1
Exhibit 1.1
NAVIDEC, INC.
2,500,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
____________, 1999
First Security Xxx Xxxxxx
Advest, Inc.
As Representatives of the Several
Underwriters named in Schedule I
c/o First Security Xxx Xxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Ladies and Gentlemen:
Navidec, Inc., a Colorado corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters named in Schedule I hereto (the
"UNDERWRITERS") 2,500,000 shares (the "FIRM SHARES") of the Company's Common
Stock, no par value (the "COMMON STOCK"). In addition, the Company and the
stockholders listed on Schedule II hereto (the "SELLING STOCKHOLDERS") propose
to grant to the Underwriters an option to purchase up to an additional 375,000
shares of the Common Stock on the terms and for the purposes set forth in
Section 2(b) (the "OPTION SHARES"). The Firm Shares and any Option Shares
purchased pursuant to this Agreement are referred to below as the "SHARES."
First Security Xxx Xxxxxx and Advest, Inc. are acting as Representatives of the
several Underwriters and in that capacity is referred to in this Agreement as
the "REPRESENTATIVES".
The Company hereby confirms its agreements with the several
Underwriters as set forth below.
1
2
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING STOCKHOLDERS.
(A) The Company hereby represents and warrants to, and agrees with each
Underwriter, as follows:
(I) A registration statement (Registration No. 333-______) on
Form S-3 under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
including such amendments to such Registration Statement as may have been
required to the date of this Agreement, relating to the Shares has been prepared
by the Company under and in conformity with the provisions of the Securities
Act, the rules and regulations (the "RULES AND REGULATIONS") of the Securities
and Exchange Commission (the "Commission") thereunder and has been filed with
the Commission. After the execution of this Agreement, the Company will file
with the Commission either (i) if such Registration Statement, as it may have
been amended, has been declared by the Commission to be effective under the
Securities Act, either (A) if the Company relies on Rule 434 of the Rules and
Regulations, a Term Sheet (defined below) relating to the Shares, that
identifies the Preliminary Prospectus (defined below) that it supplements and
contains such information as is required or permitted by Rules 434, 430A and
424(b) of the Rules and Regulations or (B) if the Company does not rely on Rule
434, a prospectus in the form most recently included in an amendment to such
Registration Statement (or, if no such amendment has been filed, in such
Registration Statement), with such changes or insertions as are required by Rule
430A of the Rules and Regulations or permitted by Rule 424(b) of the Rules and
Regulations, and in the case of either (i)(A) or (i)(B) of this sentence, as has
been provided to and approved by the Representatives prior to the execution of
this Agreement, or (ii) if such Registration Statement, as it may have been
amended, has not been declared by the Commission to be effective pursuant to
Section 8 of the Securities Act, an amendment to such Registration Statement,
including a form of prospectus, a copy of which amendment has been furnished to
and approved by the Representatives prior to the execution of this Agreement. As
used in this Agreement, the term "REGISTRATION STATEMENT" means such
Registration Statement, including all financial schedules and exhibits thereto
and including any information omitted therefrom pursuant to Rule 430A of the
Rules and Regulations and included in the Prospectus (defined below), in the
form in which it became effective from and after the time it became effective,
and any Registration Statement filed pursuant to Rule 462(b) of the Rules and
Regulations with respect to the Common Stock (a "RULE 462(B) REGISTRATION
STATEMENT"), and, in the event of any amendment thereto after the effective date
of such Registration Statement (the "EFFECTIVE DATE"), shall also mean (from and
after the effectiveness of such amendment) such Registration Statement as so
amended (including any 462(b) Registration Statement); the term "PRELIMINARY
PROSPECTUS" means each prospectus subject to completion filed with such
Registration Statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); the term
"PROSPECTUS" means:
(A) if the Company relies on Rule 434, the Term Sheet
relating to the Shares that is first filed pursuant to Rule 424(b)(7), together
with the Preliminary Prospectus identified therein that such Term Sheet
supplements;
2
3
(B) if the Company does not rely on Rule 434, the
prospectus first filed with the Commission
pursuant to Rule 424(b); or
(C) if the Company does not rely on Rule 434 and if
no prospectus is required to be filed pursuant to Rule 424(b), the prospectus
included in the Registration Statement;
provided, that, if any revised prospectus that is provided to the Underwriters
by the Company for "use in connection with the offering of the Shares" differs
from the prospectus on file with the Commission at the time the Registration
Statement became or becomes, as the case may be, effective, whether or not the
revised prospectus is required to be filed with the Commission pursuant to Rule
424(b)(3) of the Rules and Regulations, the term "Prospectus" shall mean such
revised prospectus from and after the time it is first provided to the
Underwriters for such use. The term "Term Sheet" as used in this Agreement means
any term sheet that satisfies the requirements of Rule 434. Any reference in
this Agreement to the "date" of a prospectus that includes a Term Sheet means
the date of such Term Sheet.
3
4
(II) No order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Preliminary Prospectus or
the Prospectus has been issued and no proceedings for that purpose are pending
or, to the best knowledge of the Company, threatened or contemplated by the
Commission; no order suspending the sale of the Shares in any jurisdiction has
been issued and no proceedings for that purpose are pending or, to the best
knowledge of the Company, threatened or contemplated, and any request of the
Commission for additional information (to be included in the Registration
Statement, any Preliminary Prospectus or the Prospectus or otherwise) has been
complied with.
(III) When the Preliminary Prospectus was filed with the
Commission it (i) contained all statements required to be contained therein and
complied in all respects with the requirements of the Securities Act, the Rules
and Regulations, the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and the rules and regulations of the Commission thereunder (the "EXCHANGE
ACT RULES AND REGULATIONS") and (ii) did not include 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. When the Registration Statement or any amendment thereto
was or is declared effective, it (i) contained or will contain all statements
required to be contained therein and complied or will comply in all respects
with the requirements of the Securities Act, the Rules and Regulations, the
Exchange Act and the Exchange Act Rules and Regulations and (ii) did not or will
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading. When the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or such amendment or
supplement is not required to be so filed, when the Registration Statement or
the amendment thereto containing such amendment or supplement to the Prospectus
was or is declared effective) and at all times subsequent thereto up to and
including the Closing Date (defined below) and any date on which Option Shares
are to be purchased, the Prospectus, as amended or supplemented at any such
time, (i) contained or will contain all statements required to be contained
therein and complied or will comply in all respects with the requirements of the
Securities Act, the Rules and Regulations, the Exchange Act and the Exchange Act
Rules and Regulations, and (ii) did not or will not include 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. The foregoing provisions of this paragraph (c) do not
apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(IV) The subsidiaries (each, a "SUBSIDIARY" and collectively
the "SUBSIDIARIES") of the Company and the jurisdiction of incorporation of each
Subsidiary are listed on Exhibit A hereto. As used in this Agreement, the word
"subsidiary" means any corporation, partnership, joint venture, limited
liability company or other entity of which the Company directly or indirectly
owns 50 percent or more of the equity or that the Company directly or indirectly
controls. The Company has no subsidiaries other than the Subsidiaries listed on
Exhibit A to this Agreement, and except as set forth on such Exhibit, the
Company owns 100% of the issued and outstanding stock of each of the
Subsidiaries. Exhibit B hereto lists each entity in which the
4
5
Company or any Subsidiary holds an equity interest, whether as a shareholder,
partner, member, joint venturer or otherwise. Except as set forth on Exhibit B,
neither the Company nor any Subsidiary has any equity interest in any person.
(V) 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 power (corporate and
other) and authority to own or lease its properties and conduct its business as
described in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and as
currently being conducted and proposed to be conducted by it 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, condition (financial or otherwise), results of operations
or prospects of the Company or such Subsidiary). Each of the Company and its
Subsidiaries is in possession of and operating in compliance with all
authorizations, licenses, certificates, consents, orders and permits from
federal, state, local, foreign and other governmental or regulatory authorities
that are material to the conduct of its business, all of which are valid and in
full force and effect.
(VI) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there has not been
any material loss or interference with the business of the Company or any
Subsidiary from fire, explosion, flood, earthquake or other calamity, whether or
not covered by insurance, or from any court or governmental action, order or
decree, or any changes in the capital stock or long-term debt of the Company or
any Subsidiary, or any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company or any Subsidiary, or any material
change, or a development known to the Company that might cause or result in a
material change, in or affecting the business, properties, condition (financial
or otherwise), results of operation or prospects of the Company or any
Subsidiary, whether or not arising from transactions in the ordinary course of
business, in each case other than as is set forth in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and since such dates, except in the ordinary course of
business, neither the Company nor any Subsidiary has entered into any material
transaction not described in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus).
(VII) There is no agreement, contract, license, lease or other
document required to be described in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. All contracts described
in the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), if any, are in full force and effect on the date
hereof, and none of the Company, its Subsidiaries or any other party thereto is
in material breach of or default under any such contract.
(VIII) The authorized and outstanding capital stock of the
Company is set forth in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and the description of the
Common Stock and of the Shares therein conforms with
5
6
and accurately describes the rights set forth in the instruments defining the
same. The Shares have been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and validly
issued, fully paid and nonassessable, and the issuance of the Shares is not
subject to any preemptive or similar rights.
(IX) All of the outstanding shares of Common Stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all applicable federal and
state securities laws and were not issued in violation of and are not subject to
any preemptive rights or other rights to subscribe for or purchase securities of
the Company. The description of the Company's stock option, stock bonus and
other stock plans or arrangements and the options or other rights granted or
exercised thereunder or otherwise set forth in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights. Other than pursuant to this
Agreement and the options, warrants and rights to purchase or acquire the Common
Stock described in the Prospectus, there are no options, warrants or other
rights outstanding to subscribe for or purchase or acquire any shares of the
Company's capital stock. There are no preemptive rights applicable to any shares
of capital stock of the Company.
(X) All of the stock in the Subsidiaries owned by the Company
as set forth on Exhibit A is owned by the Company free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest of any type,
kind or nature. All of the outstanding stock of each of the Subsidiaries has
been duly authorized and validly issued and is fully paid and nonassessable, has
been issued in compliance with all applicable laws, including securities laws,
and was not issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities of such Subsidiary. There are no
options, warrants or other rights outstanding to subscribe for or purchase any
shares of the capital stock or registered capital of any Subsidiary and no
Subsidiary is subject to any obligation, commitment, plan, arrangement or court
or administrative order with respect to same. There are no preemptive rights
applicable to any shares of capital stock or registered capital of the
Subsidiaries.
(XI) This Agreement has been duly authorized, executed and
delivered by, and constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnification hereunder may be limited by applicable federal or state
securities laws. Other than the registration rights set forth in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) there are no rights for or relating to the registration of any
capital stock of the Company. The filing of the Registration Statement does not
give rise to any rights, other than those which have been waived in writing, for
or relating to the registration of any capital stock of the Company.
(XII) Neither the Company nor any of its Subsidiaries is, or
with the giving of notice or lapse of time or both would be, in violation of or
in default under, nor will the execution or delivery of this Agreement or the
completion of the transactions contemplated by this Agreement result in a
violation of or constitute a breach of or a default (including without
limitation with the giving of notice, the passage of time or otherwise) under,
the articles of incorporation, bylaws or other governing documents of the
Company or such Subsidiary or any obligation, agreement, covenant or condition
contained in any bond, debenture, note or other
6
7
evidence of indebtedness or in any contract, indenture, mortgage, deed of trust,
loan agreement, lease, license, joint venture or other agreement or instrument
to which the Company or any Subsidiary is a party or by which any properties of
the Company or any Subsidiary may be bound or affected. The Company has not
incurred any liability, direct or indirect, for any finders' or similar fees
payable on behalf of the Company or the Underwriters in connection with the
transactions contemplated by this Agreement. The performance by the Company of
its obligations under this Agreement will not violate any law, ordinance, rule
or regulation, or any order, writ, injunction, judgment or decree of any
governmental agency or body or of any court having jurisdiction over the Company
or any Subsidiary or any properties of the Company or any Subsidiary, or result
in the creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company or any Subsidiary. Except for permits and
similar authorizations required under the Securities Act, the Exchange Act or
under other securities or Blue Sky laws of certain jurisdictions and for
permits, authorizations, consents and approvals that have been obtained, no
consent, permit, approval, authorization or order of any court, governmental
agency or body, financial institution or any other person is required in
connection with the completion by the Company of the transactions contemplated
by this Agreement.
(XIII) Each of the Company and its Subsidiaries owns, or has
valid rights to use, all items of real and personal property which are material
to the business of the Company or such Subsidiary (including, without
limitation, all real property on which the Company's facilities are located)
and, except as described in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus),
free and clear of all liens, encumbrances and claims that might materially
interfere with the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company or such Subsidiary.
(XIV) The Company or the appropriate Subsidiary, as the case
may be, owns or possesses adequate rights to use all material patents, patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names and copyrights (collectively, the "Intellectual Property") described or
referred to in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), as
owned by or used by the Company or such Subsidiary, or which are necessary for
the conduct of the business of the Company or such Subsidiary as described in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus); and neither the Company nor
any Subsidiary has received any notice of infringement of or conflict with
asserted rights of others with respect to any Intellectual Property which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material effect on the business, properties, condition
(financial or otherwise), results of operations or prospects of the Company or
any Subsidiary. Except as described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), neither the Company nor any Subsidiary is a party to
any material options, licenses, or agreements of any kind that grant rights to
any other party to manufacture, license, produce, assemble, market or sell the
products of the Company, nor is the Company or any Subsidiary bound by or a
party to any options, licenses, or agreements of any kind with respect to any
Intellectual Property of any other party material to the business of the
Company. No employee of the Company or of any Subsidiary is obligated under any
contract (including licenses, covenants, or commitments of any nature) or other
agreement known to the Company, or subject
7
8
to any judgment, decree, or order of any court or administrative agency known to
the Company, that would interfere with the use of such employee's best efforts
to promote the interests of the Company or such Subsidiary or that would
conflict with the business of the Company or such Subsidiary as presently
conducted or proposed to be conducted.
(XV) There is no litigation or governmental proceeding to
which the Company or any Subsidiary is a party or to which any property of the
Company or any Subsidiary is subject which is pending or, to the best knowledge
of the Company, is threatened or contemplated against the Company that is
required to be disclosed in the Registration Statement or Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) or that
might prevent consummation of the transactions contemplated by this Agreement
and is not so disclosed.
(XVI) None of the Company or any Subsidiary is in violation
of, or has received any notice or claim from any governmental agency or third
party that any of them is in violation of, any law, ordinance, rule or
regulation, or any order, writ, injunction, judgment or decree of any agency or
body or of any court, to which it or its properties (whether owned or leased)
may be subject, which violation might have a material effect on the business,
properties, condition (financial or otherwise), results of operations or
prospects of the Company or any Subsidiary.
(XVII) The Company has not taken and shall not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to cause or result in, under
the Exchange Act, the Exchange Act Rules and Regulations or otherwise, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares. No bid or purchase by the Company
and, to the best knowledge of the Company, no bid or purchase that could be
attributed to the Company (as a result of bids or purchases by an "affiliated
purchaser" within the meaning of Regulation M under the Exchange Act) for or of
the Shares, the Common Stock, any securities of the same class or series as the
Common Stock or any securities convertible into or exchangeable for or that
represent any right to acquire the Common Stock is now pending or in progress or
will have commenced at any time prior to the completion of the distribution of
the Shares that is or will be in violation of Regulation M under the Exchange
Act.
(XVIII) Both Xxxx & Associates LLP and Xxxxxx Xxxxxxxx LLP,
whose reports appear in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus),
are, and during the periods covered by their reports in the Registration
Statement were, independent accountants as required by the Securities Act and
the Rules and Regulations. The financial statements and schedules included in
the Registration Statement, each Preliminary Prospectus and the Prospectus
present fairly (or, if the Prospectus has not been filed with the Commission, as
to the Prospectus, will present fairly) the financial condition, results of
operations, cash flow and changes in shareholders' equity and the financial
statements and schedules included in the Registration Statement present fairly
the information required to be stated therein. Such financial statements and
schedules have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods presented. The
selected and summary financial and statistical data included in the Registration
Statement and the Prospectus present fairly (or, if the Prospectus has
8
9
not been filed with the Commission, as to the Prospectus, will present fairly)
the information shown therein and have been compiled on a basis consistent with
the audited financial statements presented therein. No other financial
statements or schedules are required to be included in the Registration
Statement. Except as set forth in such financial statements or as set forth in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), the Company has no material debts, liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature
whatsoever, including, without limitation, any tax liabilities or deferred tax
liabilities or any other debts, liabilities or obligations.
(XIX) The books, records and accounts of the Company and each
Subsidiary accurately and fairly reflect, in reasonable detail, the transactions
in and dispositions of the assets of the Company and such Subsidiary. The
systems of internal accounting controls maintained by the Company and each
Subsidiary are 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 (x) to permit
preparation of financial statements in conformity with generally accepted
accounting principles and (y) 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 the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(XX) For a period of 180 days following the date of the
Prospectus, the Company shall not offer, sell, contract to sell or otherwise
dispose of, or announce the offer of, any Common Stock, warrants, options or
other securities exchangeable for or convertible into Common Stock without the
prior written consent of the Representatives; except that the Company during
this period (A) may issue to employees, officers, directors and consultants of
the Company, options to purchase Common Stock; provided, that, such options
shall not be exercisable during this 180 day period and (B) may issue shares of
Common Stock upon the exercise of previously outstanding options, warrants or
rights.
(XXI) No labor disturbance by the employees of the Company or
any Subsidiary exists, is imminent or, to the best knowledge of the Company, is
contemplated or threatened; and the Company is not aware of an existing,
imminent or threatened labor disturbance by the employees of any principal
suppliers or contractors that might be expected to result in any material change
in the business, properties, condition (financial or otherwise), results of
operations or prospects of the Company. Except as disclosed in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), no collective bargaining agreement exists
with any employees of the Company or any Subsidiary and, to the best knowledge
of the Company, no such agreement is imminent. Except as disclosed in the
Registration Statement, no officer, employee or consultant of the Company or any
Subsidiary whose continued services are material to the conduct of the business
of the Company or any Subsidiary has any plans to terminate employment with the
Company or any Subsidiary nor does the Company or any Subsidiary have a present
intention to terminate the employment or contract of any such person.
(XXII) Each of the Company and its Subsidiaries has filed all
federal, state, local and foreign tax returns that are required to be filed or
has requested extension thereof and
9
10
has paid all taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges to the extent that the same have become due
and payable. No tax assessment or deficiency has been made or proposed against
the Company or any of its Subsidiaries nor has the Company or any Subsidiary
received any notice of any proposed tax assessment or deficiency.
(XXIII) Except as set forth in the Prospectus (or if the
Prospectus is not in existence, the most recent Preliminary Prospectus) there
are no outstanding loans, advances or guaranties of indebtedness by the Company
to or for the benefit of any of (A) its "affiliates", as such term is defined in
the Rules and Regulations, (B) any of the officers or directors of any of its
Subsidiaries or (C) any of the members of the families of any of them.
(XXIV) Neither the Company nor any Subsidiary has, directly or
indirectly, at any time: (A) made any contributions to any candidate for
political office in violation of law; (B) made any payment in violation of law
to any local, state, federal or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties; or (C) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended.
(XXV) Neither the Company nor any Subsidiary has any material
liability, absolute or contingent, relating to: (A) public health or safety; (B)
worker health or safety; (C) product defect or warranty; or (iv) except as may
be disclosed in the Registration Statement and Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) pollution, damage
to or protection of the environment, including, without limitation, relating to
damage to natural resources, emissions, discharges, releases or threatened
releases of hazardous materials into the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or otherwise relating to the manufacture, processing, use, treatment,
storage, generation, disposal, transport or handling of any hazardous materials,
which could have a material adverse effect on the general affairs, management
and financial position of the Company. As used herein, "HAZARDOUS MATERIAL"
includes chemical substances, or wastes, pollutants, contaminants, hazardous,
radioactive or toxic substances, constituents, materials or wastes, whether
solid, gaseous or liquid in nature.
(XXVI) The Company has not distributed and will not distribute
prior to the Closing Date or prior to any date on which the Option Shares are to
be purchased, as the case may be, any prospectus or other offering material in
connection with the offering and sale of the Shares other than the Prospectus,
the Registration Statement and any other material which may be permitted by the
Securities Act and the Rules and Regulations.
(XXVII) The Company has filed and will file in a timely manner
all reports and other documents required to be filed with the Commission under
the Exchange Act and with the National Association of Securities Dealers, Inc.
(the "NASD"), and each such report or other document contained, at the time it
was filed, such information as was required to be included in such report or
other document and all such information was correct and complete in all material
respects; except as disclosed in the Registration Statement, no event has
occurred or is likely to occur that required or would require an amendment to
any report or document referred to in this section that has not been filed or
distributed as required.
10
11
(XXVIII) The Shares have been designated for inclusion on the
Nasdaq National Market, subject only to official notice of issuance.
(XXIX) The Company is not now, and intends to conduct its
affairs in the future in such a manner so that it will not become, an investment
company within the meaning of the Investment Company Act of 1940, as amended.
(XXX) Each of the Company and its Subsidiaries 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) for which the Company would have any liability has
occurred; 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 or any
Subsidiary 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 nothing
has occurred, whether by action or by failure to act, that would cause the loss
of such qualification.
(XXXI) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic wastes,
medical wastes, hazardous wastes or hazardous substances by the Company or any
Subsidiary (or, to the best knowledge of the Company, any of their predecessors
in interest) at, upon or from any of the property now or previously owned or
leased by the Company or any Subsidiary 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 would not be reasonably likely to have, singularly or
in the aggregate with all such violations and remedial actions, a material
adverse effect on the general affairs, management, financial position,
shareholders' equity or results of operations of the Company or any Subsidiary;
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 toxic wastes, medical wastes, solid wastes,
hazardous wastes, radioactive wastes, mixed wastes or hazardous substances due
to or caused by the Company or any Subsidiary or with respect to which the
Company has knowledge, 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, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and releases, a
material effect on the general affairs, management, financial position,
shareholders' equity or results of operations of the Company or any Subsidiary.
The terms "RADIOACTIVE WASTES," "MIXED WASTES," "HAZARDOUS WASTES," "TOXIC
WASTES," "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(XXXII) The Company satisfies the requirements for filing a
registration statement on Form S-3.
11
12
(XXXIII) Each certificate signed by any officer of the Company
or any Subsidiary and delivered to the Representatives' or Underwriter's counsel
shall be deemed to be a representation and warranty by the Company or such
Subsidiary to each Underwriter as to matters covered thereby.
(B) Each Selling Stockholder hereby severally represents and warrants
to, and agrees with each Underwriter, as follows:
(I) Such Selling Stockholder has, and on the Closing Date,
will have valid and unencumbered title to the Option Shares to be delivered by
such Selling Stockholder on such Closing Date and full right, power and
authority to enter into this Agreement and to sell, assign, transfer and deliver
the Option Shares to be delivered by such Selling Stockholder on such Closing
Date hereunder; and upon the delivery of and payment for the Option Shares on
the Closing Date hereunder the several Underwriters will acquire valid and
unencumbered title to the Option Shares to be delivered by such Selling
Stockholder on the Closing Date.
(II) When the Registration Statement or any amendment thereto
was or is declared effective, it did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading. When the Prospectus or any amendment
or supplement to the Prospectus is filed with the Commission pursuant to Rule
424(b) (or, if the Prospectus or such amendment or supplement is not required to
be so filed, when the Registration Statement or the amendment thereto containing
such amendment or supplement to the Prospectus was or is declared effective) and
at all times subsequent thereto up to and including the Closing Date and any
date on which Option Shares are to be purchased, the Prospectus, as amended or
supplemented at any such time, did not or will not include 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. The provisions of this subsection (b)(ii) apply only to
the extent that any statements in or omissions from a Registration Statement or
the Prospectus are based on written information furnished to the Company by such
Selling Stockholder specifically for use therein.
(III) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling Stockholder and any
person that would give rise to a valid claim against such Selling Stockholder or
any Underwriter for a brokerage commission, finder's fee or other like payment
in connection with this offering.
(IV) Certificates in negotiable form for the Option
Shares to be sold by such Selling Stockholder have been placed
in custody under a Custody Agreement for delivery under this
Agreement with the Custodian; such Selling Stockholder
specifically agrees that the Option Shares represented by the
certificates so held in custody for such Selling Stockholder
are subject to the interests of the several Underwriters and
the Company, that the arrangements made by such Selling
Stockholder 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
Stockholder shall not be terminated by any act of such Selling
Stockholder or by operation of law, whether by the death or
incapacity of such Selling Stockholder (or, in the case of a
Selling Stockholder
12
13
that is not an individual, the dissolution or liquidation of
such Selling Stockholder) or the occurrence of any other
event; if any such death, incapacity, dissolution liquidation
or other such event should occur before the delivery of such
Option Shares hereunder, certificates for such Offered
Securities shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such
death, incapacity, dissolution, liquidation or other event had
not occurred, regardless of whether the Custodian shall have
received notice of such death, incapacity, dissolution,
liquidation or other event.
13
14
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(A) On the basis of the representations, warranties, covenants and
agreements of the Company contained in this Agreement and subject to the terms
and conditions set forth in this Agreement, the Company agrees to sell to the
several Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $______ per Share
("PURCHASE PRICE"), the respective number of Firm Shares set forth opposite the
name of such Underwriter on Schedule I to this Agreement (subject to adjustment
as provided in Section 8 of this Agreement).
(B) On the basis of the several (and not joint)
representations, warranties, covenants and agreements of the
Underwriters contained in this Agreement and subject to the terms and
conditions set forth in this Agreement, the Company and the Selling
Stockholders grant an option to the several Underwriters to purchase
from the Company all or a portion of the respective number of Option
Shares set forth opposite the name of such Underwriter on Schedule I to
this Agreement (subject to adjustment as provided in Section 8 of this
Agreement) and to purchase from each Selling Stockholder all or a
portion (on a pro rata basis) of the respective number of Option Shares
set forth opposite the name of such Underwriter on Schedule I to this
Agreement (subject to adjustment as provided in Section 8 of this
Agreement) at the Purchase Price. This option may be exercised only to
cover over-allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time (but
not more than once) on or before the 45th day after the date of the
Prospectus upon written, telecopied or telegraphic notice by the
Representatives to the Company setting forth the aggregate number of
Option Shares as to which the several Underwriters are exercising the
option and the settlement date. If the option to purchase the Option
Shares is exercised, the Option Shares shall be purchased severally,
and not jointly, by each Underwriter, in the same proportion that the
number of Firm Shares set forth opposite the name of the Underwriter in
Schedule I to this Agreement bears to the total number of Firm Shares
to be purchased by the Underwriters under Section 2(a) above, subject
to such adjustments as the Representatives in its absolute discretion
shall make to eliminate any fractional Shares. Delivery of Option
Shares, and payment therefor, shall be made as provided in Section
2(c), Section 2(d) and Section 2(e) below.
If the option to purchase the Option Shares is exercised,
certificates in negotiable form for the Option Shares to be sold by the Selling
Stockholders hereunder will be placed in custody, for delivery under this
Agreement, under Custody Agreements made with _____________, as custodian
("CUSTODIAN"). Each Selling Stockholder agrees that the shares represented by
the certificates held in custody for the Selling Stockholders under such Custody
Agreements are subject to the interests of the Underwriters hereunder, that the
arrangements made by the Selling Stockholders for such custody are to that
extent irrevocable, and that the obligations of the Selling Stockholders
hereunder shall not be terminated by operation of law, whether by the death of
any individual Selling Stockholder or the occurrence of any other event, or in
the case of a trust, by the death of any trustee or trustees or the termination
of such trust. If
14
15
any individual Selling Stockholder or any such trustee or trustees should die,
or if any other such event should occur, or if any of such trusts should
terminate, before the delivery of the Option Shares hereunder, certificates for
such Option Shares shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such death or other event or
termination had not occurred, regardless of whether or not the Custodian shall
have received notice of such death or other event or termination.
15
16
(C) Delivery of the Firm Shares and the Option Shares (if the option
granted by the Company in Section 2(b) above has 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 First
Security Xxx Xxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx at 7:00 a.m., San Francisco time, on the third business day after the
effective date of this Agreement, or at such time on such other day, not later
than seven full business days after such third business day, as shall be agreed
upon in writing by the Company and the Representatives, or as provided in
Section 8 of this Agreement. The date and hour of delivery and payment for the
Firm Shares are referred to in this Agreement as the "FIRST CLOSING DATE". The
date and hour of delivery and payment for the Option Shares, if any, are
referred to in this Agreement as the "OPTIONAL CLOSING DATE" (the First Closing
Date and Option Closing Date, if any, being referred to as a "CLOSING DATE"). As
used in this Agreement, "BUSINESS DAY" means a day on which the Nasdaq National
Market is operating and on which banks in New York and California are open for
business and not permitted by law or executive order to be closed.
(D) If the option granted by the Company in Section 2(b) above is
exercised after 7:00 a.m., San Francisco time, on the date two business days
preceding the Closing Date, delivery of the Option Shares and payment therefor
shall be made at the office of First Security Xxx Xxxxxx, 000 Xxxxxxxxxx Xxxxxx,
Xxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx at 7:00 a.m., San Francisco time, on the
date specified by the Representatives (which shall be three or four or fewer
business days after the exercise of the option, but not in excess of the period
specified in the Rules and Regulations).
(E) Payment of the Purchase Price for the Shares by the several
Underwriters shall be made by certified or official bank check or checks drawn
in next-day funds, payable to the order of the Company. Such payment shall be
made upon delivery of Shares to the Representatives for the respective accounts
of the several Underwriters. The Shares to be delivered to the Representatives
shall be registered in such name or names and shall be in such denominations as
the Representatives may request at least two business days before the Closing
Date, in the case of Firm Shares, and at least one business day prior to the
purchase of the Option Shares, in the case of the Option Shares. The
Representatives, individually and not on behalf of the Underwriters, may (but
shall not be obligated to) make payment to the Company for Shares to be
purchased by any Underwriter whose check shall not have been received by the
Representatives on the Closing Date or any later date on which Option Shares are
purchased for the account of such Underwriter. Any such payment shall not
relieve such Underwriter from any of its obligations hereunder.
(F) The several Underwriters propose to offer the Shares for sale to
the public as soon as the Representatives deems it advisable to do so. The Firm
Shares are to be initially offered to the public at the public offering price
set forth (or to be set forth) in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other selling
terms.
(G) The information set forth in the under the caption "Underwriting"
in the Registration Statement, any Preliminary Prospectus and in the Prospectus
constitute the only information furnished by the Underwriters to the Company for
inclusion in any Preliminary Prospectus, the Prospectus or the Registration
Statement.
16
17
3. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING STOCKHOLDERS. The Company
covenants and agrees with the several Underwriters as follows:
(A) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the time of execution
of this Agreement, to become effective as promptly as possible. If the
Registration Statement has become or becomes effective pursuant to Rule 430A, or
filing of the Prospectus is otherwise required under Rule 424(b), the Company
will file the Prospectus, properly completed (and in form and substance
reasonably satisfactory to the Underwriters) pursuant to Rule 424(b) within the
time period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Company will not file the Prospectus,
any amended Prospectus, any amendment (including post-effective amendments) of
the Registration Statement or any supplement to the Prospectus without (i)
advising the Representatives of the proposed filing of such document, amendment
or supplement within a reasonable time prior to the proposed filing, and
furnishing the Representatives with copies thereof and (ii) obtaining the prior
consent of the Representatives to such filing. The Company will prepare and file
with the Commission, promptly upon the request of the Representatives, any
amendment to the Registration Statement or supplement to the Prospectus that may
be necessary or advisable in the reasonable opinion of the Representatives in
connection with the distribution of the Shares by the Underwriters and shall use
its best efforts to cause the same to become effective as promptly as possible.
(B) The Company will promptly advise the Representatives (i) when the
Registration Statement becomes effective, (ii) when any post-effective amendment
thereof becomes effective, (iii) of any request by the Commission for any
amendment of or supplement to the Registration Statement or the Prospectus or
for any additional information, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose, and (v) of the
receipt by the Company of any notification with respect to the suspension of the
registration, qualification or exemption from registration or qualification of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order or suspension and, if issued, to obtain as
soon as possible the withdrawal thereof.
(C) The Company will (i) on or before the Closing Date, deliver to the
Representatives and its counsel 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 the Representatives) and will also deliver to the Representatives,
for distribution to the several Underwriters, a sufficient number of additional
conformed copies of each of the foregoing (excluding exhibits) so that one copy
of each may be distributed to each Underwriter, (ii) as promptly as possible
deliver to the Representatives and send to the several Underwriters, at such
office or offices as the Representatives may designate, as many copies of the
Prospectus as the Representatives 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 a dealer, likewise to 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
17
18
Prospectus, filed by the Company with the Commission, as the Representatives 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 a dealer any event shall occur as a
result of which it is necessary to supplement or amend the Prospectus in order
to make the Prospectus not misleading or so that the Prospectus will not omit to
state a material fact necessary to be stated therein, in each case at the time
the Prospectus is delivered to a purchaser of the Shares, or if it shall be
necessary to amend or to supplement the Prospectus to comply with the Securities
Act or the Rules and Regulations, 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 not misleading and so that it then will
otherwise comply with the Securities Act and the Rules and Regulations. If,
after the initial public offering of the Shares by the Underwriters and during
such period, the Underwriters propose to vary the terms of offering thereof by
reason of changes in general market conditions or otherwise, the Representatives
will advise the Company in writing of the proposed variation and if, in the
opinion either of counsel for the Company or 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 setting forth such variation. The Company authorizes the Underwriters
and all dealers to whom any of the Shares may be sold by the Underwriters to use
the Prospectus, as from time to time so amended or supplemented, in connection
with the sale of the Shares in accordance with the applicable provisions of the
Securities Act and the Rules and Regulations for such period.
(E) The Company will cooperate with the Representatives and its counsel
in the qualification or registration of the Shares for offer and sale under the
securities or blue sky laws of such jurisdictions as the Representatives may
designate and, if applicable, in connection with exemptions from such
qualification or registration and, during the period in which a Prospectus is
required by law to be delivered by an Underwriter or a dealer, in keeping such
qualifications, registrations and exemptions in effect; provided, however, that
the Company shall not be obligated to file any general consent to service of
process or to qualify to do business 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, registrations and exemptions in
effect for so long a period as the Representatives may reasonably request for
the distribution of the Shares.
(F) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to the Representatives and to each
Underwriter who may so request in writing copies of (i) all periodic and special
reports furnished by it to shareholders of the Company, (ii) all information,
documents and reports filed by it with the Commission, any securities exchange
on which any securities of the Company are then listed, the Nasdaq National
Market, the Nasdaq Small Cap Securities Market or the NASD, (iii) all press
releases and material news items or articles in respect of the Company or its
affairs released or prepared by the Company (other than promotional and
marketing materials disseminated solely to customers and potential customers of
the Company in the ordinary course of business) and (iv) any
18
19
additional information concerning the Company or its business which the
Representatives may reasonably request.
(G) Within 90 days of the Closing Date, the Company will furnish the
Representatives with four bound volumes which shall be standard for an
underwriting transaction of the type contemplated by this Agreement.
(H) As soon as practicable, but not later than the 45th day following
the end of the fiscal quarter first ending after the first anniversary of the
Effective Date, the Company will make generally available to its securities
holders and furnish to the Representatives an earnings statement or statements
(which need not be audited) in accordance with Section 11(a) of the Securities
Act and Rule 158 of the Rules and Regulations.
(I) The Company will apply the net proceeds from the offering of the
Shares in the manner set forth under the caption "Use of Proceeds" in the
Prospectus.
(J) The Company will comply with all provisions of all undertakings
contained in the Registration Statement.
(K) The Company will, at all times for a period of at least five years
after the date of this Agreement, cause the Common Stock (including the Shares)
to be included on the Nasdaq National Market to the extent that the Common Stock
satisfies the then applicable criteria for inclusion, and the Company will
comply with all registration, filing, reporting, listing and other requirements
of the Exchange Act and the Nasdaq National Market, which may from time to time
be applicable to the Company.
(L) The Company will use its best efforts to maintain insurance of the
types and in the amounts which it deems adequate for its business consistent
with insurance coverage maintained by companies of similar size and engaged in
similar businesses in similar geographic locations, including, but not limited
to, product liability insurance and general liability insurance covering all
real and personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against.
(M) The Company will issue no press release prior to the Closing Date
with respect to the offering of the Shares without the prior written consent of
the Representatives.
(N) The Company will not effect a change in its accounting firm to any
other firm other than a "big six" accounting firm for a period of three years
from the date of this Agreement without the written consent of the
Representatives.
(O) The Company has not and will not, without the prior written consent
of the Representatives, seek any exemption from the requirements for inclusion
on the Nasdaq National Market.
(P) The Company will take all steps necessary to comply with
the requirements of the NASD in connection with the issuance and sale
of the Shares.
19
20
(Q) Each Selling Stockholder agrees to deliver to First Security Xxx
Xxxxxx on or prior to the Optional Closing Date, a properly completed and
executed United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
20
21
4. FEES AND EXPENSES.
(A) The Company and each Selling Stockholder agree with each
Underwriter that:
(I) The Company and each Selling Stockholder will pay and bear
all costs and expenses in connection with: the preparation, printing and filing
of the Registration Statement (including financial statements, schedules and
exhibits), Preliminary Prospectuses and the Prospectus, any drafts of each of
them and any amendments or supplements to any of them; the duplication or, if
applicable, printing (including all drafts thereof) of this Agreement, the
Agreement Among Underwriters, any Selected Dealer Agreements, the Preliminary
Blue Sky Survey and any Supplemental Blue Sky Survey, the Underwriters'
Questionnaire and the Power of Attorney and the duplication and printing
(including of drafts thereof) of any other underwriting documents and
underwriting material (including but not limited to marketing memoranda and
other marketing material) approved by the Company and used in connection with
the offering, purchase, sale and delivery of the Shares; the issuance and
delivery of the Shares under this Agreement to the several Underwriters,
including all expenses, taxes, duties, fees and commissions on the purchase and
sale of the Shares, stock exchange brokerage and transaction levies with respect
to the purchase and, if applicable, the sale of the Shares; the cost of printing
the certificates for the Shares; the Transfer Agents' and Registrars' fees; the
fees and disbursements of counsel for the Company and the Selling Stockholders,
if any; all fees and other charges of the Company's independent public
accountants and any other experts named in the Prospectus; the cost of
furnishing to the several Underwriters copies of the Registration Statement
(including appropriate exhibits), Preliminary Prospectus and the Prospectus, the
agreements and other documents and instruments referred to above and any
amendments or supplements to any of the foregoing; the NASD filing fees; the
cost of qualifying or registering the Shares (or obtaining exemptions from
qualification or registration) under the laws of such jurisdictions as the
Representatives may designate (including filing fees and fees and
costs/disbursements of Underwriters' counsel in connection with such NASD
filings and state securities or Blue Sky qualifications, registrations and
exemptions and in preparing the preliminary and any final Blue Sky Memorandum);
all fees and expenses in connection with designating the Shares for inclusion on
the Nasdaq National Market; all Company advertising and road show expenses; and
all other expenses incurred by the Company and the Selling Stockholders in
connection with the performance of its obligations hereunder. [IN ADDITION, THE
COMPANY WILL PAY THE REPRESENTATIVES ON THE CLOSING DATE AND, IF APPLICABLE, ON
THE DATE ON WHICH OPTION SHARES ARE PURCHASED, A NON-ACCOUNTABLE EXPENSE
ALLOWANCE OF ONE AND ONE-HALF PERCENT (1 1/2%) OF THE GROSS PROCEEDS (PRIOR TO
DEDUCTING UNDERWRITING DISCOUNTS AND COMMISSIONS) OF THE OFFERING OF THE
SHARES].
(II) In addition to its obligations under Section 7(a) of this
Agreement, the Company agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any loss, claim, damage or liability described in Section 7(a) of
this Agreement, it will reimburse or advance to or for the benefit of the
Underwriters, and each of them, on a monthly basis (or more often, if requested)
for all legal and other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse or advance for the
benefit of the Underwriters for such expenses or the possibility that
21
22
such payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any portion, or all, of any such interim
reimbursement payments or advances are so held to have been improper, the
Underwriters receiving the same shall promptly return such amounts to the
Company together with interest, compounded daily, at the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by Bank of America, NT&SA, San Francisco, California (the
"PRIME RATE"), but not in excess of the maximum rate permitted by applicable
law. Any such interim reimbursement payments or advances that are not made to or
for the Underwriters within 30 days of a request for reimbursement or for an
advance shall bear interest at the Prime Rate, compounded daily, but not in
excess of the maximum rate permitted by applicable law, from the date of such
request until the date paid.
(B) In addition to their obligations under Section 7(b) of this
Agreement, the Underwriters severally and in proportion to their obligation to
purchase Firm Shares as set forth on Schedule I hereto, agree that, as an
interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any loss, claim, damage or
liability described in Section 7(b) of this Agreement, they will reimburse or
advance to or for the benefit of the Company on a monthly basis (or more often,
if requested) for all legal and other expenses incurred by the Company in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety or enforceability of the
Underwriters' obligation to reimburse or advance for the benefit of the Company
for such expenses and the possibility that such payments or advances might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any portion, or all, of any such interim reimbursement payments or
advances are so held to have been improper, the Company shall promptly return
such amounts to the Underwriters together with interest, compounded daily, at
the Prime Rate, but not in excess of the maximum rate permitted by applicable
law. Any such interim reimbursement payments or advances that are not made to
the Company within 30 days of a request for reimbursement or for an advance
shall bear interest at the Prime Rate, compounded daily, but not in excess of
the maximum rate permitted by applicable law, from the date of such request
until the date paid.
(C) Any controversy arising out of the operation of the interim
reimbursement and advance arrangements set forth in Sections 4(a)(ii) and 4(b)
above, including the amounts of any requested reimbursement payments or
advances, the method of determining such amounts and the basis on which such
amounts shall be apportioned among the indemnifying parties, shall be settled by
arbitration conducted under the provisions of the Code of Arbitration Procedure
of the NASD. Any such arbitration must be commenced by service of a written
demand for arbitration or a written notice of intention to arbitrate, therein
electing the arbitration tribunal. If the party demanding arbitration does not
make such designation of an arbitration tribunal in such demand or notice, then
the party responding to the demand or notice is authorized to do so. Any such
arbitration will be limited to the interpretation and obligations of the parties
under the interim reimbursement and advance provisions contained in Sections
4(a)(ii) and 4(b) above and will not resolve the ultimate propriety or
enforceability of the obligation to indemnify for or contribute to expenses that
is created by the provisions of Section 7 of this Agreement.
22
23
(D) If the sale of the Shares provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 5 of this Agreement is not satisfied, or because of any termination
pursuant to Section 9(b) of this Agreement, or because of any refusal, inability
or failure on the part of the Company to perform any covenant or agreement set
forth in this Agreement or to comply with any provision of this Agreement other
than by reason of a default by any of the Underwriters, the Company agrees to
reimburse the several Underwriters upon demand for all out-of-pocket accountable
expenses reasonably incurred (including fees and disbursements of counsel) that
shall have been incurred by any or all of them in connection with investigating,
preparing to market or marketing the Shares or otherwise in connection with this
Agreement.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of the
Underwriters to purchase and pay for the Shares shall be subject, in the
reasonable determination of the Representatives, to the accuracy as of the date
of execution of this Agreement, the Firm Closing Date and the Optional Closing
Date are to be purchased, as the case may be, of the representations and
warranties of the Company and the Selling Stockholders, as applicable, set forth
in this Agreement, to the accuracy of the statements of the Company and its
officers and the Selling Stockholders, if applicable, made in any certificate
delivered pursuant to this Agreement, to the performance by the Company and the
Selling Stockholders, if applicable, of all of its obligations to be performed
under this Agreement at or prior to the First Closing Date or Optional Closing
Date, as the case may be, and to the satisfaction of all conditions to be
satisfied or performed by the Company and the Selling Stockholders, as
applicable, at or prior to that date and to the following additional conditions:
(A) The Registration Statement shall have become effective (or, if a
post-effective amendment is required to be filed pursuant to Rule 430A under the
Act, such post-effective amendment shall become effective and the Company shall
have provided evidence satisfactory to the Representatives of such filing and
effectiveness) not later than 5:00 p.m., New York time, on the date of this
Agreement or at such later date and time as the Representatives may approve in
writing and, at the Closing Date or, with respect to the Option Shares, the
Optional Closing Date, no stop order suspending the effectiveness of the
Registration Statement or any qualification, registration or exemption from
qualification or registration for the sale of the Shares in any jurisdiction
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened; and any request for additional information on the part
of the Commission shall have been complied with to the reasonable satisfaction
of the Representatives and its counsel.
(B) The Representatives shall have received from Xxxxxx Godward LLP,
counsel for the Underwriters, an opinion, on and dated as of the First Closing
Date or, if applicable, the Optional Closing Date, with respect to the issuance
and sale of the Shares and such other related matters as the Representatives may
reasonably require, and the Company and the Selling Stockholders shall have
furnished such counsel with all documents which they may request for the purpose
of enabling them to pass upon such matters.
(C) The Representatives shall have received on the First Closing Date
or, if applicable, the Optional Closing Date, the opinion of Benesch,
Friedlander, Xxxxxx & Xxxxxxx LLP, counsel for the Company, addressed to the
Underwriters, with reproduced copies or signed
23
24
counterparts thereof for each of the Underwriters, covering the matters set
forth in Exhibit C to this Agreement and in form and substance satisfactory to
the Representatives.
(D) The Representatives shall have received on the First Closing Date
or, if applicable, the Optional Closing Date, the opinion of _________,
addressed to the Underwriters, with reproduced copies or signed counterparts
thereof for each of the Underwriters, covering the matters set forth in Exhibit
D to this Agreement and in form and substance satisfactory to the
Representatives.
(E) The Representatives shall be satisfied that there has not been any
material change in the market for securities in general or in political,
financial or economic conditions as to render it impracticable, in the judgment
of the Representatives, to make a public offering of the Shares, 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
to proceed.
(F) The Representatives shall have received on the First Closing Date
or, if applicable, the Optional Closing Date, a certificate signed by the Chief
Executive Officer and the Chief Financial Officer of the Company confirming
certain of the representations and warranties of the Company, as follows:
(I) the representations and warranties of the Company set
forth in Section 1 of this Agreement are true and correct with the same force
and effect as if expressly made at and as of the applicable Closing Date, and
the Company has complied in all material respects with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such Closing Date;
(II) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose have
been instituted or are pending or are threatened under the Securities Act;
(III) the Common Stock has been designated for inclusion on
the Nasdaq National Market, subject only to notice of issuance; and
(IV) (A) the respective signers of such certificate have
carefully examined the Registration Statement in the form in which it originally
became effective and the Prospectus and any supplements or amendments to any of
them and, as of the Effective Date, the statements made in the Registration
Statement and the Prospectus were true and correct in all material respects 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 not misleading, (B) since the Effective Date, no event has
occurred that should have been set forth in an amendment to the Registration
Statement or a supplement or amendment to the Prospectus that has not been set
forth in such an amendment or supplement, (C) 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, there has not been any material
change or any development involving a prospective material change in or
affecting the business, properties, condition (financial or otherwise), results
of operations or prospects of the Company and its Subsidiaries
24
25
taken as a whole and, since such dates, neither the Company nor any of its
Subsidiaries has entered into any material transaction not referred to in the
Registration Statement in the form in which it originally became effective and
the Prospectus, (D) there are not any pending or threatened legal proceedings to
which the Company or any Subsidiary is a party or of which property of the
Company or any Subsidiary is the subject which are material and which are not
disclosed in the Registration Statement and the Prospectus and (E) there are not
any license agreements, contracts, leases or other documents that are required
to be filed as exhibits to the Registration Statement that have not been filed
as required.
(G) The Representatives shall have received from Xxxxxx Xxxxxxxx LLP,
accountants to the Company, a letter or letters, addressed to the Underwriters
and dated the First Closing Date or, if applicable, the Optional Closing Date,
confirming that they are independent accountants with respect to the Company
within the meaning of the Securities Act and the applicable Rules and
Regulations and, based upon the procedures described in their letter delivered
to the Representatives concurrently with the execution of this Agreement (the
"ORIGINAL LETTER"), but carried out to a date not more than five business days
prior to the applicable Closing Date, (i) confirming, to the extent true, that
the statements and conclusions set forth in the Original Letter are accurate as
of the applicable Closing Date and (ii) setting forth any revisions and
additions to the statements and conclusions set forth in the Original Letter
that 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. Such letters reflect that
there is not any change, or any development involving a prospective change, in
or affecting the business, properties or condition (financial or otherwise),
results of operations or prospects of the Company which, in the sole judgment of
the Representatives, makes it impracticable or inadvisable to proceed with the
public offering of the Firm Shares or the purchase of the Option Shares as
contemplated by the Prospectus. In addition, the Representatives shall have
received from Xxxxxx Xxxxxxxx LLP, on or prior to the applicable Closing Date, a
letter addressed to the Company and made available to the Representatives for
the use of the Underwriters stating that their review of the Company's system of
internal controls, to the extent they deemed necessary in establishing the scope
of its latest examination of the Company's consolidated financial statements, or
in delivering the Original Letter, did not disclose any weaknesses in internal
controls that they considered to be material weaknesses.
(H) Prior to the Closing Date, the Common Stock shall have been
designated for inclusion on the Nasdaq National Market, subject only to official
notice of issuance.
(I) The Representatives shall have received executed agreements from
each of the Company's officers and directors and such holders of the Company's
capital stock and options to purchase capital stock as the Representatives shall
designate to the effect that each such person or entity will not for a period of
180 days following the date of the Prospectus, in each case without prior
written consent of the Representatives, offer, sell or contract to sell, or
otherwise dispose of, or announce the offer of, any Common Stock or options or
convertible securities exercisable or exchangeable for, or convertible into,
Common Stock. The Company acknowledges that the Representatives have provided
the Company with the form of agreement described above and that such form of
agreement is acceptable for the purposes of this section.
25
26
(J) The Company and the Selling Stockholders shall have furnished to
the Representatives such further certificates and documents as the
Representatives shall reasonably request (including certificates of officers of
the Company and of the Selling Stockholders) as to the accuracy of the
representations and warranties of the Company or any Subsidiary set forth in
this Agreement, the performance by the Company and the Selling Stockholders of
their respective obligations under this Agreement and such other matters as the
Representatives may have then reasonably requested.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement will be in compliance with the provisions of this
Agreement only if they are reasonably satisfactory to the Representatives and
its counsel. The Company and the Selling Stockholders will furnish the
Representatives with such number of conformed copies of such opinions,
certificates, letters and documents as the Representatives shall reasonably
request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
time being of the essence, or if any of the opinions and certificates mentioned
above or elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and its
counsel, this Agreement and all obligations of the Underwriters hereunder may be
canceled by the Representatives at or at any time prior to, the Closing Date or,
with respect to the Option Shares, prior to Optional Closing Date, as the case
may be. Notice of such cancellation shall be given to the Company in writing or
by telephone, telecopy or telegraph confirmed in writing. Any such termination
shall be without liability of the Company and the Selling Stockholders to the
Underwriters (except as provided in Section 4 or Section 7 of this Agreement)
and without liability of the Underwriters to the Company and the Selling
Stockholders (except as provided in Section 7 of this Agreement).
26
27
6. CONDITIONS OF THE OBLIGATION OF THE COMPANY. The obligations of the Company
and the Selling Stockholders to sell and deliver the Shares required to be
delivered as and when specified in this Agreement shall be subject to the
condition that, at the First Closing Date or, with respect to the Option Shares,
the Optional Closing, no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings therefor shall be
pending or threatened by the Commission.
7. INDEMNIFICATION AND CONTRIBUTION.
(A) The Company agrees 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 Exchange Act
or any other federal or state statute, law or regulation, at common law
or otherwise, specifically including but not limited to losses, claims,
damages or liabilities (or action in respect thereof) related to
negligence on the part of any Underwriter, and the Company agrees to
reimburse each such Underwriter and controlling person for any legal or
other expenses (including, except as otherwise provided below,
settlement expenses and 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 that may be
brought against, the respective indemnified parties, in each case
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon, in whole or in part,
(i) any breach of any representation, warranty, covenant or agreement
of the Company contained in this Agreement, (ii) any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement in the form declared effective by the Commission
(including the Prospectus as part thereof) or any post-effective
amendment thereto, 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 (iii) any untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary 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 required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading or (iv) any untrue statement
or alleged untrue statement of a material fact contained in any
application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order to
qualify or register the Shares under the securities or Blue Sky laws
thereof or to obtain an exception from such qualification or
registration or filed with the Commission, any registered national
securities association or the Nasdaq National Market, or the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light
27
28
of the circumstances under which they were made, not misleading;
provided, however, that (1) the indemnity agreements of the Company
contained in this Section 7(a) shall not apply to such losses, claims,
damages, liabilities or expenses if such statement or omission was made
in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for use in any Preliminary Prospectus or
the Registration Statement or the Prospectus or any such amendment
thereof or supplement thereto and (2) the indemnity agreement contained
in this Section 7(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 Shares that is the subject thereof (or to the benefit of
any person controlling such Underwriter) if the Company can demonstrate
that at or prior to the written confirmation of the sale of such Shares
a copy of the Prospectus (or the Prospectus as amended or supplemented)
or, for this purpose, if applicable, a copy of the then most recent
Preliminary Prospectus, was not sent or delivered to such person and
the untrue statement or omission of a material fact contained in such
Preliminary Prospectus or, if applicable, prior Preliminary Prospectus,
was corrected in the Prospectus (or the Prospectus as amended or
supplemented) or, if applicable, the then most recent Preliminary
Prospectus, unless the failure is the result of noncompliance by the
Company with Section 3 of this Agreement. The indemnity agreements of
the Company contained in this Section 7(a) and the representations and
warranties of the Company contained in Section 1(a) of this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or behalf of any indemnified party and shall
survive the delivery of and payment for the Shares. This indemnity
agreement shall be in addition to any liabilities which the Company may
otherwise have.
(B) The Selling Stockholders, 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 Exchange Act or any other
federal or state statute, law or regulation, at common law or otherwise,
specifically including but not limited to losses, claims, damages or liabilities
(or action in respect thereof) related to negligence on the part of any
Underwriter, and the Company agrees to reimburse each such Underwriter and
controlling person for any legal or other expenses (including, except as
otherwise provided below, settlement expenses and 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 that may be
brought against, the respective indemnified parties, in each case insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon, in whole or in part, (i) any breach of any
representation, warranty, covenant or agreement of the Company contained in this
Agreement, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement in the form declared effective by
the Commission (including the Prospectus as part thereof) or any post-effective
amendment thereto, or the omission or alleged omission to state therein a
material fact
28
29
required to be stated therein or necessary to make the statements therein not
misleading or (iii) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary 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 required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading or (iv) any untrue statement or alleged untrue
statement of a material fact contained in any application or other document, or
any amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify or register the Shares under the securities or
Blue Sky laws thereof or to obtain an exception from such qualification or
registration or filed with the Commission, any registered national securities
association or the Nasdaq National Market, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the indemnity agreements of the
Company contained in this Section 7(a) shall not apply to such losses, claims,
damages, liabilities or expenses if such statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the Representatives
specifically for use in any Preliminary Prospectus or the Registration Statement
or the Prospectus or any such amendment thereof or supplement thereto; and,
provided, further, that a Selling Stockholder shall only be subject to such
liability to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission is based upon information provided by such Selling
Stockholder or contained in a representation or warranty given by such Selling
Stockholder in this Agreement or the Custody Agreement; and, provided, further,
that the liability under this subsection of each Selling Stockholder shall be
limited to an amount equal to the aggregate gross proceeds to such Selling
Stockholder from the sale of Option Shares sold by such Selling Stockholder
hereunder. The indemnity agreements of each Selling Stockholder contained in
this Section 7(a) and the representations and warranties of the Selling
Stockholders contained in Section 1(b) of this Agreement shall remain operative
and in full force and effect regardless of any investigation made by or behalf
of any indemnified party and shall survive the delivery of and payment for the
Option Shares. This indemnity agreement shall be in addition to any liabilities
which the Selling Stockholders may otherwise have
29
30
(C) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, each of its officers who signs the Registration
Statement, 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 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 other federal or state statute,
law or regulation or at common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, settlement expenses and 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 that may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any breach of
any covenant or agreement of the indemnifying Underwriter contained in this
Agreement, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement in the form declared effective by
the Commission (including the Prospectus included as part thereof) or any
post-effective amendment thereto, or the omission or alleged omission to state
therein a material fact 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 or (iii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary 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 required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, but in each case under clauses (ii) and (iii) above,
as the case may be, only if such statement or omission was made in reliance upon
and in connection with information furnished in writing to the Company by or on
behalf of such indemnifying Underwriter through the Representatives specifically
for use in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto. The Company
acknowledges and agrees that the matters described in Section 2(g) of this
Agreement constitute the only information furnished in writing by or on behalf
of any of the several Underwriters for inclusion in the Registration Statement
or the Prospectus or in any Preliminary Prospectus. The several indemnity
agreement of each Underwriter contained in this Section 7(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 Shares. This indemnity agreement shall be in addition to any
liabilities which each Underwriter may otherwise have.
(D) Each person or entity indemnified under the provisions of Sections
7(a) and 7(b) above 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 Sections, it
will, if a claim in respect thereunder is to be made against the indemnifying
party or parties under this Section 7, promptly give written notice (the
"Notice") of such service or notification to the party or parties from whom
indemnification may be sought hereunder. No indemnification provided for in
Sections 7(a) or 7(b) above shall be available to any person who fails to so
give the Notice if the party to whom such Notice was not given was unaware of
the action, suit, investigation, inquiry
30
31
or proceeding to which the Notice would have related, but only to the extent
such party was materially prejudiced by the failure to receive the Notice, and
the omission to so notify such indemnifying party or parties 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
Sections 7(a) and 7(b). 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 (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 or rights available to such indemnified party or parties
different from or in addition to those available to the indemnifying party or
parties, then separate counsel for and selected by the indemnified party or
parties shall be entitled, at the expense of the indemnifying parties, to
conduct the defense of the indemnified parties to the extent determined by
counsel to the indemnified parties 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 selected by such indemnified party or
parties participate in, but not conduct, the defense. If, within a reasonable
time after receipt of the Notice, an indemnifying party gives a Notice of
Defense and, unless separate counsel is to be chosen by the indemnified party or
parties as provided above, 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 Sections 7(a) through
7(c) 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 and pay the legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the "provided,
however" clause in the preceding sentence and (B) the indemnifying party or
parties shall bear and pay 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.
(E) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 7
but is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right to appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 7 provides for
indemnification in such case, each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in Section 7(a) or 7(b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by each indemnifying party from the offering of the Shares or (ii) if
the
31
32
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 Selling Stockholders on the one hand and the Underwriters on
the other shall be deemed to be in the same respective proportion as the total
proceeds from the offering of the Shares, net of the underwriting discounts,
received by the Company and the Selling Stockholders and the total underwriting
discount retained by the Underwriters bear to the aggregate public offering
price of the Shares. 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
contribution pursuant to this Section 7(d) were to be determined by pro rata
allocation which does not take into account the equitable considerations
referred to in the first sentence of the first paragraph of this Section 7(d)
and to the considerations referred to in the third sentence of the first
paragraph of this Section 7(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 the first paragraph of this
Section 7(d) shall be deemed to include any legal or other expenses incurred by
such indemnified party in connection with investigating, preparing to defend or
defending against any action or claim which is the subject of this Section 7(d).
Notwithstanding the provisions of this Section 7(d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Shares purchased by that Underwriter. For purposes of this
Section 7(d), each person who controls an Underwriter within the meaning of
Section 15 of the Securities Act shall have the same rights to contribution as
such Underwriter, and each person who controls the Company within the meaning of
Section 15 of the Securities Act, each officer of the Company who signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company; provided, however, in each case that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute in this Section 7(d) are several in proportion to
their respective underwriting obligations and not joint.
Each party or other entity 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, but the omission to so notify such party or
parties of any such service shall not relieve the party from whom contribution
may be sought from any obligation it may have hereunder or otherwise (except to
the extent such party is materially prejudiced by the failure to receive written
notice).
32
33
(F) The Company and the Selling Stockholders shall not, without the
prior written consent of each Underwriter and any person who controls such
Underwriter within the meaning of Section 15 of the Securities Act, 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 or
contribution 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 is a party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each such
Underwriter and each such controlling person from any and all liability arising
out of such claim, action, suit or proceeding.
(G) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of Sections 4(a)(ii), 4(b) and 4(c) and this Section
7 of this Agreement and that they are fully informed regarding all such
provisions. They further acknowledge that the provisions of Sections 4(a)(ii),
4(b) and 4(c) and this Section 7 of this Agreement fairly allocate the risks in
light of the ability of the parties to investigate the Company and its business
in order to assure that adequate disclosure is made in the Registration
Statement and Prospectus as required by the Securities Act, the Rules and
Regulations, the Exchange Act and the Exchange Act Rules and Regulations. The
parties are advised that federal or state policy, as interpreted by the courts
in certain jurisdictions, may be contrary to certain provisions of Sections
4(a)(ii), 4(b) and 4(c) and this Section 7 of this Agreement and, to the extent
permitted by law, the parties hereto hereby expressly waive and relinquish any
right or ability to assert such public policy as a defense to a claim under
Sections 4(a)(ii), 4(b) or 4(c) or this Section 7 of this Agreement and further
agree not to assert any such defense.
8. SUBSTITUTION OF UNDERWRITERS. If for any reason one or more of the
Underwriters fails or refuses (otherwise than for a reason sufficient to justify
the termination of this Agreement under the provisions of Section 5 or Section 9
of this Agreement) to purchase and pay for the number of Firm Shares agreed to
be purchased by such Underwriter or Underwriters, the Representatives shall
immediately give notice thereof to the Company and the non-defaulting
Underwriters, and the non-defaulting Underwriters shall have the right within 24
hours after their receipt of such notice to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon among
the Representatives and such purchasing Underwriter or Underwriters and upon the
terms set forth herein, all or any part of the Firm Shares that such defaulting
Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail to make such arrangements with respect to all such Shares, the
number of Firm Shares that each non-defaulting Underwriter is otherwise
obligated to purchase under this Agreement shall be automatically increased on a
pro rata basis to absorb the remaining Shares that the defaulting Underwriter or
Underwriters agreed to purchase; provided, however, that the non-defaulting
Underwriters shall not be obligated to purchase the Shares that the defaulting
Underwriter or Underwriters agreed to purchase if the aggregate amount of such
Shares exceeds 10% of the aggregate amount of Firm Shares that all Underwriters
agreed to purchase under this Agreement. If the total number of Firm Shares that
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 first 24-hour
period above referred to, to make arrangements with other underwriters or
purchasers satisfactory to the
33
34
Representatives for purchase of such Shares on the terms set forth in this
Agreement. In any such case, either the Representatives or the Company shall
have the right to postpone the First Closing Date determined as provided in
Section 2(c) of this Agreement for not more than seven business days after the
date originally fixed as the First Closing Date pursuant to Section 2(c) 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 time periods set forth above for the purchase
of all the Firm Shares that 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 any Selling
Stockholder to any non-defaulting Underwriter (except as provided in Section 4
or Section 7 of this Agreement) and without any liability on the part of any
nondefaulting Underwriters to the Company or any Selling Stockholder (except to
the extent provided in Section 4 or Section 7 of this Agreement). Nothing in
this Section 8, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability, if any, to the Company or any Selling Stockholder or
any nondefaulting Underwriter for damages occasioned by its default under this
Agreement. If this Agreement is terminated pursuant to the provisions of this
Section 8, the Company shall not be obligated to reimburse any defaulting
Underwriter for expenses pursuant to the provisions of Section 4 hereof or
otherwise. The term "Underwriter" in this Agreement shall include any persons
substituted for an Underwriter under this Section 8.
34
35
9. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
(A) If the Registration Statement has not been declared effective prior
to the date of this Agreement, this Agreement shall become effective at such
time, after notification of the effectiveness of the Registration Statement has
been released by the Commission, as the Representatives and the Company shall
agree upon the public offering price and other terms and the purchase price of
the Shares. If the public offering price and other terms and the purchase price
of the Shares shall not have been determined prior to 5:00 p.m., New York time,
on the third full business day after the Registration Statement has become
effective, this Agreement shall thereupon terminate without liability on the
part of the Company or any Selling Stockholder to the Underwriters (except as
provided in Section 4 or Section 7 of this Agreement). By giving notice before
the time this Agreement becomes effective, the Representatives, as
Representatives of the several Underwriters, may prevent this Agreement from
becoming effective without liability of any party to the other party, except
that the Company and the Selling Stockholders shall remain obligated to pay
costs and expenses to the extent provided in Section 4 and Section 7 of this
Agreement. If the Registration Statement has been declared effective prior to
the date of this Agreement, this Agreement shall become effective upon execution
and delivery by the Representatives, the Company and the Selling Stockholders
(through their attorney-in-fact (the "ATTORNEY-IN-FACT")).
(B) This Agreement may be terminated by the Representatives in its
absolute discretion by giving written notice to the Company at any time on or
prior to the First Closing Date or, with respect to the purchase of the Option
Shares, by giving notice to the Company and the Attorney-In-Fact for the Selling
Stockholders, on or prior to the Optional Closing Date, as the case may be, if
prior to such time any of the following has occurred or, in the opinion of the
Representatives, is likely to occur: (i) after the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material change or development involving a prospective adverse change in or
affecting the business, properties, condition (financial or otherwise), results
of operations or prospects of the Company and its subsidiaries taken as a whole,
which would, in the Representatives' sole judgment, make the offering or the
delivery of the Shares impracticable or inadvisable; or (ii) trading in
securities of the Company has been suspended by the Commission or if trading
generally on the New York Stock Exchange, American Stock Exchange, Nasdaq
National Market or over-the-counter market has been suspended or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of such exchanges, by the NASD or by
the Commission; or (iii) there shall have been 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 sole
judgement of the Representatives, materially affects or may materially affect
the business, properties, condition (financial or otherwise), results of
operations or prospects of the Company and its subsidiaries taken as a whole;
(iv) there shall have been the declaration of a banking moratorium by federal,
New York or California authorities; (v) existing international monetary
conditions shall have undergone a material change which, in the Representatives'
sole judgment, makes the offering or delivery of the Shares impracticable or
inadvisable; or (vi) there has occurred any material change in the financial
markets in the United States or internationally or any outbreak of hostilities
or escalation of existing hostilities or other crisis, the effect of which, in
the reasonable judgement of the Representatives, makes the
35
36
offering or delivery of the Shares impracticable or inadvisable. If this
Agreement shall be terminated pursuant to this Section 9, there shall be no
liability of the Company or any Selling Stockholder to the Underwriters (except
pursuant to Section 4 and Section 7 of this Agreement) and no liability of the
Underwriters to the Company (except pursuant to Section 4 and Section 7 of this
Agreement).
10. NOTICES. Except as otherwise provided herein, all communications hereunder
shall be in writing or by either telecopier or telegraph and, if to the
Underwriters, shall be mailed, telecopied or telegraphed or delivered to First
Security Xxx Xxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: _____________________ (telecopier: (000) 000-0000);
if to the Company, shall be mailed, telecopied, telegraphed or delivered to it
at its office at 00 Xxxxxxxxx Xxxxx, Xxxxx X-000, Xxxxxxxxx, XX 00000
(telecopier: (000) 000-0000), Attention: Xxxxx Xxxxxx; and if to the Selling
Stockholders or any of them, shall be mailed, telecopied, telegraphed or
delivered to the address set forth on Schedule II. All notices given by telecopy
or telegraph shall be promptly confirmed by letter.
11. PERSONS ENTITLED TO THE BENEFIT OF THIS AGREEMENT. This Agreement shall
inure to the benefit of the Company, the Selling Stockholders and the several
Underwriters and, with respect to the provisions of Section 4 and Section 7 of
this Agreement, the several parties (in addition to the Company and the several
Underwriters) indemnified under the provisions of Section 4 and Section 7 and
their respective personal Representatives, successors and assigns (whether such
succession or assignment is by sale, assignment, merger, reverse merger,
consolidation, operation of law or, without limitation, otherwise). 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 contained herein. The term "SUCCESSORS AND
ASSIGNS" as herein used shall not include any purchaser, as such, of any of the
Shares from the several Underwriters.
12. GENERAL. Notwithstanding any provision of this Agreement to the contrary,
the reimbursement, indemnification and contribution agreements contained in this
Agreement and the representations, warranties, covenants and agreements 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 Selling
Stockholders or the Company, any controlling person thereof or their respective
directors or officers and (c) delivery and payment for the Shares under this
Agreement; provided, however, that if this Agreement is terminated prior to the
Closing Date, the provisions of Sections 3(f) through 3(p), inclusive, of this
Agreement shall be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of
which shall constitute 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 INTERNAL LAWS, AND NOT THE LAWS PERTAINING TO CHOICE OR CONFLICT OF LAWS, OF
THE STATE OF CALIFORNIA.
36
37
13. JURISDICTION. The parties agree that any litigation arising out of or in any
way related to this Agreement will be adjudicated in a state or district court
sitting in the City of San Francisco, California, and the parties hereby consent
to the jurisdiction of such court. The parties hereby waive any right to object
to such jurisdiction, including, without limitation, any objection based on a
claim of improper venue or forum non conveniens.
14. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement, the
Representatives will act for and on behalf of the several Underwriters, and any
action taken under this Agreement by the Representatives, as Representatives of
the several Underwriters, will be binding on all of the Underwriters.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
37
38
If the foregoing correctly sets forth your understanding, please so
indicate by signing in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among the Company and the several
Underwriters.
Very truly yours,
NAVIDEC, INC.
By:
--------------------------------------
J. Xxxxx Xxxxxx
President and Chief Executive Officer
SELLING STOCKHOLDERS
J. Xxxxx Xxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxx XxxxxxxxXX
By:
--------------------------------------
Name:
Title:
As Attorney-In-Fact acting on behalf of
each of the Selling Stockholders named in
Schedule II to this Agreement.
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
FIRST SECURITY XXX XXXXXX
ADVEST, INC.
BY FIRST SECURITY XXX XXXXXX
By:
--------------------------------------
Name:
Title:
Acting on behalf of themselves and as the
Representatives of the several Underwriters
39
SCHEDULE I
UNDERWRITERS
NUMBER OF FIRM SHARES NUMBER OF OPTION SHARES
UNDERWRITERS TO BE PURCHASED TO BE PURCHASED
----------------------------------------------------- -------------------- ----------------------
First Security Xxx Xxxxxx
Advest, Inc.
Total 2,500,000
============= ================
SI-1
40
SCHEDULE II
SELLING STOCKHOLDERS
SELLING STOCKHOLDER NUMBER OF OPTION SHARES TO BE SOLD
------------------- ----------------------------------
J. Xxxxx Xxxxxx
00 Xxxxxxxxx Xxxxx, Xxxxx X-000
Xxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxxx
00 Xxxxxxxxx Xxxxx, Xxxxx X-000
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxxxx II
[ADDRESS]
SII-1
41
EXHIBIT A
SUBSIDIARIES OF THE COMPANY
XxxxxXxx.xxx, Inc., a Delaware corporation
A-1
42
EXHIBIT B
EQUITY INTEREST OF THE COMPANY AND ITS SUBSIDIARIES
IADMA LLC
B-1
43
EXHIBIT C
Matters to be Covered in the Opinion of
Benesch, Friedlander, Xxxxxx & Xxxxxx LLP
(A) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Colorado.
XxxxxXxx.xxx (the "SUBSIDIARY") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(B) The Company has the corporate power to own, lease and operate
its properties and to conduct its business as described in the Prospectus. The
Subsidiary as has the corporate power to own, lease and operate its properties
and to conduct its business as described in the Prospectus.
(C) The Company is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure so to qualify would not have a material
adverse effect on the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company. The Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions in which the ownership or leasing of its properties or the conduct
of its business requires such qualification, except where the failure so to
qualify would not have a material adverse effect on the business, properties,
condition (financial or otherwise), results of operations or prospects of the
Company.
(D) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption "Capitalization" as
of the dates stated therein; the issued and outstanding shares of capital stock
of the Company have been duly and validly authorized and issued, are fully paid
and nonassessable and have not been issued in violation of any preemptive right
or other rights to subscribe for or purchase securities or in violation of the
registration provisions of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or any registration or qualification requirements of all
states in which such registration or qualification was necessary.
(E) The Company owns all the outstanding shares of the Subsidiary.
The issued and outstanding shares of capital stock of the Subsidiary have been
duly and validly authorized and issued, are fully paid and nonassessable and
have not been issued in violation of any preemptive right or other rights to
subscribe for or purchase securities or in violation of the registration
provisions of the Securities Act or any registration or qualification
requirements of all states in which such registration or qualification was
necessary. To our knowledge, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligation into any shares of capital stock or ownership interests in the
Subsidiary are outstanding.
C-1
44
(F) The Company has the corporate power and authority to enter into the
Underwriting Agreement and to issue, sell and deliver the Firm Shares or the
Option Shares, as the case may be, to the Underwriters.
(G) The execution, delivery and performance of this Agreement and the
issuance and sale of the Shares do not (A) conflict with, violate, result in a
breach of or constitute a default (or an event that with notice or lapse of
time, or both, would constitute a default) under the Articles of Incorporation
or Bylaws of the Company or the Certificate of Incorporation or Bylaws of
Subsidiary or any agreement (including, without limitation, an agreement with
respect to registration rights) known to such counsel to which the Company or
Subsidiary is a party or by which it or any of their respective properties or
assets are bound or (B) result in violation of any statute or any rule or
regulation or any writ, judgment, order, injunction or decree of any government,
governmental body, agency or court or any arbitration tribunal having
jurisdiction over the Company or Subsidiary or any of their respective
properties (except with respect to state securities and Blue Sky laws, as to
which such counsel need not express any opinion).
(H) The Shares are duly authorized and, when issued and delivered
against payment in full therefor pursuant to the terms of the Underwriting
Agreement, will be validly issued, fully paid, nonassessable and free of
preemptive rights.
(I) The Underwriting Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been duly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery of the Underwriting Agreement by the Representatives on behalf of the
Underwriters, is the valid and binding agreement of the Company, except insofar
as the enforceability of the indemnification and contribution provisions of the
Underwriting Agreement may be limited as a matter of public policy and except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally or by general
equitable principles.
(J) Except for the order of the Commission making the Registration
Statement effective and similar authorizations required under the securities or
"Blue Sky" laws of certain jurisdictions (as to which such counsel need express
no opinion), no consent, approval, authorization or other order of any federal
or state governmental body or, to the knowledge of such counsel, other person is
required which has not been obtained in connection with the authorization,
issuance, sale and delivery of the Shares and the execution, delivery and
performance by the Company of the Underwriting Agreement.
(K) The Registration Statement has become effective under the
Securities Act and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or threatened
under the Securities Act.
(L) The Registration Statement and the Prospectus, and each amendment
or supplement thereto (other than the financial statements, financial data and
supporting schedules included 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 the applicable Rules and Regulations.
C-2
45
(M) To the best knowledge of such counsel, the Company satisfies the
requirements for filing a registration statement on Form S-3.
(N) The form of certificate evidencing the Common Stock complies with
the applicable provisions the Colorado Corporation Code.
(O) The description in the Registration Statement and the Prospectus of
statutes and contracts are accurate in all material respects and fairly
summarize such matters to the extent required by the Securities Act and the
Rules and Regulations.
(P) To the knowledge of such counsel, there are no agreements,
contracts, licenses, leases or documents of a character required to be described
or referred to in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement that are not described or referred to
therein and filed as required.
(Q) To the knowledge of such counsel and except as described in the
Registration Statement or Prospectus, there are no legal or governmental
proceedings pending or overtly threatened to which the Company or the Subsidiary
is a party or of which any property of the Company or Subsidiary is subject
which, if determined adversely to the Company or Subsidiary, as the case may be,
would individually or in the aggregate have a material adverse effect on the
business, properties, condition (financial or otherwise), results of operations
or prospects of the Company or Subsidiary, as the case may be .
(R) The Company is not in violation of its Articles of Incorporation or
Bylaws. The Subsidiary is not in violation of its Certificate of Incorporation
or Bylaws. The Company is not presently in breach of, or in default under, any
bond, debenture, note or other evidence of indebtedness or any contract,
indenture, mortgage, deed of trust, loan agreement, lease, license or, without
limitation, other agreement or instrument to which the Company is a party or by
which any of its properties is bound that, individually or in the aggregate, is
material to the business, properties, condition (financial or otherwise),
prospects or results of operations of the Company. The Subsidiary is not
presently in breach of, or in default under, any bond, debenture, note or other
evidence of indebtedness or any contract, indenture, mortgage, deed of trust,
loan agreement, lease, license or, without limitation, other agreement or
instrument to which the Subsidiary is a party or by which any of its properties
is bound that, individually or in the aggregate, is material to the business,
properties, condition (financial or otherwise), prospects or results of
operations of the Subsidiary.
(S) To the knowledge of such counsel, except as set forth in the
Registration Statement and Prospectus, no holders of Common
Stock or other securities of the Company have registration
rights with respect to any securities of the Company.
(T) A Power of Attorney and a Custody Agreement have
been duly executed and delivered by each of the Selling
Stockholders and constitute valid and binding agreements of
each Selling Stockholder in accordance with their terms,
subject as to enforcement to applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other
similar laws of general
C-3
46
applicability affecting creditors' rights and to general
equity principles and to limitations on availability of
equitable relief, including specific performance.
(U) The Underwriting Agreement has been duly executed
and delivered by or on behalf of each Selling Stockholder, and
the sale of the Option Shares to be sold by each Selling
Stockholder thereunder and the compliance by each Selling
Stockholder with all of the provisions of the Underwriting
Agreement, the Power of Attorney and the Custody Agreement and
the consummation of the transactions contemplated therein will
not result in any violation of the provisions of any order,
rule or regulation known to us or of any court or governmental
agency or body having jurisdiction over any Selling
Stockholder or the property of any such Selling Stockholder,
except with respect to state securities and Blue Sky laws, as
to which such counsel need express no opinion.
(V) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated by the
Underwriting Agreement in connection with the Option Shares to
be sold by each Selling Stockholder hereunder, except such as
may be required under the Securities Act and state securities
or Blue Sky laws in connection with the purchase and
distribution of such Option Shares by the Underwriters.
(W) Immediately prior to delivery of the Option
Shares, each Selling Stockholder had good and valid title to
the Option Shares to be sold by such Selling Stockholder under
the Underwriting Agreement, free and clear of all liens,
encumbrances, equities or claims, and full right, power and
authority to sell, assign, transfer and deliver the Option
Shares to be sold by such Selling Stockholder thereunder.
(X) Upon delivery to the Underwriters of certificates
representing the Option Shares duly endorsed for transfer and
against payment therefor in accordance with the terms of the
Underwriting Agreement, the Option Shares will have been
transferred free and clear of adverse claims to each of the
several underwriters who have purchased such Option Shares
without notice of any adverse claims within the meaning of the
Colorado Uniform Commercial Code.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other Representatives of the
Company, the independent public accountants of the Company, the Representatives
and counsel to the Underwriters, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although they have not independently verified the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, nothing has come to the attention of such counsel that caused them
to believe that, at the time the Registration Statement became effective, the
Registration Statement (except as to financial statements, financial data and
supporting schedules contained therein, as to which such counsel need express no
opinion) contained any untrue statement of a material fact or omitted to state a
material fact required to be
C-4
47
stated therein or necessary to make the statements therein not misleading, or at
the First Closing Date or at the Optional Closing Date, as the case may be, or
the date hereof, the Prospectus contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
C-5
48
EXHIBIT D
Matters to be Covered in the Opinion of
---------------------
We have reviewed the statements set forth in the Registration Statement and the
Prospectus under the captions "Risk Factors -XxxxxXxx.xxx is subject to
regulatory uncertainties and potential government regulations" and "Business -
Regulatory Uncertainties and Government Regulation" and such statements
accurately summarize the matters described herein. Nothing has come to our
attention that would lead us to believe that either at the effective date of the
Registration Statement or at the date hereof, such sections of the Registration
Statement and the Prospectus, or any amendment or supplement, contained or
contain any untrue statement or a material fact or omitted or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
D-1
