EXHIBIT 1.1
3,000,000 SHARES*
XXXXXXX CARDIOLOGY SYSTEMS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
May , 2004
Xxxxxxx & Company, Inc.
SunTrust Xxxxxxxx Xxxxxxxx
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Xxxxxxxxx Xxxxxxxxx, Inc.
As Representatives of the several Underwriters
c/o Needham & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxxx Cardiology Systems, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell 1,605,976 shares (the "Company Firm Shares") of the
Company's Common Stock, $0.001 par value per share (the "Common Stock"), and the
shareholder of the Company named in Schedule II hereto (the "Selling
Shareholder") proposes to sell 1,394,024 shares (the "Selling Shareholder Firm
Shares") of Common Stock, in each case to you and to the several other
Underwriters named in Schedule I hereto (collectively, the "Underwriters"), for
whom you are acting as Representatives (the "Representatives"). The Company has
also agreed to grant to you and the other Underwriters an option (the "Option")
to purchase up to an additional 450,000 shares of Common Stock (the "Option
Shares") on the terms and for the purposes set forth in Section 1(b). The
Company Firm Shares and the Selling Shareholder Firm Shares are referred to
collectively herein as the "Firm Shares," the Company Firm Shares and the Option
Shares are referred to collectively herein as the "Company Shares", and the Firm
Shares and the Option Shares are referred to collectively herein as the
"Shares."
The Company and the Selling Shareholder confirms as follows their
respective agreements with the Representatives and the several other
Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and agreements of the
Company herein contained and subject to all the terms and conditions of this
Agreement, (i) the Company agrees to issue and sell the Firm Shares to the
Underwriters and (ii) each of the Underwriters, severally and not jointly,
agrees to purchase from the Company the respective number of Firm Shares set
forth opposite that Underwriter's name in Schedule I hereto, at the purchase
price of $______ for each Firm Share.
(b) On the basis of the representations, warranties and agreements of the
Company and the Selling Shareholder herein contained and subject to all the
terms and conditions of this Agreement, (i) the Selling Shareholder agrees to
sell the Selling Shareholder Firm Shares to the Underwriters and (ii) each of
the Underwriters,
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* Plus an option to purchase up to an additional 450,000 shares to cover
over-allotments.
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severally and not jointly, agrees to purchase from the Selling Shareholder the
respective number of Selling Shareholder Firm Shares set forth opposite that
Underwriter's name in Schedule I hereto, at the purchase price of $______ for
each Selling Shareholder Firm Share.
(c) Subject to all the terms and conditions of this Agreement, the Company
grants the Option to the several Underwriters to purchase, severally and not
jointly, up to the maximum number of Option Shares set forth in Schedule II
hereto at the same price per share as the Underwriters shall pay for the Firm
Shares. The 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 30th day after the date of
this Agreement upon written notice (the "Option Shares Notice") by the
Representatives to the Company no later than 12:00 noon, New York City time, at
least two and no more than five business days before the date specified for
closing in the Option Shares Notice (the "Option Closing Date"), setting forth
the aggregate number of Option Shares to be purchased and the time and date for
such purchase. On the Option Closing Date, the Company will issue and sell to
the Underwriters the number of Option Shares set forth in the Option Shares
Notice, and each Underwriter will purchase such percentage of the Option Shares
as is equal to the percentage of Firm Shares that such Underwriter is
purchasing, as adjusted by the Representatives in such manner as they deem
advisable to avoid fractional shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be made to
Xxxxxxx & Company, Inc. for the accounts of the Underwriters against payment of
the purchase price by wire transfer payable in same-day funds to the order of
the Company for the Company Firm Shares to be sold by it and to the order of the
Selling Shareholder for the Selling Shareholder Firm Shares to be sold by it at
the office of Xxxxxxx & Company, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m., New York City time, on the third (or, if the purchase
price set forth in Section 1(b) hereof is determined after 4:30 p.m., Washington
D.C. time, the fourth) business day following the commencement of the offering
contemplated by this Agreement, or at such time on such other date, not later
than seven business days after the date of this Agreement, as may be agreed upon
by the Company and the Representatives (such date is hereinafter referred to as
the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(and on the date of delivery thereof, which may be the Closing Date) specified
in the Option Shares Notice.
The Shares shall, if certificated, be in definitive form, and, whether
certificated or in book-entry form, shall be registered in such names and in
such denominations as the Representatives shall request at least two business
days prior to the Closing Date or the Option Closing Date, as the case may be,
by written notice to the Company. For the purpose of expediting the checking and
packaging of certificates for the Shares, the Company agrees to make such
certificates available for inspection at least 24 hours prior to the Closing
Date or the Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Company Firm Shares and Option Shares by the
Company to the respective Underwriters shall be borne by the Company. The cost
of transfer taxes, if any, in connection with the delivery of the Selling
Shareholder Firm Shares by the Selling Shareholder to the respective
Underwriters shall be borne by the Selling Shareholder. The Company will pay and
save each Underwriter and any subsequent holder of the Shares harmless from any
and all liabilities with respect to or resulting from any failure or delay in
paying federal and state stamp taxes, if any, which may be payable or determined
to be payable in connection with the original issuance or sale to such
Underwriter of the Shares.
3. Representations and Warranties of the Company. The Company represents,
warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333-114908) on Form S-3 relating to the
Shares, including a preliminary prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company under the provisions of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (collectively
referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a preliminary
prospectus, including the documents incorporated by reference therein, as
contemplated
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by Rule 430 or Rule 430A of the Rules and Regulations included at any time as
part of the registration statement. Copies of such registration statement and
amendments and of each related preliminary prospectus have been delivered to the
Representative. If such registration statement has not become effective, a
further amendment to such registration statement, including a form of final
prospectus, necessary to permit such registration statement to become effective
will be filed promptly by the Company with the Commission. If such registration
statement has become effective, a final prospectus containing information
permitted to be omitted at the time of effectiveness by Rule 430A of the Rules
and Regulations will be filed promptly by the Company with the Commission in
accordance with Rule 424(b) of the Rules and Regulations. The term "Registration
Statement" means the registration statement as amended at the time it becomes or
became effective (the "Effective Date"), including all documents incorporated by
reference therein, financial statements and all exhibits and schedules thereto
and any information deemed to be included by Rule 430A and includes any
registration statement relating to the offering contemplated by this Agreement
and filed pursuant to Rule 462(b) of the Rules and Regulations. The term
"Prospectus" means the prospectus, including the documents incorporated by
reference therein, as first filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations or, if no such filing is required, the form of final
prospectus, including the documents incorporated by reference therein, included
in the Registration Statement at the Effective Date. Any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), after the Effective Date, the date of any
preliminary prospectus or the date of the Prospectus, as the case may be, and
deemed to be incorporated therein by reference.
(b) No order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and no stop order suspending the
effectiveness of the Registration Statement (including any related registration
statement filed pursuant to Rule 462(b) under the Act) or any post-effective
amendment thereto has been issued, and no proceeding for that purpose has been
initiated or threatened by the Commission. On the Effective Date, the date the
Prospectus is first filed with the Commission pursuant to Rule 424(b) (if
required), at all times during the period through and including the Closing Date
and, if later, the Option Closing Date and when any post-effective amendment to
the Registration Statement becomes effective or any amendment or supplement to
the Prospectus is filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement thereto), including the financial
statements included in the Prospectus, did and will comply with all applicable
provisions of the Act, the Exchange Act, the rules and regulations under the
Exchange Act (the "Exchange Act Rules and Regulations"), and the Rules and
Regulations and will contain all statements required to be stated therein in
accordance with the Act, the Exchange Act, the Exchange Act Rules and
Regulations, and the Rules and Regulations. On the Effective Date and when any
post-effective amendment to the Registration Statement becomes effective, no
part of the Registration Statement, the Prospectus or any such amendment or
supplement thereto did or will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. At the Effective Date, the
date the Prospectus or any amendment or supplement to the Prospectus is filed
with the Commission and at the Closing Date and, if later, the Option Closing
Date, the Prospectus did not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The foregoing representations and warranties in this Section 3(b) do
not apply to any statements or omissions made in reliance on and in conformity
with information relating to any Underwriter furnished in writing to the Company
by the Representatives specifically for inclusion in the Registration Statement
or Prospectus or any amendment or supplement thereto. The Company acknowledges
that the statements set forth in the paragraphs under the heading "Underwriting"
in the Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Representatives specifically for
inclusion in the Registration Statement.
(c) The documents that are incorporated by reference in the preliminary
prospectus and the Prospectus or from which information is so incorporated by
reference, when they became or become effective or were or are filed with the
Commission, as the case may be, complied or will comply in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and the
Rules and Regulations or the Exchange Act Rules and Regulations, as applicable.
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(d) The Company does not own, and at the Closing Date and, if later, the
Option Closing Date, will not own, directly or indirectly, any shares of stock
or any other equity or long-term debt securities of any corporation or have any
equity interest in any corporation, firm, partnership, joint venture,
association or other entity, other than the subsidiaries listed in Exhibit 21.1
to, or otherwise disclosed in, the Registration Statement or the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (the
"Subsidiaries"). The Company, and each Subsidiary listed in Exhibit 21.1 to the
Company's annual report on Form 10-K for the year ended December 31, 2003 (a
"Principal Subsidiary"), is, and at the Closing Date and, if later, the Option
Closing Date, will be, a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation. The Company,
and each of its Principal Subsidiaries, has, and at the Closing Date and, if
later, the Option Closing Date, will have, full power and authority to conduct
all the activities conducted by it, to own or lease all the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The Company, and each of its Principal
Subsidiaries, is, and at the Closing Date and, if later, the Option Closing
Date, will be, duly licensed or qualified to do business and in good standing as
a foreign corporation in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
license or qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not materially and adversely affect
the Company and its Principal Subsidiaries, taken as a whole, or its their
respective businesses, properties, financial condition or results of operations,
taken as a whole (such effect is referred to herein as a "Material Adverse
Effect"). All of the outstanding shares of capital stock of each Subsidiary have
been duly authorized and validly issued and are fully paid and nonassessable,
and owned by the Company free and clear of all claims, liens, charges and
encumbrances; there are no securities outstanding that are convertible into or
exercisable or exchangeable for capital stock of any Subsidiary, except for such
claims, liens, charges and encumbrances that would not have a Material Adverse
Effect. The Company, and each of its Principal Subsidiaries, is not, and at the
Closing Date and, if later, the Option Closing Date, will not be, engaged in any
discussions or a party to any agreement or understanding, written or oral,
regarding the acquisition of an interest in any corporation, firm, partnership,
joint venture, association or other entity where such discussions, agreements or
understandings would require amendment to the Registration Statement pursuant to
applicable securities laws. Complete and correct copies of the certificates of
incorporation (or articles of incorporation, as the case may be) and of the
by-laws of the Company, and each of its Principal Subsidiaries, and all
amendments thereto have been made available to the Representatives, and no
changes therein will be made subsequent to the date hereof and prior to the
Closing Date or, if later, the Option Closing Date.
(e) The Company has authorized, issued and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus as of the date
set forth therein under the column titled "Actual". All of the outstanding
shares of capital stock of the Company (including the Selling Shareholder Firm
Shares to be sold by the Selling Shareholder under this Agreement) have been
duly authorized, validly issued and are fully paid and nonassessable and were
issued in compliance with all applicable state and federal securities laws; the
Firm Shares and the Option Shares (if any) have been duly authorized and when
issued and paid for as contemplated herein will be validly issued, fully paid
and nonassessable; no preemptive or similar rights exist with respect to any of
the Shares or the issue and sale thereof. The description of the capital stock
of the Company incorporated by reference in the Registration Statement and the
Prospectus is, and at the Closing Date and, if later, the Option Closing Date,
will be, complete and accurate in all respects. Except as set forth in the
Prospectus, or in any documents incorporated by reference therein, and except
for transactions effected pursuant to the Company's stock option plan(s) or
employee stock purchase plan, the Company does not have outstanding, and at the
Closing Date and, if later, the Option Closing Date, will not have outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any shares of capital stock, or any such warrants, convertible
securities or obligations. No further approval or authority of shareholders or
the Board of Directors of the Company will be required for (i) the transfer and
sale of the Selling Shareholder Firm Shares, or (ii) the issuance and sale of
the Firm Shares and the Option Shares as contemplated herein. The certificates
evidencing the Shares are in due and proper legal form and have been duly
authorized for issuance by the Company.
(f) The financial statements and schedules included or incorporated by
reference in the Registration Statement or the Prospectus present fairly the
financial condition of the Company and its consolidated Subsidiaries as of the
respective dates thereof and the results of operations and cash flows of the
Company and its consolidated Subsidiaries for the respective periods covered
thereby, all in conformity with generally accepted accounting principles applied
on a consistent basis throughout the entire period involved, except as otherwise
disclosed in the
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Prospectus. No other financial statements or schedules of the Company are
required by the Act, the Exchange Act, the Exchange Act Rules and Regulations or
the Rules and Regulations to be included in the Registration Statement or the
Prospectus. KPMG LLP (the "Accountants"), who have reported on such financial
statements and schedules, other than the financial statements for the fiscal
year ended December 31, 2001, are independent accountants with respect to the
Company as required by the Act and the Rules and Regulations. The summary and
selected consolidated financial and statistical data included in the
Registration Statement present fairly the information shown therein and have
been compiled on a basis consistent with the financial statements presented in
the Registration Statement.
(g) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus and prior to or on the Closing
Date and, if later, the Option Closing Date, except as set forth in or
contemplated by the Registration Statement and the Prospectus, (i) there has not
been and will not have been any change in the capitalization of the Company or
any of its Principal Subsidiaries (other than in connection with the exercise of
options to purchase the Company's Common Stock granted pursuant to the Company's
stock option plans, or employee stock purchase plan from the shares reserved
therefor as described in the Registration Statement), or any Material Adverse
Effect arising for any reason whatsoever, (ii) neither the Company nor any of
its Principal Subsidiaries has incurred nor will any of them incur, except in
the ordinary course of business as described in the Prospectus, any material
liabilities or obligations, direct or contingent, nor has the Company or any of
its Principal Subsidiaries entered into nor will any of them enter into, except
in the ordinary course of business as described in the Prospectus, any material
transactions other than pursuant to this Agreement and the transactions referred
to herein and (iii) the Company has not and will not have paid or declared any
dividends or other distributions of any kind on any class of its capital stock.
(h) The Company is not and will not become as a result of the transactions
contemplated hereby an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended.
(i) Except as set forth in the Registration Statement and the Prospectus,
there are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Principal
Subsidiaries, or any of their respective officers in their capacity as such, nor
any basis therefor, before or by any federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding is reasonably likely
to have a Material Adverse Effect.
(j) The Company, and each Principal Subsidiary, is not in default, under
any contract or other instrument to which it is a party or by which its property
is bound or affected, which default might reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Company, no other party
under any contract or other instrument to which it or any such Principal
Subsidiary is a party is in default in any respect thereunder, which default
could reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any such Principal Subsidiary is, and at the Closing Date and, if
later, the Option Closing Date, will not be, in violation of any provision of
its certificate or articles of organization or by-laws or other organizational
documents.
(k) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for the
consummation by the Company of the transactions on its part contemplated herein,
except such as have been obtained under the Act or the Rules and Regulations and
such as may be required under state securities or Blue Sky laws or the by-laws
and rules of the National Association of Securities Dealers, Inc. (the "NASD")
in connection with the purchase and distribution by the Underwriters of the
Shares.
(l) The Company has full corporate power and authority to enter into this
Agreement. This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with the terms hereof except as to
(i) rights to indemnity and contribution thereunder, which may be limited under
applicable law, (ii) bankruptcy and laws relating to the rights and remedies of
creditors generally and (iii) the availability of equitable remedies. The
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company pursuant to the
terms or provisions of, or result in a breach or violation of any of the terms
or provisions of, or conflict with or constitute a
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default under, or give any party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, the certificate or
articles of incorporation or by-laws of the Company or any of its Principal
Subsidiaries, any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument to which the
Company is a party or by which the Company or any of its properties is bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to the business or properties of the Company, which default or
conflict would, in any such case, have a Material Adverse Effect.
(m) The Company, and each of its Principal Subsidiaries, has good and
marketable title to all properties and assets described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Prospectus or are not material to the
business of the Company or its Principal Subsidiaries. The Company, and each of
its Principal Subsidiaries, has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it. The Company owns or
leases all such properties as are necessary to its operations as now conducted,
except where the failure to so own or lease is not reasonably likely to have a
Material Adverse Effect.
(n) There is no document, contract, permit or instrument of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement that is not described or
filed as required. All such contracts to which the Company or any of its
Principal Subsidiaries is a party have been duly authorized, executed and
delivered by the Company or such Principal Subsidiary, constitute valid and
binding agreements of the Company or such Principal Subsidiary and are
enforceable against and by the Company or such Subsidiary in accordance with the
terms thereof except as to (i) rights to indemnity and contribution thereunder,
which may be limited under applicable law, (ii) bankruptcy and laws relating to
the rights and remedies of creditors generally and (iii) the availability of
equitable remedies.
(o) No statement, representation, warranty or covenant made by the Company
in this Agreement or made in any certificate or document required by Section 6
of this Agreement to be delivered to the Representatives was or will be, when
made, inaccurate, untrue or incorrect in any material respect.
(p) The Company has not distributed and will not distribute prior to the
later of (i) the Closing Date or, if later, the Option Closing Date, and (ii)
completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any preliminary
prospectuses, the Prospectus, the Registration Statement and other materials, if
any, permitted by the Act and the Rules and Regulations. Neither the Company nor
any of its directors, officers or controlling persons has taken, directly or
indirectly, any action designed, or that might reasonably be expected, to cause
or result, under the Act or otherwise, in, or that has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(q) No holder of securities of the Company has rights to the registration
of any securities of the Company because of the filing of the Registration
Statement, which rights have not been waived by the holder thereof as of the
date hereof.
(r) The Common Stock has been registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Company has filed an application to list the Company Shares to be sold by the
Company hereunder on the Nasdaq National Market ("NNM"), and has received
notification that the listing has been approved, subject to notice of issuance
of such Shares. The Shares to be sold by the Selling Shareholder hereunder are
listed on the NNM.
(s) Except as disclosed in or specifically contemplated by the Prospectus
(i) each of the Company and its Principal Subsidiaries owns or has adequate
rights to use all trademarks, trade names, domain names, patents, patent rights,
copyrights, technology, know-how (including trade secrets and other unpatented
or unpatentable proprietary or confidential information, systems or procedures),
service marks, trade dress rights, and other intellectual property
(collectively, "Intellectual Property") and has such other licenses, approvals
and governmental authorizations, in each case, sufficient to conduct its
business as now conducted, and, to the Company's and its Principal Subsidiaries'
knowledge, none of the foregoing Intellectual Property rights owned or licensed
by the Company or any of its
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Principal Subsidiaries is invalid or unenforceable, (ii) the Company has no
knowledge of any infringement by it or any of its Principal Subsidiaries of
Intellectual Property rights of others, where such infringement could have a
Material Adverse Effect, (iii) the Company is not aware of any infringement,
misappropriation or violation by others of, or conflict by others with rights of
the Company or any of its Principal Subsidiaries with respect to, any
Intellectual Property, (iv) there is no claim being made against the Company or
any of its Principal Subsidiaries, or, to the best knowledge of the Company and
its Principal Subsidiaries, any employee of the Company or any of its Principal
Subsidiaries, regarding Intellectual Property or other infringement that could
reasonably be expected to have a Material Adverse Effect, and (v) neither the
Company nor any of its Principal Subsidiaries has received any notice of
infringement with respect to any patent or any notice challenging the validity,
scope or enforceability of any Intellectual Property owned by or licensed to the
Company or any of its Principal Subsidiaries, in each case the loss of which
patent or Intellectual Property (or loss of rights thereto) would reasonably be
expect to have a Material Adverse Effect.
(t) The Company and each of its Principal Subsidiaries has filed all
federal, state, local and foreign income tax returns that have been required to
be filed and has paid all taxes and assessments received by it to the extent
that such taxes or assessments have become due. Neither the Company nor any of
its Principal Subsidiaries has any tax deficiency that has been or, to the best
knowledge of the Company or any Principal Subsidiary, might be asserted or
threatened against it that would reasonably be expected to have a Material
Adverse Effect.
(u) The pro forma financial information set forth in the Registration
Statement reflects, subject to the limitations set forth in the Registration
Statement as to such pro forma financial information, the results of operations
of the Company and its consolidated Subsidiaries purported to be shown thereby
for the periods indicated and conforms to the requirements of Regulation S-X of
the Rules and Regulations, and management of the Company believes (i) the
assumptions underlying the pro forma adjustments are reasonable, (ii) that such
adjustments have been properly applied to the historical amounts in the
compilation of such pro forma statements and notes thereto, and (iii) that such
statements and notes thereto present fairly, with respect to the Company and its
consolidated Subsidiaries, the pro forma financial position and results of
operations and the other information purported to be shown therein at the
respective dates or for the respective periods therein specified.
(v) The Company and each of its Principal Subsidiaries owns or possesses
all authorizations, approvals, orders, licenses, registrations, other
certificates and permits of and from all governmental regulatory officials and
bodies, necessary to conduct their respective businesses as contemplated in the
Prospectus, except where the failure to own or possess all such authorizations,
approvals, orders, licenses, registrations, other certificates and permits would
not have a Material Adverse Effect. There is no proceeding pending or, to the
knowledge of the Company, threatened (or any basis therefor known to the
Company) that may cause any such authorization, approval, order, license,
registration, certificate or permit to be revoked, withdrawn, cancelled,
suspended or not renewed; and the Company, and each of its Principal
Subsidiaries, is conducting its business in compliance with all laws, rules and
regulations applicable thereto (including, without limitation, all applicable
federal, state and local environmental laws and regulations) except where such
noncompliance would not have a Material Adverse Effect.
(w) The Company, and each of its Principal Subsidiaries, maintains
insurance of the types and in the amounts generally deemed adequate for its
business, including, but not limited to, insurance covering real and personal
property owned or leased by the Company or any of its Principal Subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(x) Neither the Company nor any of its Principal Subsidiaries has, nor, to
the best of the Company's knowledge, any of its or their respective employees or
agents at any time during the last five years (i) made any unlawful contribution
to any candidate for foreign office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
(y) The books, records and accounts of the Company accurately and fairly
reflect, in reasonable detail, the transactions in, and dispositions of, the
assets of, and the results of operations of, the Company and its Principal
Subsidiaries. The Company maintains (x) systems of internal accounting controls
sufficient to provide reasonable
7
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of the Company's consolidated financial statements in
accordance with generally accepted accounting principles and to maintain asset
accountability, (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, and
(y) disclosure controls and procedures (as defined in Rule 13a-14(c) under the
Exchange Act).
4. Representations, Warranties and Covenants of the Selling Shareholder.
The Selling Shareholder represents, warrants and covenants to each Underwriter
that:
(a) All consents, approvals, authorizations and orders necessary for the
execution and delivery by the Selling Shareholder of this Agreement and the
Irrevocable Power of Attorney and Custody Agreement (hereinafter referred to as
the "Stockholder Agreement") hereinafter referred to, and for the sale and
delivery of the Selling Shareholder Firm Shares to be sold by the Selling
Shareholder hereunder, have been obtained; and the Selling Shareholder has full
corporate power and authority to enter into this Agreement and the Stockholder
Agreement, to make the representations, warranties and agreements hereunder and
thereunder, and to sell, assign, transfer and deliver the Selling Shareholder
Firm Shares to be sold by the Selling Shareholder hereunder.
(b) Certificates in negotiable form representing all of the Selling
Shareholder Firm Shares to be sold by the Selling Shareholder have been placed
in custody under the Stockholder Agreement, in the form heretofore furnished to
you, duly executed and delivered by the Selling Shareholder to the Company, as
custodian for the Selling Shareholder (in such capacity, the "Custodian"), and
the Selling Shareholder has duly executed and delivered a power-of-attorney, in
the form heretofore furnished to you and included in the Stockholder Agreement
(the "Power-of-Attorney"), appointing Xxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx, and
each of them, as the Selling Shareholder's attorney-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this Agreement on
behalf of the Selling Shareholder, to determine (subject to the provisions of
the Stockholder Agreement) the purchase price to be paid by the Underwriters to
the Selling Shareholder as provided in Section 2 hereof, to authorize the
delivery of the Selling Shareholder Firm Shares to be sold by the Selling
Shareholder hereunder and otherwise to act on behalf of the Selling Shareholder
in connection with the transactions contemplated by this Agreement and the
Stockholder Agreement.
(c) The Selling Shareholder specifically agrees that the Selling
Shareholder Firm Shares represented by the certificates held in custody for the
Selling Shareholder under the Stockholder Agreement are for the benefit of and
coupled with the interests of the Underwriters, the Custodian, the
Attorneys-in-Fact and the Company, that the arrangements made by the Selling
Shareholder for such custody, and the appointment by the Selling Shareholder of
the Attorneys-in-Fact by the Power-of-Attorney, are to that extent irrevocable,
and that the obligations of the Selling Shareholder hereunder shall not be
terminated by operation of law, whether by the liquidation or dissolution of the
Selling Shareholder or by the occurrence of any other event. If the Selling
Shareholder should be dissolved, or if any other such event should occur, before
the delivery of the Selling Shareholder Firm Shares hereunder, certificates
representing the Selling Shareholder Firm Shares shall be delivered by or on
behalf of the Selling Shareholder in accordance with the terms and conditions of
this Agreement and of the Stockholder Agreement, and actions taken by the
Attorneys-in-Fact pursuant to the Powers-of-Attorney shall be as valid as if
such dissolution or other event had not occurred, regardless of whether or not
the Custodian, the Attorneys-in-Fact, or any of them, shall have received notice
of such dissolution or other event.
(d) This Agreement has been duly authorized, executed and delivered by or
on behalf of the Selling Shareholder.
(e) The Stockholder Agreement has been duly executed and delivered by or
on behalf of the Selling Shareholder and constitutes a valid and binding
agreement of the Selling Shareholder, enforceable in accordance with its terms,
except as enforceability may be limited by the application of bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally or by general principles of equity; and the Attorneys-in-Fact and the
Custodian have been duly authorized by the Selling Shareholder to deliver the
Selling Shareholder Firm Shares on behalf of the Selling Shareholder in
accordance with the terms of this Agreement.
8
(f) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the sale of the Selling Shareholder Firm Shares by the Selling
Shareholder or the consummation by the Selling Shareholder of the transactions
on its part contemplated by this Agreement and the Stockholder Agreement, except
such as may be required under the Act or the Rules and Regulations and such as
may be required under state securities or Blue Sky laws or the by-laws and rules
of the NASD in connection with the purchase and distribution by the Underwriters
of the Selling Shareholder Firm Shares to be sold by the Selling Shareholder.
(g) The sale of the Selling Shareholder Firm Shares to be sold by the
Selling Shareholder hereunder and the performance by the Selling Shareholder of
this Agreement and the Stockholder Agreement and the consummation of the
transactions contemplated hereby and thereby will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of the
Selling Shareholder pursuant to the terms or provisions of, or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or give any party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement or other evidence of indebtedness, lease, contract or
other agreement or instrument to which the Selling Shareholder is a party or by
which the Selling Shareholder or any of its properties is bound or affected, or
violate or conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or other governmental agency or body applicable to the
Selling Shareholder or the organizational documents of the Selling Shareholder.
(h) Assuming that the Selling Shareholder Firm Shares are indorsed to DTC
or in blank, upon payment for the Selling Shareholder Firm Shares and the
delivery to DTC or its agent of the Selling Shareholder Firm Shares registered
in the name of Cede & Co. or such other nominee designated by DTC, and DTC's
crediting the Selling Shareholder Firm Shares to an Underwriter's account with
DTC, Cede & Co., or such other nominee designated by DTC, will be a "protected
purchaser" of the Selling Shareholder Firm Shares (as defined in Section 8-303
of the Uniform Commercial Code as adopted in the State of New York (the
"Code")), such Underwriter will acquire a valid "security entitlement" (within
the meaning of Section 8-501 of the Code) with respect to the Common Stock to
the extent that DTC credits the Selling Shareholder Firm Shares to such
Underwriter's account, and no action based on an "adverse claim" (as defined in
section 8-102 of the Code) may be asserted against such Underwriter with respect
to such security entitlement (assuming that such Underwriter is without notice
of any such adverse claim).
(i) Other than as permitted by the Act and the Rules and Regulations, the
Selling Shareholder has not distributed and will not distribute any preliminary
prospectus, the Prospectus or any other offering material in connection with the
offering and sale of the Selling Shareholder Firm Shares. The Selling
Shareholder has not taken and will not at any time take, directly or indirectly,
any action designed, or that might reasonably be expected, to cause or result
in, or that will constitute, stabilization of the price of shares of Common
Stock to facilitate the sale or resale of any of the Shares; provided that the
Selling Shareholder and its affiliates are not prohibited from making or
amending any filings with the Commission required to be made or amended in
connection with the execution of this Agreement and consummation of the
transactions contemplated hereby.
(j) All information with respect to the Selling Shareholder furnished to
the Company in writing by the Selling Shareholder expressly for inclusion in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto that was so included does not and will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
(k) In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982 with respect to the transactions herein contemplated, the Selling
Shareholder agrees to deliver to you prior to or at the 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).
(l) The Selling Shareholder, directly or indirectly, has not entered into
any written contract, agreement or understanding, including any prepaid forward
contract, 10b5-1 plan or similar agreement, that transfers or may
9
transfer any of the legal or beneficial ownership or any of the economic
consequences of ownership of Common Stock, except as has been previously
disclosed in writing to the Representative.
5. Agreements of the Company and the Selling Shareholder. The Company, and
the Selling Shareholder solely with respect to the last sentence of Section 5(i)
hereof, covenants and agrees with the several Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or thereafter
during such period as the Prospectus is required by law to be delivered in
connection with sales of the Shares by an Underwriter or a dealer, file any
amendment or supplement to the Registration Statement or the Prospectus, unless
a copy thereof shall first have been submitted to the Representatives within a
reasonable period of time prior to the filing thereof and the Representatives
shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the Registration
Statement to become effective, and will notify the Representatives promptly, and
will confirm such advice in writing, (i) when the Registration Statement has
become effective and when any post-effective amendment thereto becomes
effective, (ii) of any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose or the threat thereof, (iv) of the happening of any event
during the period mentioned in the second sentence of Section 5(e) that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in the light of the circumstances in which they are made, not
misleading and (v) of receipt by the Company or any Representatives or attorney
of the Company of any other communication from the Commission relating to the
Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment. If the Company has omitted any information from the
Registration Statement pursuant to Rule 430A of the Rules and Regulations, the
Company will comply with the provisions of and make all requisite filings with
the Commission pursuant to said Rule 430A and notify the Representatives
promptly of all such filings. If the Company elects to rely upon Rule 462(b)
under the Act, the Company shall file a registration statement under Rule 462(b)
with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for such Rule 462(b)
registration statement or give irrevocable instructions for the payment of such
fee pursuant to the Rules and Regulations.
(c) The Company will furnish to each Representative, without charge, a
copy of one signed copy of each of the Registration Statement and of any pre- or
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Representative, without charge,
for transmittal to each of the other Underwriters, a copy of the Registration
Statement and any pre- or post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any undertakings
contained in the Registration Statement.
(e) On the Effective Date, and during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act,, the Company will
deliver to each of the Underwriters, without charge, as many copies of the
Prospectus or any amendment or supplement thereto as the Representatives may
reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Underwriters and by all dealers to whom
the Shares may be sold, both in connection with the offering or sale of the
Shares and for any period of time thereafter during which the Prospectus is
required by law to be delivered in connection therewith. If during such period
of time any event shall occur that in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was made,
not misleading, or if it is necessary to supplement or amend the Prospectus to
comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies of such
supplement or amendment to the Prospectus as the Representatives may reasonably
request. The Company will not file any
10
document under the Exchange Act or the Exchange Act Rules and Regulations before
the termination of the offering of the Shares by the Underwriters, if such
document would be deemed to be incorporated by reference into the Prospectus,
that is not approved by the Representatives after reasonable notice thereof.
(f) Prior to any public offering of the Shares, the Company will cooperate
with the Representatives and counsel to the Underwriters in connection with the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives may
request; provided, that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action that would subject it to general service of process in any jurisdiction
where it is not now so subject.
(g) The Company will comply with the Rules and Regulations so as to permit
the completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus.
(h) The Company will timely file such reports pursuant to the 1934 Act as
are necessary in order to make generally available to its securityholders as
soon as practicable an earnings statement for the purposes of, and to provide
the benefits contemplated by, the last paragraph of Section 11(a) of the 1933
Act.
(i) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay or reimburse
if paid by the Representatives, all costs and expenses incident to the
performance of the obligations of the Company and the Selling Shareholder under
this Agreement and in connection with the transactions contemplated hereby,
including but not limited to costs and expenses of or relating to (i) the
preparation, printing and filing of the Registration Statement and exhibits to
it, each preliminary prospectus, Prospectus and any amendment or supplement to
the Registration Statement or Prospectus, (ii) the preparation and delivery of
certificates representing the Shares, (iii) the printing of this Agreement, the
Agreement Among Underwriters, any Selected Dealer Agreements, any Underwriters'
Questionnaires, the Stockholder Agreement, any Underwriters' Powers of Attorney,
and any invitation letters to prospective Underwriters, (iv) furnishing
(including costs of shipping and mailing) such copies of the Registration
Statement, the Prospectus and any preliminary prospectus, and all amendments and
supplements thereto, as may be requested for use in connection with the offering
and sale of the Shares by the Underwriters or by dealers to whom Shares may be
sold, (v) the listing of the Shares on the NNM, (vi) any filings required to be
made by the Underwriters with the NASD, and the fees, disbursements and other
charges of counsel for the Underwriters in connection therewith, (vii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions designated pursuant to Section
5(f), including the reasonable fees, disbursements and other charges of counsel
to the Underwriters in connection therewith, and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda, if any, (viii) fees,
disbursements and other charges of counsel to the Company (but not those of
counsel for the Underwriters, except as otherwise provided herein), (ix) the
transfer agent for the Shares, and (x) any travel expenses of the Company's
officers, directors and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective purchasers of the
Shares. The Underwriters may deem the Company to be the primary obligor with
respect to all costs, fees and expenses to be paid by the Company and by the
Selling Shareholder. The Selling Shareholder will pay (directly or by
reimbursement) all fees and expenses incident to the performance of its
obligations under this Agreement that are not otherwise specifically provided
for herein, including but not limited to any fees and expenses of counsel for
the Selling Shareholder, and all taxes incident to the sale and delivery of the
Selling Shareholder Firm Shares to be sold by the Selling Shareholder to the
Underwriters hereunder.
(j) The Company will not at any time, directly or indirectly, take any
action designed or that might reasonably be expected to cause or result in, or
that will constitute, stabilization of the price of the shares of Common Stock
to facilitate the sale or resale of any of the Shares.
(k) The Company will apply the net proceeds from the offering and sale of
the Company Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds".
(l) During the period beginning from the date hereof and continuing to and
including the date 90 days after the date of the Prospectus, without the prior
written consent of Xxxxxxx & Company, Inc., which consent shall not be
unreasonably withheld, the Company will not (1) offer, sell, contract to sell,
pledge, grant options, warrants or rights to purchase or otherwise dispose of
any equity securities of the Company or any other securities convertible
11
into or exchangeable for its Common Stock or other equity security (other than
(i) pursuant to employee stock option plans or employee stock purchase plans, as
disclosed in the Prospectus or incorporated by reference therein,(ii) the
issuance of shares pursuant to the exercise of options outstanding on the date
hereof or pursuant to the exercise of the new options granted in accordance with
the preceding clause (i), or (iii) the Company's issuance of shares constituting
in the aggregate up to 25% of the issued and outstanding shares of capital stock
of the Company as consideration or partial consideration for business
acquisitions or in connection with the formation of joint ventures or strategic
partnerships), or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of shares of Common Stock, whether any such transaction described
in clause (1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
(m) During the period of 90 days after the date of the Prospectus, the
Company will not file with the Commission or cause to become effective any
registration statement (other than a registration statement on Form S-4 or Form
S-8) relating to any securities of the Company without the prior written consent
of Xxxxxxx & Company, Inc.
(n) The Company will cause each of its officers and directors to enter
into lock-up agreements with the Representatives to the effect that they will
not, without the prior written consent of Xxxxxxx & Company, Inc., sell,
contract to sell or otherwise dispose of any shares of Common Stock or rights to
acquire such shares according to the terms set forth in Schedule III hereto.
6. Conditions of the Obligations of the Underwriters. The obligations of
each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become effective
shall be received by the Representatives not later than 5:00 p.m., New York City
time, on the date of this Agreement or at such later date and time as shall be
consented to in writing by the Representatives and all filings required by Rule
424 and Rule 430A of the Rules and Regulations shall have been made. If the
Company has elected to rely upon Rule 462(b), the registration statement filed
under Rule 462(b) shall have become effective by 10:00 P.M., (i) No stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall be pending or threatened by the
Commission, (ii) no order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending before or threatened or
contemplated by the Commission or the authorities of any such jurisdiction,
(iii) any request for additional information on the part of the staff of the
Commission or any such authorities shall have been complied with to the
satisfaction of the staff of the Commission or such authorities, (iv) after the
date hereof no amendment or supplement to the Registration Statement or the
Prospectus shall have been filed unless a copy thereof was first submitted to
the Representatives and the Representatives do not object thereto in good faith,
and (v) the Representatives shall have received certificates, dated the Closing
Date and, if later, the Option Closing Date and signed by the Chief Executive
Officer and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii) of this paragraph.
(b) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, properties,
management, condition (financial or otherwise) or results of operations of the
Company or any of its Principal Subsidiaries, whether or not arising from
transactions in the ordinary course of business, in each case other than as
described in or contemplated by the Registration Statement and the Prospectus,
and (ii) the Company shall not have sustained any material loss or interference
with its business or properties from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not
described in the Registration Statement and the Prospectus, if in the reasonable
judgment of the Representatives any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares by the
Underwriters at the initial public offering price.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company, any of its
12
Principal Subsidiaries, or any of its or their officers or directors in their
capacities as such, before or by any federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, in which litigation or proceeding an unfavorable ruling, decision or
finding would have a Material Adverse Effect or if, in the reasonable judgment
of the Representative, any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares by the
Underwriters at the initial public offering price.
(d) Each of the representations and warranties of the Company and the
Selling Shareholder contained herein shall be true and correct in all respects
(in the case of any representation and warranty containing a materiality or
Material Adverse Effect qualification) or in all material respects at the
Closing Date and, with respect to the Option Shares, at the Option Closing Date,
and all covenants and agreements contained herein to be performed on the part of
the Company or the Selling Shareholder and all conditions contained herein to be
fulfilled or complied with by the Company or the Selling Shareholder at or prior
to the Closing Date and, with respect to the Option Shares, at or prior to the
Option Closing Date, shall have been duly performed, fulfilled or complied with.
(e) The Representatives shall have received an opinion, dated the Closing
Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to the Representatives and counsel for the
Underwriters from Xxxxxxx Coie LLP, counsel to the Company, with respect to the
following matters:
(i) Each of the Company and its Principal Subsidiaries, is a
corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation; has full corporate power
and authority to own or lease all the assets owed or leased by it as
described in the Registration Statement and Prospectus and to conduct its
business as described in the Registration Statement and Prospectus.
(ii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Registration Statement and the Prospectus
in the column entitled "Actual" under the caption "Capitalization" (except
for subsequent issuances, if any, pursuant to this Agreement or pursuant
to reservations, agreements, employee benefit plans or the exercise of
convertible securities, options or warrants referred to in the
Prospectus). All of such outstanding shares of capital stock of the
Company (including the Selling Shareholder Firm Shares) have been duly
authorized, validly issued and are fully paid and nonassessable, and, to
such counsel's knowledge, were not issued in violation of or subject to
any preemptive or, to such counsel's knowledge, similar rights.
(iii) To such counsel's knowledge, other than its Subsidiaries, the
Company does not own or control, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation
or have any equity interest in any corporation, firm, partnership, joint
venture, association or other entity. To such counsel's knowledge, all of
the outstanding shares of capital stock of each of the Principal
Subsidiaries have been duly authorized and validly issued and are fully
paid and nonassessable, and owned by the Company free and clear of all
claims, liens, charges and encumbrances, other than such claims, liens,
charges and encumbrances that would not have a Material Adverse Effect; to
such counsel's knowledge, there are no securities outstanding that are
convertible into or exercisable or exchangeable for capital stock of any
Principal Subsidiary.
(iv) The description of the capital stock of the Company
incorporated by reference in the Registration Statement and the Prospectus
conforms in all material respects to the terms thereof.
(v) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened to which the Company or any of its
Principal Subsidiaries is a party or to which any of their respective
properties is subject that are required to be described in the
Registration Statement or the Prospectus but are not so described.
(vi) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required
for the consummation by the Company of the transactions on its part
contemplated under this Agreement, except such as have been obtained or
made
13
under the Act or the Rules and Regulations and such as may be required
under state securities or Blue Sky laws or the by-laws and rules of the
NASD in connection with the purchase and distribution by the Underwriters
of the Shares.
(vii) The Company has full corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company.
(viii) The execution and delivery of this Agreement, the compliance
by the Company with all of the terms hereof and the consummation of the
transactions contemplated hereby (A) does not contravene any provision of
applicable law or the Certificate of Incorporation or By-Laws of the
Company or any of its Principal Subsidiaries, except for such
contraventions that would not have a Material Adverse Effect, (B) to such
counsel's knowledge, will not result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of the Company pursuant
to the terms and provisions of, conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or give any party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, any
indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement, document or instrument
known to such counsel to which the Company is a party or by which the
Company, any of its Principal Subsidiaries, or any of their respective
properties is bound or affected, except for such liens, charges,
encumbrances, conflicts, breaches, violations, defaults or rights that
would not have a Material Adverse Effect or (C) violate or conflict with
(i) any judgment, ruling, decree or order known to such counsel or (ii)
any statute, rule or regulation of any court or other governmental agency
or body, applicable to the business or properties of the Company or any of
its Principal Subsidiaries, except for such violations or conflicts that
would not have a Material Adverse Effect.
(ix) To such counsel's knowledge, there is no document or contract
of a character required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement
that is not described or filed or incorporated by reference as required,
and each description of such contracts and documents that is contained or
incorporated by reference in the Registration Statement and Prospectus
fairly presents in all material respects the information required under
the Act and the Rules and Regulations; provided that counsel need not
express any opinion with respect to the statements contained in the
Registration Statement and Prospectus under the caption "Underwriting".
(x) The Company is not required, and upon the issuance and sale of
the Company Shares to be sold by the Company as herein contemplated and
the application of the net proceeds therefrom as described in the
Registration Statement and Prospectus will not be required, to register as
an "investment company" under the 1940 Act.
(xi) The Selling Shareholder Firm Shares are duly listed on the NNM
and the Company Shares have been duly authorized for listing on the NNM,
subject to notice of issuance.
(xii) To such counsel's knowledge, no holder of securities of the
Company has rights, which have not been waived or satisfied, to require
the Company to register with the Commission shares of Common Stock or
other securities, as part of the offering contemplated hereby.
(xiii)The Registration Statement has become effective under the Act,
and to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or is pending, threatened
or contemplated.
(xiv) The Registration Statement and the Prospectus comply as to
form in all material respects with the requirements of the Act and the
Rules and Regulations (other than the financial statements, schedules and
other financial data contained or incorporated by reference in the
Registration Statement or the Prospectus, as to which such counsel need
express no opinion).
14
(xv) Such counsel has participated in the preparation of the
Registration Statement and Prospectus and, without undertaking to
determine independently or assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or in the Prospectus, has no reason to believe that the
Registration Statement as of the Effective Date contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of its date or as of the Closing
Date, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances in which they were made,
not misleading (except that counsel need not express an opinion or belief
with respect to any financial statements and schedules and other financial
data included in or omitted from the Registration Statement or the
Prospectus).
(xvi) The documents incorporated by reference in the Prospectus
(other than the financial statements, schedules and other financial data
contained therein, as to which such counsel need express no opinion), when
they were filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act and the Exchange Act
Rules and Regulations.
In rendering such opinion, such counsel may include in its opinion
customary assumptions and qualifications and may rely upon as to matters of
local law on opinions of counsel satisfactory in form and substance to the
Representatives and counsel for the Underwriters, provided that the opinion of
counsel to the Company shall state that such counsel is doing so, that such
counsel has no reason to believe that such counsel and the Underwriters are not
entitled to rely on such opinions and that copies of such opinions are to be
attached to the opinion.
(f) The Representatives shall have received an opinion, dated the Closing
Date, satisfactory in form and substance to the Representatives and counsel for
the Underwriters from Xxxxxx Xxxxxxxxxx, internal counsel to the Selling
Shareholder, with respect to the following matters:
(i) This Agreement has been duly executed and delivered by or on
behalf of THE Selling Shareholder.
(ii) The Stockholder Agreement has been duly executed and delivered
by or on behalf of the Selling Shareholder, and constitutes a valid and
binding agreement of the Selling Shareholder in accordance with its terms,
except as enforceability may be limited by the application of bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally or by general principles of equity; and the
Attorneys-in-Fact and the Custodian have been duly authorized by the
Selling Shareholder to deliver the Selling Shareholder Firm Shares on
behalf of the Selling Shareholder in accordance with the terms of this
Agreement.
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated in this Agreement, or in connection with the
sale of the Shares to be sold by the Selling Shareholder as contemplated
by this Agreement, except such as may be required under the Act or the
Rules and Regulations, or as may be required under the state securities or
Blue Sky laws of the various states or the by-laws and rules of the NASD
in connection with the purchase and distribution by the Underwriters of
the Shares to be sold by the Selling Shareholder.
(iv) The Selling Shareholder has full corporate power and authority
to execute and deliver this Agreement and the Stockholder Agreement and to
consummate the transactions contemplated hereby and thereby.
(v) Assuming that the Selling Shareholder Firm Shares are indorsed
to DTC or in blank, upon payment for the Selling Shareholder Firm Shares
and the delivery to DTC or its agent of the Selling Shareholder Firm
Shares registered in the name of Cede & Co. or such other nominee
designated by DTC, and DTC's crediting the Selling Shareholder Firm Shares
to an Underwriter's account with DTC, Cede & Co., or such other nominee
designated by DTC, will be a "protected purchaser" of the Selling
Shareholder Firm Shares (as defined in Section 8-303 of the Uniform
Commercial Code as adopted in the State of New York (the "Code")), such
Underwriter will acquire a valid "security entitlement" (within the
meaning of
15
Section 8-501 of the Code) with respect to the Common Stock to the extent
that DTC credits the Selling Shareholder Firm Shares to such Underwriter's
account, and no action based on an "adverse claim" (as defined in section
8-102 of the Code) may be asserted against such Underwriter with respect
to such security entitlement (assuming that such Underwriter is without
notice of any such adverse claim).
(vi) The sale of the Selling Shareholder Firm Shares by the Selling
Shareholder to the Underwriters pursuant to this Agreement does not, and
the performance by the Selling Shareholder of its obligations under this
Agreement and the Stockholder Agreement will not, (a) violate the Selling
Shareholder's certificate of incorporation or bylaws, (b) result in a
default under or breach of any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note agreement or other
evidence of indebtedness, lease, contract or other agreement or instrument
to which the Selling Shareholder is a party or by which the Selling
Shareholder or any of its properties is bound or affected, (c) violate any
order of any court applicable to the Selling Shareholder, or (d) violate
any Federal law of the United States or law of the State of New York
applicable to the Selling Shareholder; provided, however, that, for
purposes of this paragraph (vi), no opinion need be expressed with respect
to Federal or state securities laws, other antifraud laws, fraudulent
transfer laws, antitrust laws and the Employee Retirement Income Security
Act of 1974 and related laws; provided, further, that with respect to
performance by the Selling Shareholder of its obligations under this
Agreement and the Stockholder Agreement, no opinion need be expressed as
to bankruptcy, insolvency, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights.
In rendering such opinion, such counsel may include in its opinion
customary assumptions and qualifications and may rely upon as to matters of
local law on opinions of counsel satisfactory in form and substance to the
Representatives and counsel for the Underwriters, provided that the opinion of
counsel to the Selling Shareholder shall state that such counsel is doing so,
that such counsel has no reason to believe that such counsel and the
Underwriters are not entitled to rely on such opinions and that copies of such
opinions are to be attached to the opinion.
(g) The Representatives shall have received an opinion, dated the Closing
Date and the Option Closing Date, from Xxxxxx Pepper Tooze LLP, counsel to the
Underwriters, with respect to the Registration Statement, the Prospectus, and
this Agreement, which opinion shall be satisfactory in all respects to the
Representative.
(h) Concurrently with the execution and delivery of this Agreement, the
Accountants shall have furnished to the Representatives a letter, dated the date
of its delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants with respect to the Company as required by the Act and the Exchange
Act and the Rules and Regulations and with respect to certain financial and
other statistical and numerical information contained or incorporated by
reference in the Registration Statement. At the Closing Date and, as to the
Option Shares, the Option Closing Date, the Accountants shall have furnished to
the Representatives a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set forth in
the letter from the Accountants, that nothing has come to their attention during
the period from the date of the letter referred to in the prior sentence to a
date (specified in the letter) not more than three days prior to the Closing
Date and the Option Closing Date, as the case may be, which would require any
change in their letter dated the date hereof if it were required to be dated and
delivered at the Closing Date and the Option Closing Date.
(i) At the Closing Date and, as to the Option Shares, the Option Closing
Date, there shall be furnished to the Representatives a certificate, dated the
date of its delivery, signed by each of the Chief Executive Officer and the
Chief Financial Officer of the Company, in form and substance satisfactory to
the Representative, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus (including any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus) and (A) as of the date of such certificate, such documents are
true and correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein not untrue or misleading and (B) in the case of the
certificate delivered at the Closing Date and the Option Closing Date,
since the
16
Effective Date no event has occurred as a result of which it is necessary
to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading.
(i) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct.
(ii) Each of the covenants required to be performed by the Company
herein on or prior to the date of such certificate has been duly, timely
and fully performed and each condition herein required to be satisfied or
fulfilled on or prior to the date of such certificate has been duly,
timely and fully satisfied or fulfilled.
(j) At the Closing Date, there shall be furnished to the Representatives a
certificate, dated the date of its delivery, signed on behalf of the Selling
Shareholder or the Attorneys-in-Fact on its behalf, in form and substance
satisfactory to the Representatives, to the effect that the representations and
warranties of the Selling Shareholder contained herein are true and correct in
all material respects on and as of the date of such certificate as if made on
and as of the date of such certificate, and each of the covenants and conditions
required herein to be performed or complied with by the Selling Shareholder on
or prior to the date of such certificate has been duly, timely and fully
performed or complied with.
(k) On or prior to the Closing Date, the Representatives shall have
received the executed agreements referred to in Section 5(n).
(l) The Shares shall be qualified for sale in such jurisdictions as the
Representatives may reasonably request and each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
or the Option Closing Date.
(m) Prior to the Closing Date, the Shares shall have been duly authorized
for listing on the NNM upon official notice of issuance.
(n) The Company and the Selling Shareholder shall have furnished to the
Representatives such certificates, in addition to those specifically mentioned
herein, as the Representatives may have reasonably requested as to the accuracy
and completeness at the Closing Date and the Option Closing Date of any
statement in the Registration Statement or the Prospectus, as to the accuracy at
the Closing Date and the Option Closing Date of the representations and
warranties of the Company and the Selling Shareholder herein, as to the
performance by the Company and the Selling Shareholder of its and their
respective obligations hereunder, or as to the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of the Representatives.
7. Indemnification.
(a) The Company will indemnify and hold harmless the Selling Shareholder,
each Underwriter, the directors, officers, employees and agents of the Selling
Shareholder, each Underwriter and each person, if any, who controls the Selling
Shareholder or each Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
liabilities, expenses and damages (including any and all investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted), to
which they, or any of them, may become subject under the Act, the Exchange Act
or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based on any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus, or the omission or alleged omission to state in
such document a material fact required to be stated in it or necessary to make
the statements in it not misleading in the light of the circumstances in which
they were made, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company or the Selling
Shareholder contained herein or any failure of the Company or the Selling
Shareholder to perform its or their obligations hereunder or under law in
connection with the transactions contemplated hereby; provided, however, that
17
(i) the Company will not be liable to the extent that such loss, claim,
liability, expense or damage arises from the sale of the Shares in the public
offering to any person by an Underwriter and is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to any Underwriter or to the Selling
Shareholder furnished in writing to the Company by the Representative, on behalf
of any Underwriter, or by the Selling Shareholder, as applicable, expressly for
inclusion in the Registration Statement, the preliminary prospectus or the
Prospectus; and (ii) the Company will not be liable to any Underwriter, the
directors, officers, employees or agents of such Underwriter or any person
controlling such Underwriter with respect to any loss, claim, liability,
expense, or damage arising out of or based on any untrue statement or omission
or alleged untrue statement or omission or alleged omission to state a material
fact in the preliminary prospectus that is corrected in the Prospectus if the
person asserting any such loss, claim, liability, charge or damage purchased
Shares from such Underwriter but was not sent or given a copy of the Prospectus
at or prior to the written confirmation of the sale of such Shares to such
person and if copies of the Prospectus were timely delivered to such Underwriter
pursuant to Section 5 hereof. The Company and the Selling Shareholder
acknowledge that the statements set forth under the heading "Underwriting" in
the preliminary prospectus and the Prospectus constitute the only information
relating to any Underwriter furnished in writing to the Company by the
Representatives on behalf of the Underwriters expressly for inclusion in the
Registration Statement, the preliminary prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that the Company and
the Selling Shareholder might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and the Selling
Shareholder to the same extent as the foregoing indemnity from the Company to
each Underwriter, as set forth in Section 7(a), but only insofar as losses,
claims, liabilities, expenses or damages arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to any Underwriter furnished in
writing to the Company by the Representative, on behalf of such Underwriter,
expressly for use in the Registration Statement, the preliminary prospectus or
the Prospectus. The Company and the Selling Shareholder acknowledge that the
statements set forth under the heading "Underwriting" in the preliminary
prospectus and the Prospectus constitute the only information relating to any
Underwriter furnished in writing to the Company by the Representatives on behalf
of the Underwriters expressly for inclusion in the Registration Statement, the
preliminary prospectus or the Prospectus. This indemnity will be in addition to
any liability that each Underwriter might otherwise have.
(c) Any party that proposes to assert the right to be indemnified under
this Section 7 shall, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 7, notify each such
indemnifying party in writing of the commencement of such action, enclosing with
such notice a copy of all papers served, but the omission so to notify such
indemnifying party will not relieve it from any liability that it may have to
any indemnified party under the foregoing provisions of this Section 7 unless,
and only to the extent that, such omission results in the loss of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense, the indemnifying party will not be
liable to the indemnified party for any legal or other expenses except as
provided below and except for the reasonable costs of investigation incurred by
the indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (iii) a
conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (iv) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after
18
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement (i) includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act by
or on behalf of an indemnified party. An indemnifying party will not be liable
for any settlement of any action or claim effected without its written consent
(which consent will not be unreasonably withheld or delayed).
(d) If the indemnification provided for in this Section 7 is applicable in
accordance with its terms but for any reason is held to be unavailable to or
insufficient to hold harmless an indemnified party under paragraphs (a), (b) and
(c) of this Section 7 in respect of any losses, claims, liabilities, expenses
and damages referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company or the Selling Shareholder from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) by such indemnified
party as a result of such losses, claims, liabilities, expenses and damages in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Shareholder, on the one hand, and the
Underwriters, on the other hand. The relative benefits received by the Company
and the Selling Shareholder, on the one hand, and the Underwriters, on the other
hand, shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and the
Selling Shareholder bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. If, but only if, the allocation provided by the
foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company and the Selling Shareholder, on the one hand, and
the Underwriters, on the other hand, with respect to the statements or omissions
that resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company, the Selling Shareholder or the Representatives on behalf of the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholder and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 7(d) were to
be determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss claim,
liability, expense or damage, or action in respect thereof, referred to above in
this Section 7(d) shall be deemed to include, for purposes of this Section 7(d),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts
received by it and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(d), any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against any such party in respect of which a claim for contribution may be made
under this Section 7(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties
19
from whom contribution may be sought from any other obligation it or they may
have under this Section 7(d). No party will be liable for contribution with
respect to any action or claim settled without its written consent (which
consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company and the Selling
Shareholder contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of the
Underwriters or the Selling Shareholder, (ii) acceptance of any of the Shares
and payment therefor or (iii) any termination of this Agreement.
8. Reimbursement of Certain Expenses. In addition to its other obligations
under Section 7(a) of this Agreement, the Company hereby agrees to reimburse the
Selling Shareholder and the Underwriters on a quarterly basis for all reasonable
legal and other expenses incurred in connection with investigating or defending
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon, in whole or in part, any statement or omission or alleged statement
or omission, or any inaccuracy in the representations and warranties of the
Company or the Selling Shareholder contained herein or failure of the Company or
the Selling Shareholder to perform its or their respective obligations hereunder
or under law, all as described in Section 7(a), notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 8 and the possibility that such payment might later be held
to be improper; provided, however, that, to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them; and provided, further, that the Company need not reimburse
the legal and other expenses of the Selling Shareholder for any claim action,
investigation, inquiry or other proceeding arising or based on the failure of
the Selling Shareholder to perform its obligations hereunder or any inaccuracy
in the Selling Shareholder's representations and warranties.
9. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time on or prior to the Closing Date (or,
with respect to the Option Shares, on or prior to the Option Closing Date), by
notice to the Company and the Selling Shareholder from the Representatives,
without liability on the part of any Underwriter to the Company or any Selling
Shareholder if, prior to delivery and payment for the Firm Shares or Option
Shares, as the case may be, in the sole judgment of the Representative, (i)
trading in any of the equity securities of the Company shall have been suspended
or limited by the Commission or by the NNM, (ii) trading in securities generally
on the NNM shall have been suspended or limited or minimum or maximum prices
shall have been generally established on such exchange, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by such exchange, by
order of the Commission or any court or other governmental authority, or by the
NNM (iii) a general banking moratorium shall have been declared by federal, New
York State or Washington authorities or any material disruption of the
securities settlement or clearance services in the United States shall have
occurred, or (iv) any material adverse change in the financial or securities
markets in the United States or in political, financial or economic conditions
in the United States, or other calamity or crisis, within the United States,
shall have occurred, the effect of which, in any such case, is such as to make
it, in the sole judgment of the Representative, impracticable or inadvisable to
proceed with completion of the public offering or the delivery of and payment
for the Shares.
If this Agreement is terminated pursuant to Section 9 hereof, neither the
Company nor the Selling Shareholder shall be under any liability to any
Underwriter except as provided in Sections 5(j), 7 and 8 hereof; but, if (i) the
purchase of the Company Firm Shares or Option Shares by the Underwriters is not
consummated due to a breach by the Company or if for any reason (other than as a
result of the events described in the preceding paragraph) the Company shall be
unable to perform its obligations hereunder, or if the transactions contemplated
by this Agreement are not consummated for any reason other than a breach by any
party of its representations, warranties or covenants hereunder or as a result
of the events described in the preceding paragraph (other than clause (i)
thereof), the Company will reimburse the Underwriters for all out-of-pocket
expenses (including the fees, disbursements and other charges of counsel to the
Underwriters) incurred by the Underwriters in connection with the offering of
the Company Firm Shares or Option Shares or (ii) the purchase of the Selling
Shareholder Firm Shares by the Underwriters is not consummated due solely to a
breach by the Selling Shareholder of its representations, warranties or
obligations hereunder, the Selling Shareholder will reimburse the Underwriters
for all out-of-pocket expenses (including the fees, disbursements and other
charges of counsel to the Underwriters) incurred by the Underwriters in
connection with the offering of the Selling Shareholder Firm Shares.
20
10. Substitution of Underwriters. If any one or more of the Underwriters
shall fail or refuse to purchase any of the Firm Shares that it or they have
agreed to purchase hereunder, and the aggregate number of Firm Shares that such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of Firm Shares, the other
Underwriters shall be obligated, severally and not jointly, to purchase the Firm
Shares that such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the number of Firm Shares that
they have respectively agreed to purchase pursuant to Section 1 bears to the
aggregate number of Firm Shares which all such non-defaulting Underwriters have
so agreed to purchase, or in such other proportions as the Representatives may
specify; provided that in no event shall the maximum number of Firm Shares that
any Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 10 by more than one-ninth of such number of
Firm Shares without the prior written consent of such Underwriter. In any such
case either the Representatives or the Company shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or in
any other documents or arrangements may be effected. If any Underwriter or
Underwriters shall fail or refuse to purchase any Firm Shares that it or they
agreed to purchase hereunder and the aggregate number of Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
exceeds one-tenth of the aggregate number of the Firm Shares and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Firm Shares are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter, the
Company or the Selling Shareholder for the purchase or sale of any Shares under
this Agreement. Any action taken pursuant to this Section 10 shall not relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
11. Miscellaneous. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 0000 Xxxxx
Xxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Chief Executive Officer,
with a copy to Xxxxxxx X. Xxxxxxxxx, Esq., Xxxxxxx Coie LLP, 0000 Xxxxx Xxxxxx,
00xx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000, (b) if to the Selling Shareholder,
to Xxxxxx Xxxxxxxxxx, Philips Electronics North America Corporation, 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 or (c) if to the Underwriters, to the
Representatives at the offices of Xxxxxxx & Company, Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department, with a copy to
Xxxxxx X. Xxxx, Esq., Xxxxxx Pepper Tooze LLP, 000 X.X. Xxxxxx Xxx., Xxxxx 0000,
Xxxxxxxx, Xxxxxx 00000. Any such notice shall be effective only upon receipt.
Any notice under such Section 9 or 10 may be made by telecopier or telephone,
but if so made shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company, the Selling Shareholder and the controlling persons,
directors and officers referred to in Section 7, and their respective successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" as used in this
Agreement shall not include a purchaser, as such purchaser, of Shares from any
of the several Underwriters.
Any action required or permitted to be made by the Representatives under
this Agreement may be taken by them jointly or by Xxxxxxx & Company, Inc.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
entirely within such State.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The COMPANY, THE SELLING SHAREHOLDER and the Underwriters each hereby
waive any right they may have to a trial by jury in respect of any claim based
upon or arising out of this Agreement or the transactions contemplated hereby.
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Please confirm that the foregoing correctly sets forth the agreement among
the Company and the several Underwriters.
Very truly yours,
XXXXXXX CARDIOLOGY SYSTEMS, INC.
By:
---------------------------------------
Title:
SELLING SHAREHOLDER
(named in Schedule II hereto)
By:
---------------------------------------
Title:
Confirmed as of the date first
above mentioned:
Xxxxxxx & Company, Inc
SunTrust Xxxxxxxx Xxxxxxxx
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Delefield Xxxxxxxxx, Inc.
Acting on behalf of themselves
and as the Representatives of
the other several Underwriters
named in Schedule I hereto.
By: Xxxxxxx & Company, Inc.
By:
--------------------------
Title:
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SCHEDULE I
UNDERWRITERS
Number of Firm
Underwriters Shares to be Purchased
------------ ----------------------
Xxxxxxx & Company, Inc.
SunTrust Xxxxxxxx Xxxxxxxx
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Xxxxxxxxx Xxxxxxxxx, Inc. ..............................
-------
Total ...............................................
=======
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SCHEDULE II
Total Number Total Number of
of Firm Shares Option Shares
to be Sold to be Sold
---------- ----------
Xxxxxxx Cardiology Systems, Inc. ...............
Philips Electronics North America Corporation .. 1,394,024 0
TOTALS .......................................
=========== ==========
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SCHEDULE III
FORM OF LOCK-UP AGREEMENT
(Directors and Officers of Company)
The undersigned is a holder of securities of XXXXXXX CARDIOLOGY SERVICES,
INC., a Delaware corporation (the "Company"), and wishes to facilitate the
public offering of shares of the Common Stock (the "Common Stock") of the
Company (the "Offering"). The undersigned recognizes that such Offering will be
of benefit to the undersigned.
In consideration of the foregoing and in order to induce you to act as
underwriters in connection with the Offering, the undersigned hereby agrees that
he, she or it will not, without the prior written approval of Xxxxxxx & Company,
Inc., acting on its own behalf and/or on behalf of other Representatives of the
underwriters, directly or indirectly, sell, contract to sell, make any short
sale, pledge, or otherwise dispose of, or enter into any hedging transaction
that is likely to result in a transfer of, any shares of Common Stock, options
to acquire shares of Common Stock or securities exchangeable for or convertible
into shares of Common Stock of the Company that he, she or it may own, exclusive
of any shares of Common Stock purchased in connection with the Company's public
offering or purchased in the public trading market, for a period commencing as
of the date hereof and ending on the date that is one hundred eighty (180) days
after the date of the final Prospectus relating to the Offering.
The foregoing sentence shall not apply to (A) any distribution by a partnership
to its partners, (B) the transfer of shares of Common Stock or securities
exchangeable for or convertible into shares of Common Stock by the undersigned
as a gift; (C) the transfer of shares of Common Stock or securities exchangeable
for or convertible into shares of Common Stock by the undersigned to its
affiliates, as such term is defined in Rule 405 under the Securities Act; and
(D) the exercise of stock options granted pursuant to the Company's stock option
and employee stock purchase or option plans, or options granted outside of the
Company's stock option plans but outstanding on the date hereof; or (E) the sale
or transfer of shares of Common Stock received upon or in connection with the
exercise of Company stock options if the undersigned is no longer employed by,
or no longer serving as a director of, the Company (including, without
limitation, by reason of death or disability); provided, that, in the case of
clause (A), (B) or (C) above, the recipient(s), donee(s) or transferee(s),
respectively, agrees in writing as a condition precedent to such distribution,
issuance, gift or transfer to be bound by the terms of this Agreement and, in
the case of clause (D), any shares of Common Stock acquired pursuant to the
exercise of any such stock option shall be subject to the restrictions of this
letter (unless this clause (E) applies).
The undersigned confirms that it understands that the underwriters and the
Company will rely upon the representations set forth in this Agreement in
proceeding with the Offering. The undersigned agrees and consents to the entry
of stop transfer instructions with the Company's transfer agent against the
transfer of securities held by the undersigned if such transfer would constitute
a violation or breach of this Agreement.
This Agreement shall be binding on the undersigned and his, her or its
respective successors, heirs, personal representatives and assigns.
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