financial and statistical data included in the Registration Statement
presents fairly the information shown therein and such data has been
compiled on a basis consistent with the financial statements presented
therein and the books and records of the Company. The pro forma
financial information included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements, have been properly compiled
on the pro forma bases described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(g) Xxxxxx Xxxxxxxx LLP, who have certified certain of the
financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required
by the Act and the Rules and Regulations.
(h) There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened
against the Company before any court, administrative agency,
self-regulatory body or otherwise which if determined adversely to the
Company might result in any material adverse change in the earnings,
business, management, properties, assets, rights, operations, or
condition (financial or otherwise) of the Company or prevent the
consummation of the transactions contemplated hereby, except as set
forth in the Registration Statement.
(i) The Company has good and valid title to all of the
properties and assets reflected in the financial statements (or as
described in the Registration Statement) hereinabove described, subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except
those reflected in such financial statements and the related notes
thereto (or as described in the Registration Statement) or which are
not material in amount. The Company occupies its leased properties
under valid and binding leases conforming in all material respects to
the description thereof set forth in the Registration Statement.
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(j) The Company has filed all Federal, State, local and
foreign income tax returns which have been required to be filed or
timely filed for extension of the filing of such returns and have paid
all taxes indicated by said returns and all assessments received by
them to the extent that such taxes have become due. All tax liabilities
have been adequately provided for in the financial statements of the
Company, and the Company does not know of any actual or proposed
additional material tax assessments relating to any of its historical
periods.
(k) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or
supplemented, there has not been any material adverse change or any
development involving a prospective material adverse change in or
affecting the earnings, business, management, properties, assets,
rights, operations, or condition (financial or otherwise), of the
Company, whether or not occurring in the ordinary course of business,
and there has not been any material transaction entered into or any
material transaction that is probable of being entered into by the
Company other than transactions in the ordinary course of business and
changes and transactions described in the Registration Statement, as it
may be amended or supplemented. The Company has no material contingent
obligations which are not disclosed in the Company's financial
statements which are included in the Registration Statement.
(l) The Company is not or with the giving of notice or lapse
of time or both, will not be, in violation of or in default under its
Charter or By-Laws or under any agreement, lease, contract, indenture
or other instrument or obligation to which it is a party or by which
it, or any of its properties, is bound and which default would have a
Material Adverse Effect. The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result in a
material breach of any of the terms or provisions of, or constitute a
material default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company is a party, or of the
Charter or By-Laws of the Company or any order, rule or regulation
applicable to the Company of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction.
(m) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated (except such additional steps as may
be required by the Commission, the National Association of Securities
Dealers, Inc. (the "NASD") or such additional steps as may be necessary
to qualify the Shares for public offering by the Underwriters under
state securities or Blue Sky laws) has been obtained or made and is in
full force and effect.
(n) The Company holds all material approvals, licenses,
certificates and permits from governmental authorities or
self-regulatory body which are necessary to the conduct
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of its businesses; and, to the Company's knowledge, the Company has not
infringed any patents, patent rights, trade names, trademarks or
copyrights, which infringement is material to the business of the
Company. The Company knows of no material infringement by others of
patents, patent rights, trade names, trademarks or copyrights owned by
or licensed to the Company.
(o) Neither the Company, nor to the Company's knowledge, any
of its affiliates, has taken or may take, directly or indirectly, any
action designed to cause or result in, or which has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate
the sale or resale of the Shares. The Company acknowledges that the
Underwriters may engage in passive market making transactions in the
Shares on The NASDAQ Stock Market in accordance with Regulation M under
the Exchange Act.
(p) The Company is not an "investment company" within the
meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder.
(q) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(r) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of their
respective businesses and the value of their respective properties and
as is customary for companies engaged in similar industries.
(s) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and, to the Company's knowledge,
nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
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(t) No labor dispute with the employees of the Company 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 principal suppliers, customers or vendors,
which, in any case, may reasonably be expected to result in a Material
Adverse Effect.
(u) 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.
(v) Except as disclosed in the Prospectus, there has been no
storage, disposal, generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, hazardous waste or hazardous
substances (collectively, "Hazardous Materials") by the Company (or, to
the knowledge of the Company, any of the Company's predecessors in
interest) at, upon or from any of the property now owned or leased by
the Company in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action which would not have, or could not be reasonably likely to have,
singly or in the aggregate with all such violations and remedial
actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such
property of any Hazardous Materials due to or caused by the Company
(or, to the knowledge of the Company, any of the Company's predecessors
in interest) except for any such spill, discharge, leak, emission,
injection, escape, dumping or release which would not have or would not
be reasonably likely to have, singly or in the aggregate with all other
such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a Material Adverse Effect. The terms "hazardous
wastes," "toxic wastes" and "hazardous substances" shall have the
meanings specified in any applicable local, State or Federal laws or
regulations with respect to environmental protection. The Company is in
compliance with any and all applicable Federal, state and local laws
and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants
or contaminants except where the failure to so comply would not have a
Material Adverse Effect.
(w) Except for Xxxxx Xxxxxxxxx and General Electric Capital
Corporation, to the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's
officers, directors or 5% or greater security holders.
(x) Other than as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right (other than rights which have
been waived or satisfied) to require the Company to file a registration
statement under the Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to
include such securities in the
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securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act.
(y) The Company has not been advised, and has no reason to
believe, that it is not conducting business in compliance with all
applicable laws, rules and regulations, of the jurisdictions in which
it is conducting business including, without limitation, all applicable
local, state and Federal laws and regulations, except where the failure
to so comply would not have a Material Adverse Effect.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each of the Selling Shareholders severally represents and
warrants as follows:
(a) Such Selling Shareholder now has and at the Option Closing
Date (as such dates is hereinafter defined) will have good and valid
title to the Option Shares to be sold by such Selling Shareholder, free
and clear of any liens, encumbrances, equities and claims, and full
right, power and authority to effect the sale and delivery of such
Option Shares; and upon the delivery of, against payment for, such
Option Shares pursuant to this Agreement, the Underwriters will acquire
good and valid title thereto, free and clear of any liens,
encumbrances, equities and claims.
(b) Such Selling Shareholder has full right, power and
authority to execute and deliver this Agreement, the Power of Attorney,
and the Custodian Agreement referred to below and to perform its
obligations under such Agreements. The execution and delivery of this
Agreement and the consummation by such Selling Shareholder of the
transactions herein contemplated and the fulfillment by such Selling
Shareholder of the terms hereof will not require any consent, approval,
authorization, or other order of any court, regulatory body,
administrative agency or other governmental body (except as may be
required under the Act, state securities laws or Blue Sky laws) and
will not result in a breach of any of the terms and provisions of, or
constitute a default under, organizational documents of such Selling
Shareholder, if not an individual, or any indenture, mortgage, deed of
trust or other agreement or instrument to which such Selling
Shareholder is a party, or of any order, rule or regulation applicable
to such Selling Shareholder of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction.
(c) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause or result
in the stabilization or manipulation of the price of the Common Stock
of the Company and, other than as permitted by the Act, the Selling
Shareholder will not distribute any prospectus or other offering
material in connection with the offering of the Shares.
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(d) Without having undertaken to determine independently the
accuracy or completeness of either the representations and warranties
of the Company contained herein or the information contained in the
Registration Statement, such Selling Shareholder has no reason to
believe that the representations and warranties of the Company
contained in Section 1 are not true and correct, is familiar with the
Registration Statement and has no knowledge of any material fact,
condition or information not disclosed in the Registration Statement
which has adversely affected or may adversely affect the business of
the Company; and the sale of the Option Shares by such Selling
Shareholder pursuant hereto is not prompted by any information
concerning the Company which is not set forth in the Registration
Statement or the documents incorporated by reference therein. The
information pertaining to such Selling Shareholder under the caption
"Principal and Selling Stockholders" in the Prospectus is complete and
accurate in all material respects.
3. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set
forth, the Company agrees to sell to the Underwriters and each
Underwriter agrees, severally and not jointly, to purchase, at a price
of $_____ per share, the number of Firm Shares set forth opposite the
name of each Underwriter in SCHEDULE I hereof, subject to adjustments
in accordance with Section 11 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be
in certified or official bank check or other next day funds payable to
the order of an account designated by the Company for the Shares to be
sold by it against delivery of certificates therefor to the
Representative for the several accounts of the Underwriters. Such
payment and delivery are to be made to the order of the Company at the
offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX,
at 10:00 a.m., New York City time, on the third business day after the
date of this Agreement or at such other time and date not later than
five business days thereafter as you and the Company shall agree upon,
such time and date being herein referred to as the "Closing Date." (As
used herein, "business day" means a day on which the New York Stock
Exchange is open for trading and on which banks in New York are open
for business and are not permitted by law or executive order to be
closed.) The certificates for the Firm Shares will be delivered in such
denominations and in such registrations as the Representative requests
in writing not later than the second full business day prior to the
Closing Date, and will be made available for inspection by the
Representative at least one business day prior to the Closing Date.
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions
herein set forth, the Selling Shareholders hereby grant
an option to the several Underwriters to purchase the Option Shares at
the price per share as set forth in the first paragraph of this Section
3. The option granted hereby may be exercised in whole or in part by
giving written notice (i) at any time before the Closing Date and (ii)
from time to time thereafter within 30
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days after the date of this Agreement, by you, as Representative of the
several Underwriters, to the Company, the Attorney-in-Fact and the
Custodian setting forth the number of Option Shares as to which the
several Underwriters are exercising the option, the names and
denominations in which the Option Shares are to be registered and the
time and date at which such certificates are to be delivered. If the
option granted hereby is exercised in part, the respective number of
Option Shares to be sold by each of the Selling Shareholders listed in
SCHEDULE II hereto shall be determined on a pro rata basis in
accordance with the percentages set forth opposite their names on
SCHEDULE II hereto, adjusted by you in such manner as to avoid
fractional shares. The time and date at which certificates for Option
Shares are to be delivered shall be determined by the Representative
but shall not be earlier than three nor later than 10 full business
days after the exercise of such option, nor in any event prior to the
Closing Date (such time and date being herein referred to as the
"Option Closing Date"). If the date of exercise of the option is three
or more days before the Closing Date, the notice of exercise shall set
the Closing Date as the Option Closing Date. The number of Option
Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the
number of Firm Shares being purchased by such Underwriter bears to the
total number of Firm Shares purchased, adjusted by you in such manner
as to avoid fractional shares. The option with respect to the Option
Shares granted hereunder may be exercised only to cover over-allotments
in the sale of the Firm Shares by the Underwriters. You, as
Representative of the several Underwriters, may cancel such option at
any time prior to its expiration by giving written notice of such
cancellation to the Company and the Attorney-in-Fact. To the extent, if
any, that the option is exercised, payment for the Option Shares shall
be made on the Option Closing Date is to be in certified or official
bank check or other next day funds payable to the order of "StockTrans,
Inc., as Custodian" for the shares to be sold by the Selling
Shareholders, in each case against delivery of certificates therefor at
the offices of Xxxxxxx Xxxx & Xxxxxxxxx.
(d) If on the Option Closing Date any Selling Shareholder
fails to sell the Option Shares which such Selling Shareholder has
agreed to sell on such date as set forth in SCHEDULE II hereto, the
Company agrees that it will sell or arrange for the sale of that number
of shares of Common Stock to the Underwriters which represents the
Option Shares which such Selling Shareholder has failed to so sell, as
set forth in SCHEDULE II hereto, or such lesser number as may be
requested by the Representative.
(e) Certificates in negotiable form for the total number of
the Shares to be sold hereunder by the Selling Shareholders have been
placed in custody with StockTrans, Inc. as custodian (the "Custodian")
pursuant to the Custodian Agreement executed by each Selling
Shareholder for delivery of any Option Shares to be sold hereunder by
the Selling Shareholders. Each of the Selling Shareholders specifically
agrees that any Option Shares represented by the certificates held in
custody for the Selling Shareholders under the Custodian Agreement are
subject to the interests of the Underwriters hereunder, that the
arrangements made by the Selling Shareholders for such custody are to
that extent irrevocable, and that the obligations of the Selling
Shareholders hereunder shall not be
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terminable by any act or deed of the Selling Shareholders (or by any
other person, firm or corporation including the Company, the Custodian
or the Underwriters) or by operation of law (including the death of an
individual Selling Shareholder or the dissolution of a corporate
Selling Shareholder) or by the occurrence of any other event or events,
except as set forth in the Custodian Agreement. If any such event
should occur prior to the delivery to the Underwriters of the Option
Shares hereunder, certificates for the Option Shares shall be delivered
by the Custodian in accordance with the terms and conditions of this
Agreement as if such event has not occurred. The Custodian is
authorized to receive and acknowledge receipt of the proceeds of sale
of the Shares held by it against delivery of such Shares.
4. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a
public offering of the Firm Shares as soon as the Representative deems
it advisable to do so. The Firm Shares are to be initially offered to
the public at the initial public offering price set forth in the
Prospectus. The Representative may from time to time thereafter change
the public offering price and other selling terms. To the extent, if at
all, that any Option Shares are purchased pursuant to Section 3 hereof,
the Underwriters will offer them to the public on the foregoing terms.
It is further understood that you will act as the
Representative for the Underwriters in the offering and sale of the
Shares in accordance with a Master Agreement Among Underwriters entered
into by you and the several other Underwriters.
5. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters
that:
(a) The Company will (i) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule
430A of the Rules and Regulations is followed, to prepare and timely
file with the Commission under Rule 424(b) of the Rules and Regulations
a Prospectus in a form approved by the Representative containing
information previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Rules and
Regulations, (ii) not file any amendment to the Registration Statement
or supplement to the Prospectus (or document incorporated by reference
therein) of which the Representative shall not previously have been
advised and furnished with a copy or to which the Representative shall
have reasonably objected in writing or which is not in compliance with
the Rules and Regulations and (iii) file on a timely basis all reports
and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the
Prospectus and prior to the termination of the offering of the Shares
by the Underwriters.
(b) The Company will advise the Representative promptly (i)
when the Registration Statement or any post-effective amendment thereto
shall have become
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effective, (ii) of receipt of any comments from the Commission, (iii)
of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
use of the Prospectus or of the institution of any proceedings for that
purpose. The Company will use its best efforts to prevent the issuance
of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if
issued.
(c) The Company will cooperate with the Representative in
endeavoring to qualify the Shares for sale under the securities laws of
such jurisdictions as the Representative may reasonably have designated
in writing and will make such applications, file such documents, and
furnish such information as may be reasonably required for that
purpose, provided the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction where it is not now so qualified or required to
file such a consent. 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 the Representative may reasonably request for distribution of the
Shares.
(d) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of any Preliminary
Prospectus as the Representative may reasonably request. The Company
will deliver to, or upon the order of, the Representative during the
period when delivery of a Prospectus is required under the Act, as many
copies of the Prospectus in final form, or as thereafter amended or
supplemented, as the Representative may reasonably request. The Company
will deliver to the Representative at or before the Closing Date, four
signed copies of the Registration Statement and all amendments thereto
including all exhibits filed therewith, and will deliver to the
Representative such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that
may reasonably be requested), including documents incorporated by
reference therein, if any, and of all amendments thereto, as the
Representative may reasonably request.
(e) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during
the period in which a prospectus is required by law to be delivered by
an Underwriter or dealer, any event shall occur as a result of which,
in the judgment of the Company or in the reasonable opinion of the
Representative, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading, or, if it is necessary at any time to amend
or supplement the Prospectus to comply with any law, the Company
promptly will either (i) prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to
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the Prospectus or (ii) prepare and file with the Commission an
appropriate filing under the Exchange Act which shall be incorporated
by reference in the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with
the law.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration
Statement, an earnings statement (which need not be audited) in
reasonable detail, covering a period of at least 12 consecutive months
beginning after the effective date of the Registration Statement, which
earnings statement shall satisfy the requirements of Section 11(a) of
the Act and Rule 158 of the Rules and Regulations and will advise you
in writing when such statement has been so made available.
(g) Prior to the Closing Date, the Company will furnish to the
Representative, as soon as they have been prepared by or are available
to the Company, a copy of any unaudited interim financial statements of
the Company for any period subsequent to the period covered by the most
recent financial statements appearing in the Registration Statement and
the Prospectus.
(h) The Company will, for a period of five years from the
Closing Date, deliver to the Representative copies of annual reports
and copies of all other documents, reports and information furnished by
the Company to its stockholders or filed with any securities exchange
pursuant to the requirements of such exchange or with the Commission
pursuant to the Act or the Exchange Act.
(i) Except for issuances of shares of Common Stock pursuant to
(i) option or warrant exercises or the grant of options to employees,
directors, consultants and other eligible recipients under the
Company's option plans, or (ii) acquisitions by the Company in which
shares of its Common Stock are used, in whole or in part, as
consideration, no offering, sale, short sale or other disposition of
any shares of Common Stock of the Company or other securities
convertible into or exchangeable or exercisable for shares of Common
Stock or derivative of Common Stock (or agreement for such) will be
made for a period of 180 days after the date of this Agreement,
directly or indirectly, by the Company otherwise than hereunder or with
the prior written consent of Deutsche Bank Securities Inc., nor shall
the Company file any registration statement with respect to the
proposed sale of its Shares except that the Company may file one or
more registration statements on Form S-4 registering shares of common
stock issued in acquisitions or on Form S-8 relating to shares issued
pursuant to options and employee benefit plans.
(j) The Company will use its best efforts to list, subject to
notice of issuance, the Shares on The NASDAQ National Market.
(k) The Company has used its best efforts to cause each
officer and director of the Company, and certain shareholders of the
Company listed on SCHEDULE III hereto, to furnish to you, on or prior
to the date of this agreement, a letter or letters, in form and
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substance satisfactory to the Underwriters, pursuant to which each such
person shall agree not to offer, sell, sell short or otherwise dispose
of any shares of Common Stock of the Company or other capital stock of
the Company, or any other securities convertible, exchangeable or
exercisable for Common Shares or derivative of Common Shares owned by
such person or request the registration for the offer or sale of any of
the foregoing (or as to which such person has the right to direct the
disposition of) for a period of 180 days after the date of this
Agreement, directly or indirectly, except with the prior written
consent of Deutsche Bank Securities Inc. ("Lockup Agreements").
(l) The Company shall apply the net proceeds of its sale of
the Shares as set forth in the Prospectus and shall file such reports
with the Commission with respect to the sale of the Shares and the
application of the proceeds therefrom as may be required in accordance
with Rule 463 under the Act.
(m) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Shares in such a
manner as would require the Company to register as an investment
company under the Investment Company Act of 1940, as amended (the "1940
Act").
(n) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a
registrar for the Common Stock.
(o) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
6. COVENANTS OF THE SELLING SHAREHOLDERS.
Each of the Selling Shareholders covenants and agrees,
severally and not jointly, with the several Underwriters that:
(a) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company or other capital stock of the
Company or other securities convertible, exchangeable or exercisable
for Common Stock or derivative of Common Stock owned by the Selling
Shareholder or request the registration for the offer or sale of any of
the foregoing (or as to which the Selling Shareholder has the right to
direct the disposition of) will be made for a period of 180 days after
the date of this Agreement, directly or indirectly, by such Selling
Shareholder otherwise than hereunder or with the prior written consent
of Deutsche Bank Securities Inc.
(b) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance
Act of 1983 with respect to the transactions herein contemplated, each
of the Selling Shareholders agrees to deliver to you prior to or at the
Closing Date a properly completed and executed United States Treasury
Department
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Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(c) Such Selling Shareholder will not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the
Company.
7. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Sellers under this Agreement,
including the following: accounting fees of the Company; the fees and
disbursements of counsel for the Company; the cost of printing and
delivering to, or as requested by, the Underwriters copies of the
Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Underwriters' Selling Memorandum, the Underwriters'
Invitation Letter, the Listing Application, the Blue Sky Survey and any
supplements or amendments thereto; the filing fees of the Commission;
the filing fees and expenses (including reasonable legal fees and
disbursements) incident to securing any required review by the NASD of
the terms of the sale of the Shares; the listing fee of the NASDAQ
Stock Market; and the expenses, including the reasonable fees and
disbursements of counsel for the Underwriters, incurred in connection
with the qualification of the Shares under State securities or Blue Sky
laws. To the extent, if at all, that any of the Selling Shareholders
engage legal counsel to represent them in connection with this
offering, the fees and expenses of such counsel shall be borne by such
Selling Shareholder. Underwriting discounts and commissions related to
the sale of shares by the Selling Shareholders shall be borne by the
Selling Shareholders. Any transfer taxes imposed on the sale of the
Shares to the several Underwriters will be paid by the Sellers pro rata
based on the number of shares sold by each of such Sellers. The Sellers
shall not, however, be required to pay for any of the Underwriters'
expenses (other than those related to qualification under NASD
regulation and State securities or Blue Sky laws) except that, if this
Agreement shall not be consummated because the conditions in Section 6
hereof are not satisfied, or by reason of any failure, refusal or
inability on the part of the Company or the Selling Shareholders to
perform any undertaking or satisfy any condition of this Agreement or
to comply with any of the terms hereof on their part to be performed,
unless such failure to satisfy said condition or to comply with said
terms be due to the default or omission of any Underwriter, then the
Company and each of the Selling Shareholders pro rata (based on the
number of Shares to be sold by the Company and such Selling Stockholder
hereunder) shall reimburse the several Underwriters for reasonable
out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and
proposing to market the Shares or in contemplation of performing their
obligations hereunder; PROVIDED, HOWEVER, that the Company and the
Selling Shareholders shall not in any event be liable to any of the
several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares.
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8. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the
Firm Shares on the Closing Date and the Option Shares, if any, on the
Option Closing Date are subject to the accuracy, as of the Closing Date
or the Option Closing Date, as the case may be, of the representations
and warranties of the Company and the Selling Shareholders contained
herein, and to the performance by the Company and the Selling
Shareholders of their covenants and obligations hereunder and to the
following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all filings
required by Rule 424 and Rule 430A of the Rules and Regulations shall
have been made, and any request of the Commission for additional
information (to be included in the Registration Statement or otherwise)
shall have been disclosed to the Representative and complied with to
their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to
time, shall have been issued and no proceedings for that purpose shall
have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission and no injunction, restraining order, or
order of any nature by a Federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance of the Shares.
(b) The Representative shall have received on the Closing Date
or the Option Closing Date, as the case may be, the opinion of Xxxxxx
Xxxxxxxx LLP, counsel for the Company, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters
(and stating that it may be relied upon by counsel to the Underwriters)
to the effect that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, with corporate power and
authority to own or lease its properties and conduct its
business as described in the Registration Statement; and the
Company is duly qualified to transact business in all
jurisdictions in which the conduct of their business requires
such qualification, or in which the failure to qualify would
have a materially adverse effect upon the business of the
Company.
(ii) The Company has authorized and outstanding
capital stock as set forth (under the caption
"Capitalization") in the Prospectus; the authorized shares of
the Company's Common Stock have been duly authorized; the
outstanding shares of the Company's Common Stock, including
the Shares to be sold by the Selling Shareholders, have been
duly authorized and validly issued and are fully paid and
non-assessable; all of the Shares conform to the description
thereof contained in the Prospectus in all material respects;
the certificates for the Shares, assuming they are in the form
filed with the Commission, are in due and proper form; the
shares of Common Stock to be sold by the Company pursuant to
this Agreement have been duly authorized and will
-16-
be validly issued, fully paid and non-assessable when issued
and paid for as contemplated by this Agreement; and to its
knowledge no preemptive rights of stockholders exist with
respect to any of the Shares or the issue or sale thereof.
(iii) Except as described in or contemplated by the
Prospectus, to its knowledge there are no outstanding
securities of the Company convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares
of capital stock of the Company and there are no outstanding
or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital
stock or any securities convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares
of such stock; and except as described in the Prospectus, to
its knowledge no holder of any securities of the Company or
any other person has the right, contractual or otherwise,
which has not been satisfied or effectively waived, to cause
the Company to sell or otherwise issue to them, or to permit
them to underwrite the sale of, any of the Shares or the right
to have any Common Shares or other securities of the Company
included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to require
registration under the Act of any shares of Common Stock or
other securities of the Company.
(iv) They have been advised by the Commission that
the Registration Statement has become effective under the Act
and, to its best knowledge, no stop order proceedings with
respect thereto have been instituted or are pending or
threatened under the Act.
(v) The Registration Statement, the Prospectus and
each amendment or supplement thereto and document incorporated
by reference therein comply as to form in all material
respects with the requirements of the Act or the Exchange Act,
as applicable and the applicable rules and regulations
thereunder (except that such counsel need express no opinion
as to the financial information, including the financial
statements, statistical information and related schedules
therein). The conditions for the use of Form S-1, set forth in
the General Instructions thereto, have been satisfied.
(vi) The statements under the captions
"Business--Properties," "Business--Legal Proceedings," and
"Description of Capital Stock" in the Prospectus, insofar as
such statements constitute a summary of documents referred to
therein or matters of law, fairly summarize in all material
respects the information called for with respect to such
documents and matters.
(vii) Such counsel does not know of any contracts or
documents required to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the
Prospectus which are not so filed or described as required,
and such contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly summarized
in all material respects.
-17-
(viii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the
Company except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and
the consummation of the transactions herein contemplated do
not and will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, the
Charter or bylaws of the Company, or any material agreement or
instrument known to such counsel to which the Company is a
party or by which the Company may be bound.
(x) This Agreement has been duly authorized, executed
and delivered by the Company.
(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body is necessary in
connection with the execution and delivery of this Agreement
and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by
state securities and Blue Sky laws as to which such counsel
need express no opinion) except such as have been obtained or
made, specifying the same.
(xii) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by
this Agreement, and application of the net proceeds therefrom
as described in the Prospectus, required to register as an
investment company under the 1940 Act.
(xiii) This Agreement has been duly authorized,
executed and delivered on behalf of the Selling Shareholders.
(xiv) Each Selling Shareholder has full legal right,
power and authority, and any approval required by law (other
than as required by State securities and Blue Sky laws as to
which such counsel need express no opinion), to sell, assign,
transfer and deliver the portion of the Shares to be sold by
such Selling Shareholder.
(xv) The Custodian Agreement and the Power of
Attorney executed and delivered by each Selling Shareholder is
valid and binding.
(xvi) The Underwriters (assuming that they are bona
fide purchasers within the meaning of the Uniform Commercial
Code) have acquired good and marketable title to the Shares
being sold by each Selling Shareholder on the Closing Date,
and the Option Closing Date, as the case may be, free and
clear of all liens, encumbrances, equities and claims.
-18-
In rendering such opinion Xxxxxx Xxxxxxxx LLP may rely as to
matters of fact upon certificates of officers of the Company, and as to
matters governed by the laws of states other than Delaware or Federal
laws on local counsel in such jurisdictions, and as to the matters set
forth in subparagraphs (xiii), (xiv), (xv) and (xvi) on opinions of
other counsel representing the respective Selling Shareholders,
provided that in each case Xxxxxx Xxxxxxxx LLP shall state that they
believe that they and the Underwriters are justified in relying on such
other counsel. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to
the attention of such counsel which leads them to believe that (i) the
Registration Statement, at the time it became effective under the Act
(but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act) and as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and (ii) the Prospectus, or any supplement thereto, on the
date it was filed pursuant to the Rules and Regulations and as of the
Closing Date or the Option Closing Date, as the case may be, contained
an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that
such counsel need express no view as to financial information,
including financial statements, schedules and statistical information
therein). With respect to such statement, such counsel may state that
their belief is based upon the procedures set forth therein, including
reliance upon certificates of officers of the Company, but is without
independent check and verification.
(c) The Representative shall have received from Xxxxxxx Xxxx &
Xxxxxxxxx, counsel for the Underwriters, an opinion dated the Closing
Date or the Option Closing Date, as the case may be, substantially to
the effect specified in subparagraphs (ii), (iii) and (iv) of Paragraph
(b) of this Section 6, and that the Company is a duly organized and
validly existing corporation under the laws of the State of Delaware
and with respect to any other matters that the Representative may
reasonably require. In rendering such opinion Xxxxxxx Xxxx & Xxxxxxxxx
may rely as to all matters governed other than by the laws of the State
of New York or Federal laws on the opinion of counsel referred to in
Paragraph (b) of this Section 6. In addition to the matters set forth
above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads them to
believe that (i) the Registration Statement, or any amendment thereto,
as of the time it became effective under the Act (but after giving
effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement
of a material fact or omitted to state a material fact, necessary in
order to make the statements, in the light of the circumstances under
which they are made, not
-19-
misleading (except that such counsel need express no view as to
financial information, including the financial statements, schedules
and statistical information therein). With respect to such statement,
such counsel may state that their belief is based upon the procedures
set forth therein, but is without independent check and verification.
(d) The Representative shall have received at or prior to the
Closing Date from Xxxxxxx Xxxx & Xxxxxxxxx a memorandum or summary, in
form and substance satisfactory to the Representative, with respect to
the qualification for offering and sale by the Underwriters of the
Shares under the State securities or Blue Sky laws of such
jurisdictions as the Representative may reasonably have designated to
the Company.
(e) You shall have received, on each of the dates hereof, the
Closing Date and the Option Closing Date, as the case may be, a letter
dated the date hereof, the Closing Date or the Option Closing Date, as
the case may be, in form and substance satisfactory to you, of Xxxxxx
Xxxxxxxx LLP, confirming that they are independent public accountants
within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating that in their opinion the financial
statements and schedules examined by them and included in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published
Rules and Regulations; and containing such other statements and
information as is ordinarily included in accountants' "comfort letters"
to Underwriters with respect to the financial statements and certain
financial and statistical information contained in the Registration
Statement and Prospectus.
(f) The Representative shall have received on the Closing Date
or the Option Closing Date, as the case may be, a certificate or
certificates of the Chief Executive Officer and the Chief Financial
Officer of the Company to the effect that, as of the Closing Date or
the Option Closing Date, as the case may be, each of them severally
represents as follows:
(i) The Registration Statement has become effective
under the Act and no stop order suspending the effectiveness
of the Registration Statement has been issued, and no
proceedings for such purpose have been taken or are, to his
knowledge, contemplated by the Commission;
(ii) The representations and warranties of the
Company contained in Section 1 hereof are true and correct as
of the Closing Date or the Option Closing Date, as the case
may be;
(iii) All filings required to have been made pursuant
to Rules 424 or 430A under the Act have been made;
(iv) He or she has carefully examined the
Registration Statement and the Prospectus and, in his or her
opinion, as of the effective date of the Registration
Statement, the statements contained in the Registration
Statement
-20-
were true and correct, and such Registration Statement and
Prospectus did not omit to state a material fact required to
be stated therein or necessary in order to make the statements
therein not misleading, and since the effective date of the
Registration Statement, no event has occurred which should
have been set forth in a supplement to or an amendment of the
Prospectus which has not been so set forth in such supplement
or amendment; and
(v) Since the respective dates as of which
information is given in the Registration Statement and
Prospectus, there has not been any material adverse change or
any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise,
of the Company or the earnings, business, management,
properties, assets, rights, operations, condition (financial
or otherwise) or prospects of the Company, whether or not
arising in the ordinary course of business.
(g) The Company shall have furnished to the Representative
such further certificates and documents confirming the representations
and warranties, covenants and conditions contained herein and related
matters as the Representative may reasonably have requested.
(h) The Firm Shares and Option Shares, if any, have been
approved for designation upon notice of issuance on the NASDAQ National
Market.
(i) The Lockup Agreements described in Section 5 are in full
force and effect.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if
they are in all material respects reasonably satisfactory to the
Representative and to counsel for the Underwriters.
If any of the conditions hereinabove provided for in this
Section 8 shall not have been fulfilled when and as required by this
Agreement to be fulfilled, the obligations of the Underwriters
hereunder may be terminated by the Representative by notifying the
Company and the Selling Shareholders of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date,
as the case may be.
In such event, the Company, the Selling Shareholders and the
Underwriters shall not be under any obligation to each other (except to
the extent provided in Sections 7 and 10 hereof).
9. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to sell and deliver the portion
of the Shares required to be delivered as and when specified in this
Agreement are subject to the conditions that at the Closing Date or the
Option Closing Date, as the case may be, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
in effect or proceedings therefor initiated or threatened.
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10. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities to which such Underwriter or any such controlling person
may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto, or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of
the circumstances under which they were made; provided, however, that
the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged
omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with written information furnished to
the Company by or through the Representative specifically for use in
the preparation thereof. This indemnity obligation will be in addition
to any liability which the Company may otherwise have.
The Company agrees to reimburse each Underwriter and each such
controlling person upon demand for any legal or other out-of-pocket
expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss,
claim, damage or liability, action or proceeding or in responding to a
subpoena or governmental inquiry related to the offering of the Shares,
whether or not such Underwriter or controlling person is a party to any
action or proceeding. In the event that it is finally judicially
determined that the Underwriters were not entitled to receive payments
for legal and other expenses pursuant to this subparagraph, the
Underwriters will promptly return all sums that had been advanced
pursuant hereto.
(b) In the event that you exercise your option to purchase
Option Shares, the Selling Shareholders agree to indemnify the
Underwriters and each person, if any, who controls any Underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities to which such Underwriter or controlling person may become
subject under the Act or otherwise as a result of misrepresentations or
untrue warranties of the Selling Shareholders contained in Section 2
herein. In no event, however, shall the liability of any Selling
Shareholder for indemnification under this Section 10(b) exceed the
proceeds received by such Selling Shareholder from the Underwriters in
the offering. This indemnity obligation will be in addition to any
liability which the Selling Shareholders may otherwise have.
(c) Each Underwriter severally and not jointly will indemnify
and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement, the Selling
Shareholders and each person, if any, who controls the Company
-22-
or the Selling Shareholders within the meaning of the Act, against any
losses, claims, damages or liabilities to which the Company or any such
director, officer, Selling Shareholder or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances under which they were made; and will reimburse any
legal or other expenses reasonably incurred by the Company or any such
director, officer, Selling Shareholder or controlling person in
connection with investigating or defending any such loss, claim,
damage, liability, action or proceeding; provided, however, that each
Underwriter will be liable in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission has been made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or such amendment
or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representative
specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which such Underwriter
may otherwise have.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to this Section 10, such person
(the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 10(a), (b) or (c) shall be
available to any party who shall fail to give notice as provided in
this Section 10(d) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and
was materially prejudiced by the failure to give such notice, but the
failure to give such notice shall not relieve the 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 the provisions
of Section 10(a), (b) or (c). In case any such proceeding shall be
brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to
retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred (or within 30
days of presentation) the fees and expenses of the counsel retained by
the indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the
indemnified party and representation
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of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them or (iii) the
indemnifying party shall have failed to assume the defense and employ
counsel within a reasonable period of time after notice of commencement
of the action. It is understood that the indemnifying party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more
than one separate firm for all such indemnified parties. Such firm
shall be designated in writing by you in the case of parties
indemnified pursuant to Section 10(a) and by the Company and the
Selling Shareholders in the case of parties indemnified pursuant to
Section 10(c). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not,
without the prior written consent of the indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding of which indemnification may be
sought hereunder (whether or not any indemnified party is an actual or
potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action or proceeding.
(e) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party
under Section 10(a), (b) or (c) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of
such losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholders
on the one hand and the Underwriters on the other from the offering of
the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law then each
indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the
Company and the Selling Shareholders on the one hand and the
Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities, (or actions or proceedings in respect thereof), as well as
any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Shareholders on the one hand
and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling
Shareholders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on
the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company or the Selling Shareholders on the one
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hand or the Underwriters on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contributions pursuant
to this Section 10(e) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 10(e). The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 10(e) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection 10(e), (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation , and (iii) no Selling Shareholder
shall be required to contribute any amount in excess of the lesser of
(A) that proportion of the total of such losses, claims, damages or
liabilities indemnified or contributed against that equals the
proportion of the Shares sold by such Selling Shareholder to the total
Shares sold in the offering, or (B) the proceeds received by such
Selling Shareholder from the Underwriters in the offering. The
Underwriters' obligations in this Section 10(e) to contribute are
several in proportion to their respective underwriting obligations and
not joint.
(f) In any proceeding relating to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any supplement or
amendment thereto, each party against whom contribution may be sought
under this Section 10 hereby consents to the jurisdiction of any court
having jurisdiction over any other contributing party, agrees that
process issuing from such court may be served upon him or it by any
other contributing party and consents to the service of such process
and agrees that any other contributing party may join him or it as an
additional defendant in any such proceeding in which such other
contributing party is a party.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or
contribution under this Section 10 shall be paid by the indemnifying
party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred. The indemnity and contribution
agreements of the Company, the Selling Shareholders and the
Underwriters contained in this Section 10 and the representations and
warranties of the Company and the Selling Shareholders set forth in
this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter, the Company, its
directors or officers or any persons controlling the Company (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter, or to
the
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Company, its directors or officers, or any person controlling the
Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 10.
11. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case
may be, any Underwriter shall fail to purchase and pay for the portion
of the Shares which such Underwriter has agreed to purchase and pay for
on such date (otherwise than by reason of any default on the part of
the Company or a Selling Shareholder), you, as Representative of the
Underwriters, shall use your reasonable efforts to procure within 36
hours thereafter one or more of the other Underwriters, or any others,
to purchase from the Company and the Selling Shareholders such amounts
as may be agreed upon and upon the terms set forth herein, the Firm
Shares or Option Shares, as the case may be, which the defaulting
Underwriter or Underwriters failed to purchase. If during such 36 hours
you, as such Representative, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option
Shares, as the case may be, agreed to be purchased by the defaulting
Underwriter or Underwriters, then (a) if the aggregate number of shares
with respect to which such default shall occur does not exceed 10% of
the Firm Shares or Option Shares, as the case may be, covered hereby,
the other Underwriters shall be obligated, severally, in proportion to
the respective numbers of Firm Shares or Option Shares, as the case may
be, which they are obligated to purchase hereunder, to purchase the
Firm Shares or Option Shares, as the case may be, which such defaulting
Underwriter or Underwriters failed to purchase, or (b) if the aggregate
number of shares of Firm Shares or Option Shares, as the case may be,
with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the
Company and the Selling Shareholders or you as the Representative of
the Underwriters will have the right, by written notice given within
the next 36-hour period to the parties to this Agreement, to terminate
this Agreement without liability on the part of the non-defaulting
Underwriters, the Company or of the Selling Shareholders except to the
extent provided in Section 10 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section 11, the
Closing Date or Option Closing Date, as the case may be, may be
postponed for such period, not exceeding seven days, as you, as
Representative, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents
or arrangements may be effected. The term "Underwriter" includes any
person substituted for a defaulting Underwriter. Any action taken under
this Section 11 shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this
Agreement.
12. NOTICES.
All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to
Deutsche Bank Securities Inc., Xxx Xxxxx Xxxxxx,
-00-
Xxxxxxxxx, Xxxxxxxx 00000, Attention: General Counsel; with a copy to
Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx X. Xxxxx, Xx.; if to the Company, to Bluestone
Software, Inc. 0000 Xxxxxx Xxxx, Xxxxx Xxxxxx, Xxx Xxxxxx 00000,
Attention: Chief Financial Officer; with a copy to Xxxxxx Xxxxxxxx LLP,
0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxxxx 00000, Attention:
Xxxxxxx X. Xxxxx, Xx.
13. TERMINATION.
This Agreement may be terminated by you by notice to the
Sellers as follows:
(a) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
any material adverse change or any development involving a prospective
material adverse change in or affecting the earnings, business,
management, properties, assets, rights, operations, or condition
(financial or otherwise) of the Company, whether or not arising in the
ordinary course of business, (ii) any outbreak or escalation of
hostilities or declaration of war or national emergency or other
national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make
it impracticable to market the Shares or to enforce contracts for the
sale of the Shares, or (iii) suspension of trading in securities
generally on the New York Stock Exchange or the American Stock Exchange
or limitation on prices (other than limitations on hours or numbers of
days of trading) for securities on either such Exchange, (iv) the
enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects or may
materially and adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by United States or
New York State authorities, (vi) any downgrading in the rating of the
Company's debt securities by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the
Exchange Act); (vii) the suspension of trading of the Company's common
stock by the Commission on the NASDAQ Stock Market; or (viii) the
taking of any action by any governmental body or agency in respect of
its monetary or fiscal affairs which in your reasonable opinion has a
material adverse effect on the securities markets in the United States;
or
(b) as provided in Sections 8 and 11 of this Agreement.
14. SUCCESSORS.
This Agreement has been and is made solely for the benefit of
the Underwriters, the Company and the Selling Shareholders and their
respective successors, executors, administrators, heirs and assigns,
and the officers, directors and controlling persons referred to herein,
and no other person will have any right or obligation hereunder. No
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purchaser of any of the Shares from any Underwriter shall be deemed a
successor or assign merely because of such purchase.
15. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that
the only information furnished or to be furnished by any Underwriter to
the Company for inclusion in any Prospectus or the Registration
Statement consists of the information set forth in the last paragraph
on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(d) of Regulation S-K under
the Act and the information under the caption "Underwriting" in the
Prospectus.
16. MISCELLANEOUS.
(a) 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 (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or
controlling person thereof, or by or on behalf of the Company or its
directors or officers or the Selling Shareholders and (iii) delivery of
and payment for the Shares under this Agreement.
(b) 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.
(c) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
-28-
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Shareholder represents by so doing that he has been duly appointed
as Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-Fact to take
such action.
Very truly yours,
BLUESTONE SOFTWARE, INC.
By:
------------------------------------
Xxxxx Xxxxxx
Xxxxx Xxxxxx
General Electric Capital Corporation
P/A Fund, L.P.
APA Excelsior IV, L.P.
APA Excelsior IV/Offshore, L.P.
Patricof Private Investment Club, L.P.
By:
------------------------------------
Attorney-in-Fact
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
DEUTSCHE BANK SECURITIES INC.
As Representative of the several
Underwriters listed on Schedule I
By: DEUTSCHE BANK SECURITIES INC.
By:
----------------------------------
Authorized Officer
-29-
SCHEDULE II
SCHEDULE OF OPTION SHARES
Number of Maximum Number Percentage of
Name of Seller of Option Shares Total Option Shares
Xxx Xxxxxx 152,253 25.38%
General Electric Capital
Corporation 158,000 26.33%
P/A Fund, L.P. 66,860 11.14%
APA Excelsior IV, L.P. 127,875 21.31%
APA Excelsior IV/Offshore,
L.P. 22,566 3.76%
Patricof Private Investment
Club, L.P. 2,446 0.41%
P. Xxxxx Xxxxxx 70,000 11.67%
------- ------
Total 600,000 100%
------- ------
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