Exhibit 1.1
4,600,000 Shares
Bluestone Software, Inc.
Common Stock
($.001 Par Value)
UNDERWRITING AGREEMENT
, 1999
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Deutsche Bank Securities Inc.
SoundView Technology Group, Inc.
X.X. Xxxxxxxxx, Towbin
Xxxx Xxxxx Xxxx Xxxxxx, Inc.
As Representatives of the Several Underwriters
c/o Deutsche Bank Securities Inc.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Gentlemen:
Bluestone Software, Inc. a Delaware corporation (the
"Company"), proposes to sell to the several underwriters (the "Underwriters")
named in Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of 4,000,000 shares of the Company's Common
Stock, $ .001 par value (the "Firm Shares"). The respective amounts of the Firm
Shares to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Company and certain shareholders of the
Company (the "Selling Shareholders") also propose to sell at the Underwriters'
option, an aggregate of up to 600,000 additional shares of the Company's Common
Stock (the "Option Shares") as set forth below. The maximum number of Option
Shares to be sold by the Company and the Selling Shareholders is set forth
opposite their respective names in Schedule II hereto. The Company and the
Selling Shareholders are sometimes referred to herein collectively as the
"Sellers."
As the Representatives, you have advised the Company and the
Selling Shareholders (a) that you are authorized to enter into this Agreement on
behalf of the several Underwriters, and (b) that the several Underwriters are
willing, acting severally and not jointly, to purchase the number of Firm Shares
set forth opposite their respective names in Schedule I, plus their pro rata
portion of the Option Shares, should you elect to exercise the over-allotment
option in whole or in part for the accounts of the several Underwriters. The
Firm Shares and the Option Shares (to the extent the aforementioned option is
exercised) are herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and
of the interests of the parties in the transactions contemplated hereby, the
parties hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the
Underwriters as follows:
(a) A registration statement on Form S-1 (File
No.333-82213) with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has been
filed with the Commission. The Company has complied with the conditions for the
use of Form S-1. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462(b) of the Act, herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means (a) the form of prospectus first
filed with the Commission pursuant to Rule 424(b) or (b) the last preliminary
prospectus included in the Registration Statement filed prior to the time it
becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of the
Shares, together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is
herein referred to as a "Preliminary Prospectus. "Any reference herein to the
Registration Statement, any Preliminary Prospectus or to the Prospectus shall be
deemed to refer to and include any documents incorporated by reference therein,
and, in the case of any reference herein to any Prospectus, also shall be deemed
to include any documents incorporated by reference therein, and any supplements
or amendments thereto, filed with the Commission after the date of filing of the
Prospectus under Rules 424(b) or 430A, and prior to the termination of the
offering of the Shares by the Underwriters.
(b) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement. The Company
has no direct or indirect subsidiaries and is duly qualified to transact
business in all jurisdictions in which the conduct of its business requires such
qualification, except where the failure to so qualify or be in good standing
would not result in a material adverse effect on the earnings, business,
management, properties, assets, rights, operations,
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condition (financial or otherwise), or prospects of the Company, or a material
adverse effect on the ability of the Company to consummate the transactions
contemplated hereby (a "Material Adverse Effect").
(c) The outstanding shares of Common Stock of the
Company, including all shares to be sold by the Selling Shareholders, have been
duly authorized and validly issued and are fully paid and non-assessable; the
portion of the Shares to be issued and sold by the Company have been duly
authorized and, when issued and paid for as contemplated herein, will be validly
issued, fully paid and non-assessable; and no preemptive rights of stockholders
exist with respect to any of the Shares or the issue and sale thereof. Neither
the filing of the Registration Statement nor the offering or sale of the Shares
as contemplated by this Agreement gives rise to any rights, other than those
which have been waived or satisfied, for or relating to the registration of any
shares of Common Stock, except as set forth in the Registration Statement.
(d) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct in all material respects.
All of the Shares conform to the description thereof contained in the
Registration Statement in all material respects. The form of certificates for
the Shares conforms to the requirements of the corporate law of the jurisdiction
of the Company's incorporation. Except as described in or contemplated by the
Registration Statement, there are no outstanding securities of the Company
convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidnecing the right to
purchase or subscribe for any shares of such stock.
(e) The Commission has not issued an order preventing
or suspending the use of any Prospectus relating to the proposed offering of the
Shares nor instituted proceedings for that purpose. The Registration Statement
contains, and the Prospectus and any amendments or supplements thereto will
contain, all statements which are required to be stated therein by, and will
conform to, the requirements of the Act and the Rules and Regulations in all
material respects. The Registration Statement and any amendment thereto do not
contain, and will not contain, any untrue statement of a material fact and do
not omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and any amendments and supplements thereto do not contain, and will
not contain, any untrue statement of material fact; and do not omit, and will
not omit, to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED, HOWEVER, that the Company makes no
representations or warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, or any such amendment or supplement,
in reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of any Underwriter through the Representatives,
specifically for use in the preparation thereof.
(f) The financial statements of the Company, together
with related notes and schedules as set forth in the Registration Statement,
present fairly the financial position and the results of operations and cash
flows of the Company, at the indicated dates and for the indicated periods. Such
financial statements and related schedules have been prepared in accordance with
generally accepted principles of accounting, consistently applied throughout the
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periods involved, except as disclosed therein, and all adjustments necessary for
a fair presentation of results for such periods have been made. The summary
financial and statistical data included in the Registration Statement presents
fairly the information shown therein and such data has been compiled on a basis
consistent with the financial statements presented therein and the books and
records of the Company. The pro forma financial information included in the
Registration Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been properly
compiled on the pro forma bases described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(g) Xxxxxx Xxxxxxxx LLP, who have certified certain
of the financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required by the
Act and the Rules and Regulations.
(h) There is no action, suit, claim investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company before any court, administrative agency, self-regulatory body or
otherwise which if determined adversely to the Company might result in any
material adverse change in the earnings, business, management, properties,
assets, rights, operations, or condition (financial or otherwise) of the Company
or prevent the consummation of the transactions contemplated hereby, except as
set forth in the Registration Statement.
(i) The Company has good and valid title to all of
the properties and assets reflected in the financial statements (or as described
in the Registration Statement) hereinabove described, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except those reflected in
such financial statements and the related notes thereto (or as described in the
Registration Statement) or which are not material in amount. The Company
occupies its leased properties under valid and binding leases conforming in all
material respects to the description thereof set forth in the Registration
Statement.
(j) The Company has filed all federal, State, local
and foreign income tax returns which have been required to be filed or timely
filed for extension of the filing of such returns and have paid all taxes
indicated by said returns and all assessments received by them to the extent
that such taxes have become due. All tax liabilities have been adequately
provided for in the financial statements of the Company, and the Company does
not know of any actual or proposed additional material tax assessments relating
to any of its historical periods.
(k) Since the respective dates as of which
information is given in the Registration Statement, as it may be amended or
supplemented, there has not been any material adverse change or any development
involving a prospective material adverse change in or affecting the earnings,
business, management, properties, assets, rights, operations, or condition
(financial or otherwise), of the Company, whether or not occurring in the
ordinary course of business, and there has not been any material transaction
entered into or any material transaction
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that is probable of being entered into by the Company other than transactions in
the ordinary course of business and changes and transactions described in the
Registration Statement, as it may be amended or supplemented. The Company has no
material contingent obligations which are not disclosed in the Company's
financial statements which are included in the Registration Statement.
(l) The Company is not or with the giving of notice
or lapse of time or both, will not be, in violation of or in default under its
Charter or By-Laws or under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it, or any of its
properties, is bound and which default would have a Material Adverse Effect upon
the condition (financial or otherwise) of the Company or the business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company. The execution and delivery of this
Agreement and the consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result in a material
breach of any of the terms or provisions of or constitute a material default
under, any indenture, mortgage, deed of trust or other agreement or instrument
to which the Company is a party, or of the Charter or By-Laws of the Company or
any order, rule or regulation applicable to the Company of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.
(m) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect.
(n) The Company holds all material approvals,
licenses, certificates and permits from governmental authorities or
self-regulatory body which are necessary to the conduct of its businesses; and,
to the Company's knowledge, the Company has not infringed any patents, patent
rights, trade names, trademarks or copyrights, which infringement is material to
the business of the Company. The Company knows of no material infringement by
others of patents, patent rights, trade names, trademarks or copyrights owned by
or licensed to the Company.
(o) Neither the Company, nor to the Company's
knowledge, any of its affiliates, has taken or may take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of the shares of Common Stock to facilitate the sale or resale of the
Shares. The Company acknowledges that the Underwriters may engage in passive
market
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making transactions in the Shares on The NASDAQ Stock Market in accordance with
Regulation M under the Exchange Act.
(p) The Company is not an "investment company" within
the meaning of such term under the Investment Company Act of 1940 and the rules
and regulations of the Commission thereunder.
(q) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(r) The Company carries, or is covered by, insurance
in such amounts and covering such risks as is adequate for the conduct of their
respective businesses and the value of their respective properties and as is
customary for companies engaged in similar industries.
(s) The Company is in compliance in all material
respects with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and,
to the Company's knowledge, nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(t) No labor dispute with the employees of the
Company exists or, to the knowledge of the Company, is imminent, and the Company
is not aware of any existing or imminent labor disturbance by the employees of
any of its principal suppliers, customers or vendors, which, in any case, may
reasonably be expected to result in a Material Adverse Effect.
(u) There are no contracts or documents which are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits thereto which have not been so described and filed as
required.
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(v) Except as disclosed in the Prospectus, there has
been no storage, disposal, generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, hazardous waste or hazardous substances
(collectively, "Hazardous Materials") by the Company (or, to the knowledge of
the Company, any of the Company's predecessors in interest) at, upon or from any
of the property now owned or leased by the Company in violation of any
applicable law, ordinance, rule, regulation, order, judgment, decree or permit
or which would require remedial action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit, except for any violation or
remedial action which would not have, or could not be reasonably likely to have,
singly or in the aggregate with all such violations and remedial actions, a
Material Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any Hazardous Materials due
to or caused by the Company (or, to the knowledge of the Company, any of the
Company's predecessors in interest), except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singly or in the aggregate with all other such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect. The terms "hazardous wastes," "toxic
wastes" and "hazardous substances" shall have the meanings specified in any
applicable local, State or Federal laws or regulations with respect to
environmental protection. The Company is in compliance with any and all
applicable federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants except where the failure to so
comply would not have a Material Adverse Effect.
(w) Except for Xxxxx Xxxxxxxxx of General Electric
Capital Corporation, to the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or 5% or greater security holders.
(x) Other than as disclosed in the Prospectus, there
are no contracts, agreements or understandings between the Company and any
person granting such person the right (other than rights which have been waived
or satisfied) to require the Company to file a registration statement under the
Act with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company
under the Act.
(y) The Company has not been advised, and has no
reason to believe, that it is not conducting business in compliance with all
applicable laws, rules and regulations, of the jurisdictions in which it is
conducting business including; without limitation, all applicable local, state
and Federal laws and regulations, except where the failure to so comply would
not have a Material Adverse Effect.
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2. REPRESENTATIONS AND WARRANTIES OF THE SELLING
SHAREHOLDERS.
Each of the Selling Shareholders severally represents and
warrants as follows:
(a) Such Selling Shareholder now has and at the
Option Closing Date (as such dates is hereinafter defined) will have good and
valid title to the Option Shares to be sold by such Selling Shareholder, free
and clear of any liens, encumbrances, equities and claims, and full right, power
and authority to effect the sale and delivery of such Option Shares; and upon
the delivery of, against payment for, such Option Shares pursuant to this
Agreement, the Underwriters will acquire good and valid title thereto, free and
clear of any liens, encumbrances, equities and claims.
(b) Such Selling Shareholder has full right, power
and authority to execute and deliver this Agreement, the Power of Attorney, and
the Custodian Agreement referred to below and to perform its obligations under
such Agreements. The execution and delivery of this Agreement and the
consummation by such Selling Shareholder of the transactions herein contemplated
and the fulfillment by such Selling Shareholder of the terms hereof will not
require any consent, approval, authorization, or other order of any court,
regulatory body, administrative agency or other governmental body (except as may
be required under the Act, state securities laws or Blue Sky laws) and will not
result in a breach of any of the terms and provisions of, or constitute a
default under, organizational documents of such Selling Shareholder, if not an
individual or any indenture, mortgage, deed of trust or other agreement or
instrument to which such Selling Shareholder is a party, or of any order, rule
or regulation applicable to such Selling Shareholder of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.
(c) Such Selling Shareholder has not taken and will
not take, directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Common Stock of the Company
and, other than as permitted by the Act, the Selling Shareholder will not
distribute any prospectus or other offering material in connection with the
offering of the Shares.
(d) Without having undertaken to determine
independently the accuracy or completeness of either the representations and
warranties of the Company contained herein or the information contained in the
Registration Statement, such Selling Shareholder has no reason to believe that
the representations and warranties of the Company contained in Section 1 are not
true and correct, is familiar with the Registration Statement and has no
knowledge of any material fact, condition or information not disclosed in the
Registration Statement which has adversely affected or may adversely affect the
business of the Company; and the sale of the Option Shares by such Selling
Shareholder pursuant hereto is not prompted by any information concerning the
Company which is not set forth in the Registration Statement or the documents
incorporated by reference therein. The information pertaining to such Selling
Shareholder under
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the caption "Principal and Selling Stockholders" in the Prospectus is complete
and accurate in all material respects.
3. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties
and covenants herein contained, and subject to the conditions herein set forth,
the Company agrees to sell to the Underwriters and each Underwriter agrees,
severally and not jointly, to purchase, at a price of $____ per share, the
number of Firm Shares set forth opposite the name of each Underwriter in
Schedule I hereof, subject to adjustments in accordance with Section 11 hereof.
(b) Payment for the Firm Shares to be sold hereunder
is to be in certified or official bank check or other next day funds payable to
the order of an account designated by the Company for the Shares to be sold by
it against delivery of certificates therefor to the Representatives for the
several accounts of the Underwriters. Such payment and delivery are to be made
to the order of the Company at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, XX at 10:00 a.m., New York City time, on the third
business day after the date of this Agreement or at such other time and date not
later than five business days thereafter as you and the Company shall agree
upon, such time and date being herein referred to as the "Closing Date." (As
used herein, "business day" means a day on which the New York Stock Exchange is
open for trading and on which banks in New York are open for business and are
not permitted by law or executive order to be closed.) The certificates for the
Firm Shares will be delivered in such denominations and in such registrations as
the Representatives request in writing not later than the second full business
day prior to the Closing Date, and will be made available for inspection by the
Representatives at least one business day prior to the Closing Date.
(c) In addition, on the basis of the representations
and warranties herein contained and subject to the term and conditions herein
set forth, the Company and the Selling Shareholders hereby grant an option to
the several Underwriters to purchase the Option Shares at the price per share as
set forth in the first paragraph of this Section 3. The option granted hereby
may be exercised in whole or in part by giving written notice (i) at any time
before the Closing Date and (ii) from time to time thereafter within 30 days
after the date of this Agreement, by you, as Representatives of the several
Underwriters, to the Company, the Attorney-in-Fact and the Custodian setting
forth the number of Option Shares as to which the several Underwriters are
exercising the option, the names and denominations in which the Option Shares
are to be registered and the time and date at which such certificates are to be
delivered. If the option granted hereby is exercised in part, the respective
number of Option Shares to be sold by the Company and each of the Selling
Shareholders listed in Schedule II hereto shall be determined on a pro rata
basis in accordance with the percentages set forth opposite their names on
Schedule II hereto, adjusted by you in such manner as to avoid fractional
shares. The time and date at which certificates for Option Shares are to be
delivered shall be determined by the Representatives but shall not be earlier
than three nor later than 10 full business days after the
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exercise of such option, nor in any event prior to the Closing Date (such time
and date being herein referred to as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the Closing Date, the notice
of exercise shall set the Closing Date as the Option Closing Date. The number of
Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the number of
Firm Shares being purchased by such Underwriter bears to the total number of
Firm Shares purchased, adjusted by you in such manner as to avoid fractional
shares. The option with respect to the Option Shares granted hereunder may be
exercised only to cover overallotments in the sale of the Firm Shares by the
Underwriters. You, as Representatives of the several Underwriters, may cancel
such option at any time prior to its expiration by giving written notice of such
cancellation to the Company and the Attorney-in-Fact. To the extent, if any,
that the option is exercised, payment for the Option Shares shall be made on the
Option Closing Date is to be in certified or official bank check or other next
day funds payable to the order of "Stock Trans, Inc. as Custodian" for the
shares to be sold by the Selling Shareholders, in each case against delivery of
certificates therefor at the offices of Xxxxxxx Xxxx & Xxxxxxxxx.
(d) If on the Option Closing Date any Selling
Shareholder fails to sell the Option Shares which such Selling Shareholder has
agreed to sell on such date as set forth in SCHEDULE II hereto, the Company
agrees that it will sell or arrange for the sale of that number of shares of
Common Stock to the Underwriters which represents the Option Shares which such
Selling Shareholder has failed to so sell, as set forth in Schedule II hereto,
or such lesser number as may be requested by the Representatives.
(e) Certificates in negotiable form for the total
number of the Shares to be sold hereunder by the Selling Shareholders have been
placed in custody with Stock Trans, Inc. as custodian (the "Custodian") pursuant
to the Custodian Agreement executed by each Selling Shareholder for delivery of
any Option Shares to be sold hereunder by the Selling Shareholders. Each of the
Selling Shareholders specifically agrees that any Option Shares represented by
the certificates held in custody for the Selling Shareholders under the
Custodian Agreement are subject to the interests of the Underwriters hereunder,
that the arrangements made by the Selling Shareholders for such custody are to
that extent irrevocable, and that the obligations of the Selling Shareholders
hereunder shall not be terminable by any act or deed of the Selling Shareholders
(or by any other person, firm or corporation including the Company, the
Custodian or the Underwriters) or by operation of law (including the death of an
individual Selling Shareholder or the dissolution of a corporate Selling
Shareholder) or by the occurrence of any other event or events, except as set
forth in the Custodian Agreement. If any such event should occur prior to the
delivery to the Underwriters of the Option Shares hereunder, certificates for
the Option Shares shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such event has not occurred. The
Custodian is authorized to receive and acknowledge receipt of the proceeds of
sale of the Shares held by it against delivery of such Shares.
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4. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a
public offering of the Firm Shares as soon as the Representatives deem it
advisable to do so. The Firm Shares are to be initially offered to the public at
the initial public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option Shares
are purchased pursuant to Section 3 hereof, the Underwriters will offer them to
the public on the foregoing terms.
It is further understood that you will act as the
Representatives for the Underwriters in the offering and sale of the Shares in
accordance with a Master Agreement Among Underwriters entered into by you and
the several other Underwriters.
5. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters
that:
(a) The Company will (i) use its best efforts to
cause the Registration Statement to become effective or, if the procedure in
Rule 430A of the Rules and Regulations is followed, to prepare and timely file
with the Commission under Rule 424(b) of the Rules and Regulations a Prospectus
in a form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A of the Rules and Regulations, (ii) not file any amendment to the
Registration Statement or supplement to the Prospectus (or document incorporated
by reference therein) of which the Representatives shall not previously have
been advised and furnished with a copy or to which the Representatives shall
have reasonably objected in writing or which is not in compliance with the Rules
and Regulations and (iii) file on a timely basis all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission subsequent to the date of the Prospectus and prior to the termination
of the offering of the Shares by the Underwriters.
(b) The Company will advise the Representatives
promptly (i) when the Registration Statement or any post-effective amendment
thereto shall have become effective, (ii) of receipt of any comments from the
Commission, (iii) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
(c) The Company will cooperate with the
Representatives in endeavoring to qualify the Shares for sale under the
securities laws of such jurisdictions as the
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Representatives may reasonably have designated in writing and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent. The Company will, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to continue
such qualifications in effect for so long a period as the Representatives may
reasonably request for distribution of the Shares.
(d) The Company will deliver to, or upon the order
of, the Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period when
delivery of a Prospectus is required under the Act, as many copies of the
Prospectus in final form or as thereafter amended or supplemented, as the
Representatives may reasonably request. The Company will deliver to the
Representatives at or before the Closing Date, four signed copies of the
Registration Statement and all amendments thereto including all exhibits filed
therewith, and will deliver to the Representatives such number of copies of the
Registration Statement (including such number of copies of the exhibits filed
therewith that may reasonably be requested), including documents incorporated by
reference therein, if any, and of all amendments thereto, as the Representatives
may reasonably request.
(e) The Company will comply with the Act and the
Rules and Regulations, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder, so
as to permit the completion of the distribution of the Shares as contemplated in
this Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the Representatives, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will either (i) prepare
and file with the Commission an appropriate amendment to the Registration
Statement or supplement to the Prospectus or (ii) prepare and file with the
Commission an appropriate filing under the Exchange Act which shall be
incorporated by reference in the Prospectus so that the Prospectus as so amended
or supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law.
(f) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration Statement, an
earnings statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise you in writing when such statement has been so made
available.
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(g) Prior to the Closing Date, the Company will
furnish to the Representatives, as soon as they have been prepared by or are
available to the Company, a copy of any unaudited interim financial statements
of the Company for any period subsequent to the period covered by the most
recent financial statements appearing in the Registration Statement and the
Prospectus.
(h) The Company will, for a period of five years from
the Closing Date, deliver to the Representatives copies of annual reports and
copies of all other documents, reports and information furnished by the Company
to its stockholders or filed with any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the Act or the
Exchange Act.
(i) Except for issuances of shares of Common Stock
pursuant to (i) option or warrant exercises or the grant of options to
employees, directors, consultants and other eligible recipients under the
Company's option plans, or (ii) acquisitions by the Company in which shares of
its Common Stock are used, in whole or in part, as consideration, no offering,
sale, short sale or other disposition of any shares of Common Stock of the
Company or other securities convertible into or exchangeable or exercisable for
shares of Common Stock or derivative of Common Stock (or agreement for such)
will be made for a period of 180 days after the date of this Agreement, directly
or indirectly, by the Company otherwise than hereunder or with the prior written
consent of Deutsche Bank Securities Inc., nor shall the Company file any
registration statement with respect to the proposed sale of its Shares except
that the Company may file one or more registration statements on Form S-4
registering shares of common stock issued in acquisitions or on Form S-8
relating to shares issued pursuant to options and employee benefit plans.
(j) The Company will use its best efforts to list,
subject to notice of issuance, the Shares on The NASDAQ National Market.
(k) The Company has caused each officer and director
of the Company, and certain shareholders of the Company listed on Schedule III
hereto, to furnish to you, on or prior to the date of this agreement, a letter
or letters, in form and substance satisfactory to the Underwriters, pursuant to
which each such person shall agree not to offer, sell, sell short or otherwise
dispose of any shares of Common Stock of the Company or other capital stock of
the Company, or any other securities convertible, exchangeable or exercisable
for Common Shares or derivative of Common Shares owned by such person or request
the registration for the offer or sale of any of the foregoing (or as to which
such person has the right to direct the disposition of) for a period of 180 days
after the date of this Agreement, directly or indirectly, except with the prior
written consent of Deutsche Bank Securities Inc. ("Lockup Agreements").
(l) The Company shall apply the net proceeds of its
sale of the Shares as set forth in the Prospectus and shall file such reports
with the Commission with respect to the
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sale of the Shares and the application of the proceeds therefrom as may be
required in accordance with Rule 463 under the Act.
(m) The Company shall not invest, or otherwise use
the proceeds received by the Company from its sale of the Shares in such a
manner as would require the Company to register as an investment company under
the Investment Company Act of 1940, as amended (the "1940 Act").
(n) The Company will maintain a transfer agent and,
if necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock.
(o) The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
6. COVENANTS OF THE SELLING SHAREHOLDERS.
Each of the Selling Shareholders covenants and agrees,
severally and not jointly, with the several Underwriters that:
(a) No offering, sale, short sale or other
disposition of any shares of Common Stock of the Company or other capital stock
of the Company or other securities convertible, exchangeable or exercisable for
Common Stock or derivative of Common Stock owned by the Selling Shareholder or
request the registration for the offer or sale of any of the foregoing (or as to
which the Selling Shareholder has the right to direct the disposition of) will
be made for a period of 180 days after the date of this Agreement, directly or
indirectly, by such Selling Shareholder otherwise than hereunder or with the
prior written consent of Deutsche Bank Securities Inc.
(b) In order to document the Underwriters' compliance
with the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of
1983 with respect to the transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to you prior to or at the Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
(c) Such Selling Shareholder will not take, directly
or indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the stabilization or
manipulation of the price of any securities of the Company.
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7. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Sellers under this Agreement,
including the following: accounting fees of the Company; the fees and
disbursements of counsel for the Company; the cost of printing and delivering
to, or as requested by, the Underwriters copies of the Registration Statement,
Preliminary Prospectuses, the Prospectus, this Agreement, the Underwriters'
Selling Memorandum the Underwriters' Invitation Letter, the Listing Application,
the Blue Sky Survey and any supplements or amendments thereto; the filing fees
of the Commission; the filing fees and expenses (including reasonable legal fees
and disbursements) incident to securing any required review by the NASD of the
terms of the sale of the Shares; the listing Fee of the NASDAQ Stock Market; and
the expenses, including the reasonable fees and disbursements of counsel for the
Underwriters, incurred in connection with the qualification of the Shares under
State securities or Blue Sky laws. The Selling Shareholders have agreed with the
Company to reimburse the Company for a portion of such expenses in the event
Option Shares are purchased. To the extent, if at all, that any of the Selling
Shareholders engage legal counsel to represent them in connection with this
offering the fees and expenses of such counsel shall be borne by such Selling
Shareholder. Underwriting discounts and commissions related to the sale of
Shares by the Selling Shareholders shall be borne by the Selling Shareholders.
Any transfer taxes imposed on the sale of the Shares to the several Underwriters
will be paid by the Sellers pro rata based on the number of Shares sold by each
of such Sellers. The Sellers shall not, however, be required to pay for any of
the Underwriters' expenses (other than those related to qualification under NASD
regulation and State securities or Blue Sky laws) except that, if this Agreement
shall not be consummated because the conditions in Section 6 hereof are not
satisfied, or by reason of any failure, refusal or inability on the part of the
Company or the Selling Shareholders to perform any undertaking or satisfy any
condition of this Agreement or to comply with any of the terms hereof on their
part to be performed, unless such failure to satisfy said condition or to comply
with said terms be due to the default or omission of any Underwriter, then the
Company and each of the Selling Shareholders pro rata (based on the number of
Shares to be sold by the Company and such Selling Stockholder hereunder) shall
reimburse the several Underwriters for reasonable out-of-pocket expenses,
including fees and disbursements of counsel, reasonably incurred in connection
with investigating, marketing and proposing to market the Shares or in
contemplation of performing their obligations hereunder; PROVIDED, HOWEVER, that
the Company and the Selling Shareholders shall not in any event be liable to any
of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares.
8. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the
Firm Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the Option
Closing Date, as the case may be, of the representations and warranties of the
Company and the Selling Shareholders contained herein,
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and to the performance by the Company and the Selling Shareholders of their
covenants and obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all filings required
by Rule 424 and Rule 430A of the Rules and Regulations shall have been made, and
any request of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to the
Representatives and complied with to their reasonable satisfaction. No stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued and no proceedings for that purpose
shall have been taken or, to the knowledge of the Company, shall be contemplated
by the Commission and no injunction restraining order, or order of any nature by
a Federal or state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the
Closing Date or the Option Closing Date, as the case may be, the opinion of
Xxxxxx Xxxxxxxx LLP, counsel for the Company, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters (and
stating that it may be relied upon by counsel to the Underwriters) to the effect
that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement; and the
Company is duly qualified to transact business in all jurisdictions in which the
conduct of their business requires such qualification, or in which the failure
to qualify would have a materially adverse effect upon the business of the
Company.
(ii) The Company has authorized and outstanding
capital stock as set forth (under the caption "Capitalization") in the
Prospectus; the authorized shares of the Company's Common Stock have been duly
authorized; the outstanding shares of the Company's Common Stock, including the
Shares to be sold by the Selling Shareholders, have been duly authorized and
validly issued and are fully paid and non-assessable; all of the Shares conform
to the description thereof contained in the Prospectus in all material respects;
the certificates for the Shares, assuming they are in the form filed with the
Commission, are in due and proper form; the shares of Common Stock, including
the Option Shares, if any, to be sold by the Company pursuant to this Agreement
have been duly authorized and will be validly issued, fully paid and
non-assessable when issued and paid for as contemplated by this Agreement; and
to its knowledge no preemptive rights of stockholders exist with respect to any
of the Shares or the issue or sale thereof.
(iii) Except as described in or contemplated by
the Prospectus, to its knowledge there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the
-16-
Company and there are no outstanding or authorized options, warrants or rights
of any character obligating the Company to issue any shares of its capital stock
or any securities convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of such stock; and except as described in
the Prospectus, to its knowledge no holder of any securities of the Company or
any other person has the right, contractual or otherwise, which has not been
satisfied or effectively waived, to cause the Company to sell or otherwise issue
to them, or to permit them to underwrite the sale of, any of the Shares or the
right to have any Common Shares or other securities of the Company included in
the Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of any shares of
Common Stock or other securities of the Company.
(iv) They have been advised by the Commission
that the Registration Statement has become effective under the Act and, to its
best knowledge, no stop order proceedings with respect thereto have been
instituted or are pending or threatened under the Act.
(v) The Registration Statement, the Prospectus
and each amendment or supplement thereto and document incorporated by reference
therein comply as to form in all material respects with the requirements of the
Act or the Exchange Act, as applicable and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the financial
information, including the financial statements, statistical information and
related schedules therein). The conditions for the use of Form S-1, set forth in
the General Instructions thereto, have been satisfied.
(vi) The statements under the captions
"Business-Properties, "Business-Legal Proceedings," and "Description of Capital
Stock" in the Prospectus, insofar as such statements constitute a summary of
documents referred to therein or matters of law, fairly summarize in all
material respects the information called for with respect to such documents and
matters.
(vii) Such counsel does not know of any contracts
or documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are not so filed
or described as required, and such contracts and documents as are summarized in
the Registration Statement or the Prospectus are fairly summarized in all
material respects.
(viii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company except as set
forth in the Prospectus.
(ix) The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Charter or
-17-
bylaws of the Company, or any material agreement or instrument known to such
counsel to which the Company is a party or by which the Company may be bound.
(x) This Agreement has been duly authorized,
executed and delivered by the Company.
(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD or as required by state
securities and Blue Sky laws as to which such counsel need express no opinion)
except such as have been obtained or made, specifying the same.
(xii) The Company is not, and will not become, as
a result of the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
(xiii) This Agreement has been duly authorized,
executed and delivered on behalf of the Selling Shareholders.
(xiv) Each Selling Shareholder has full legal
right, power and authority, and any approval required by law (other than as
required by State securities and Blue Sky laws as to which such counsel need
express no opinion), to sell, assign, transfer and deliver the portion of the
Shares to be sold by such Selling Shareholder.
(xv) The Custodian Agreement and the Power of
Attorney executed and delivered by each Selling Shareholder is valid and
binding.
(xvi) The Underwriters (assuming that they are
bona fide purchasers within the meaning of the Uniform Commercial Code) have
acquired good and marketable title to the Shares being sold by each Selling
Shareholder on the Closing Date, and the Option Closing Date, as the case may
be, free and clear of all liens, encumbrances, equities and claims.
In rendering such opinion Xxxxxx Xxxxxxxx LLP may rely as to
matters of fact upon certificates of officers of the Company, and as to matters
governed by the laws of states other than Delaware or Federal laws on local
counsel in such jurisdictions, and as to the matters set forth in subparagraphs
(xiii), (xiv), (xv) and (xvi) on opinions of other counsel representing the
respective Selling Shareholders, provided that in each case Xxxxxx Xxxxxxxx LLP
shall state that they believe that they and the Underwriters are justified in
relying on such other counsel. In addition to the matters set forth above, such
opinion shall also include a statement to the effect that nothing has come to
the attention of such counsel which leads them to believe that (i) the
-18-
Registration Statement, at the time it became effective under the Act (but after
giving effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) and as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Rules and Regulations and as
of the Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements, in the light of the circumstances
under which they are made, not misleading (except that such counsel need express
no view as to financial information, including the financial statements,
schedules and statistical information therein). With respect to such statement,
such counsel may state that their belief is based upon the procedures set forth
therein, including reliance upon certificates of officers of the Company, but is
without independent check and verification.
(c) The Representatives shall have received from
Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Underwriters, an opinion dated the
Closing Date or the Option Closing Date, as the case may be, substantially to
the effect specified in subparagraphs (ii), (iii) and (iv)of Paragraph (b) of
this Section 6, and that the Company is a duly organized and validly existing
corporation under the laws of the State of Delaware and with respect to any
other matters that the Representatives may reasonably require. In rendering such
opinion Xxxxxxx Xxxx & Xxxxxxxxx may rely as to all matters governed other than
by the laws of the State of New York or Federal laws on the opinion of counsel
referred to in Paragraph (b) of this Section 6. In addition to the matters set
forth above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads them to believe
that (i) the Registration Statement, or any amendment thereto, as of the time it
became effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) as of the Closing Date
or the Option Closing Date, as the case may be, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact, necessary in order to make the statements, in the light
of the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial information, including the
financial statements, schedules and statistical information therein). With
respect to such statement, such counsel may state that their belief is based
upon the procedures set forth therein, but is without independent check and
verification.
(d) The Representatives shall have received at or
prior to the Closing Date from Xxxxxxx Xxxx & Xxxxxxxxx a memorandum or summary,
in form and substance satisfactory to the Representatives, with respect to the
qualification for offering and sale by the Underwriters of the Shares under the
State securities or Blue Sky laws of such jurisdictions as the Representatives
may reasonably have designated to the Company.
-19-
(e) You shall have received, on each of the dates
hereof, the Closing Date and the Option Closing Date, as the case may be, a
letter dated the date hereof the Closing Date or the Option Closing Date, as the
case may be, in form and substance satisfactory to you, of Xxxxxx Xxxxxxxx LLP,
confirming that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder and
stating that in their opinion the financial statements and schedules examined by
them and included in the Registration Statement comply in form in all material
respects with the applicable accounting requirements of the Act and the related
published Rules and Regulations; and containing such other statements and
information as is ordinarily included in accountants' "comfort letters" to
Underwriters with respect to the financial statements and certain financial and
statistical information contained in the Registration Statement and Prospectus.
(f) The Representatives shall have received on the
Closing Date or the Option Closing Date, as the case may be, a certificate or
certificates of the Chief Executive Officer and the Chief Financial Officer of
the Company to the effect that, as of the Closing Date or the Option Closing
Date, as the case may be, each of them severally represents as follows:
(i) The Registration Statement has become
effective under the Act and no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such purpose have
been taken or are, to his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the
Company contained in Section 1 hereof are true and correct as of the Closing
Date or the Option Closing Date, as the case may be;
(iii) All filings required to have been made
pursuant to Rules 424 or 430A under the Act have been made;
(iv) He or she has carefully examined the
Registration Statement and the Prospectus and, in his or her opinion, as of the
effective date of the Registration Statement, the statements contained in the
Registration Statement were true and correct, and such Registration Statement
and Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading, and
since the effective date of the Registration Statement, no event has occurred
which should have been set forth in a supplement to or an amendment of the
Prospectus which has not been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the condition, financial or otherwise,
of the Company or the earnings, business, management, properties, assets,
-20-
rights, operations, or condition (financial or otherwise) of the Company,
whether or not arising in the ordinary course of business.
(g) The Company shall have furnished to the
Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
(h) The Firm Shares and Option Shares, if any, have
been approved for designation upon notice of issuance on the NASDAQ National
Market.
(i) The Lockup Agreements described in Section 5 are
in full force and effect.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are
in all material respects reasonably satisfactory to the Representatives and to
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this
Section 8 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Representatives by notifying the Company and the Selling Shareholders of
such termination in writing or by telegram at or prior to the Closing Date or
the Option Closing Date, as the case may be.
In such event, the Company, the Selling Shareholders and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 7 and 10 hereof).
9. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to sell and deliver the portion
of the Shares required to be delivered as and when specified in this Agreement
are subject to the conditions that at the Closing Date or the Option Closing
Date, as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
10. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act, against any losses, claims, damages or liabilities to
which such Underwriter or any such controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon
-21-
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity obligation will
be in addition to any liability which the Company may otherwise have.
The Company agrees to reimburse each Underwriter and each such
controlling person upon demand for any legal or other out-of-pocket expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental inquiry
related to the offering of the Shares, whether or not such Underwriter or
controlling person is a party to any action or proceeding. In the event that it
is finally judicially determined that the Underwriters were not entitled to
receive payments for legal and other expenses pursuant to this subparagraph, the
Underwriters will promptly return all sums that had been advanced pursuant
hereto.
(b) In the event that you exercise your option to
purchase Option Shares, the Selling Shareholders agree to indemnify the
Underwriters and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities to which
such Underwriter or controlling person may become subject under the Act or
otherwise as a result of misrepresentations or untrue warranties of the Selling
Shareholders contained in Section 2 herein. In no event, however, shall the
liability of any Selling Shareholder for indemnification under this Section
10(b) exceed the proceeds received by such Selling Shareholder from the
Underwriters in the offering. This indemnity obligation will be in addition to
any liability which the Selling Shareholders may otherwise have.
(c) Each Underwriter severally and not jointly will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement, the Selling Shareholders
and each person, if any, who controls the Company or the Selling Shareholders
within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer, Selling
Shareholder or controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the
-22-
circumstances under which they were made or (iii) any act or failure to act or
any alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Shares or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause (i)
or (ii) above; and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, Selling Shareholder or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; provided, however, that each
Underwriter will be liable in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representatives specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(d) In case any proceeding (including any
governmental investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to this Section 10, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 10(a), (b) or (c) shall be available to
any party who shall fail to give notice as provided in this Section 10(d) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 10(a), (b) or (c). In case any such proceeding shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred (or within 30 days of presentation) the fees and
expenses of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel within a reasonable period of time after notice of commencement of the
action. It is understood that the indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you in the case
of parties indemnified pursuant to
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Section 10(a) and by the Company and the Selling Shareholders in the case of
parties indemnified pursuant to Section 10(c). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. In
addition, the indemnifying party will not, without the prior written consent of
the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(e) If the indemnification provided for in this
Section 10 is unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), (b) or (c) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Shareholders on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Shareholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Shareholders on the one hand or the
Underwriters on the other, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
Section 10(e) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 10(e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to
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above in this Section 10(e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection 10(e), (i)
no Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11 (f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation, and (iii) no
Selling Shareholder shall be required to contribute any amount in excess of the
lesser of (A) that proportion of the total of such losses, claims, damages or
liabilities indemnified or contributed against that equals the proportion of the
Shares sold by such Selling Shareholder to the total Shares sold in the
offering, or (B) the proceeds received by such Selling Shareholder from the
Underwriters in the offering. The Underwriters' obligations in this Section
10(e) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) In any proceeding relating to the Registration
Statement, any Preliminary Prospectus, the Prospectus or any supplement or
amendment thereto, each party against whom contribution may be sought under this
Section 10 hereby consents to the jurisdiction of any court having jurisdiction
over any other contributing party, agrees that process issuing from such court
may be served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party.
(g) Any losses, claims, damages, liabilities or
expenses for which an indemnified party is entitled to indemnification or
contribution under this Section 10 shall be paid by the indemnifying party to
the indemnified party as such losses, claims, damages, liabilities or expenses
are incurred. The indemnity and contribution agreements of the Company, the
Selling Shareholders and the Underwriters contained in this Section 10 and the
representations and warranties of the Company and the Selling Shareholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or any persons controlling the Company, (ii) acceptance of any Shares and
payment therefor hereunder and (iii) any termination of this Agreement. A
successor to any Underwriter, or to the Company, its directors or officers,
or any person controlling the Company, shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in this
Section 10.
11. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case
may be, any Underwriter shall fail to purchase and pay for the portion of the
Shares which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the
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part of the Company or a Selling Shareholder), you, as Representatives of the
Underwriters, shall use your reasonable efforts to procure within 36 hours
thereafter one or more of the other Underwriters, or any others, to purchase
from the Company and the Selling Shareholders such amounts as may be agreed upon
and upon the terms set forth herein, the Firm Shares or Option Shares, as the
case may be, which the defaulting Underwriter or Underwriters failed to
purchase. If during such 36 hours you, as such Representatives, shall not have
procured such other Underwriters, or any others, to purchase the Firm Shares or
Option Shares, as the case may be, agreed to be purchased by the defaulting
Underwriter or Underwriters, then (a) if the aggregate number of shares with
respect to which such default shall occur does not exceed 10% of the Firm Shares
or Option Shares, as the case may be, covered hereby, the other Underwriters
shall be obligated, severally, in proportion to the respective numbers of Firm
Shares or Option Shares, as the case may be, which they are obligated to
purchase hereunder, to purchase the Firm Shares or Option Shares, as the case
may be, which such defaulting Underwriter or Underwriters failed to purchase, or
(b) if the aggregate number of shares of Firm Shares or Option Shares, as the
case may be, with respect to which such default shall occur exceeds 10% of the
Firm Shares or Option Shares, as the case may be, covered hereby, the Company
and the Selling Shareholders or you as the Representatives of the Underwriters
will have the right, by written notice given within the next 36-hour period to
the parties to this Agreement, to terminate this Agreement without liability on
the part of the non-defaulting Underwriters, the Company or of the Selling
Shareholders except to the extent provided in Section 10 hereof. In the event of
a default by any Underwriter or Underwriters, as set forth in this Section 11,
the Closing Date or Option Closing Date, as the case may be, may be postponed
for such period, not exceeding seven days, as you, as Representatives, may
determine in order that the required changes in the Registration Statement or in
the Prospectus or in any other documents or arrangements may be effected. The
term "Underwriter" includes any person substituted for a defaulting Underwriter.
Any action taken under this Section 11 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
12. NOTICES.
All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows:
(a) if to the Underwriters, to:
Deutsche Bank Securities Inc.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
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with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
(b) if to the Company, to:
Bluestone Software, Inc.
0000 Xxxxxx Xxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
with a copy to:
Xxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
13. TERMINATION.
This Agreement may be terminated by you by notice to the
Sellers as follows:
(a) at any time prior to the Closing Date if any of
the following has occurred: (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change or any development involving a prospective material
adverse change in or affecting the earnings, business, management,
properties, assets, rights, operations, or condition (financial or otherwise)
of the Company, whether or not arising in the ordinary course of business,
(ii) any outbreak or escalation of hostilities or declaration of war or
national emergency or other national or international calamity or crisis or
change in economic or political conditions if the effect of such outbreak,
escalation declaration, emergency, calamity, crisis or change on the
financial markets of the United States would, in your reasonable judgment,
make it impracticable to market the Shares or to enforce contracts for the
sale of the Shares, or (iii) suspension of trading in securities generally on
the New York Stock Exchange or the American Stock Exchange or limitation on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such Exchange, (iv) the enactment, publication, decree
or other promulgation of any statute, regulation, rule or order of any court
or other governmental authority which in your opinion materially and
adversely affects or may materially and adversely affect the business or
operations of the Company, (v) declaration of a banking moratorium by United
States or Xxx
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Xxxx Xxxxx authorities, (vi) any downgrading in the rating of the Company's debt
securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Exchange Act); (vii) the
suspension of trading of the Company's common stock by the Commission on the
NASDAQ Stock Market; or (viii) the taking of any action by any governmental body
or agency in respect of its monetary or fiscal affairs which in your reasonable
opinion has a material adverse effect on the securities markets in the United
States; or
(b) as provided in Sections 8 and 11 of this
Agreement.
14. SUCCESSORS.
This Agreement has been and is made solely for the benefit of
the Underwriters, the Company and the Selling Shareholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
15. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that
the only information furnished or to be furnished by any Underwriter to the
Company for inclusion in any Prospectus or the Registration Statement consists
of the information set forth in the last paragraph on the front cover page
(insofar as such information relates to the Underwriters), legends required by
Item 502(d) of Regulation S-K under the Act and the information under the
caption "Underwriting" in the Prospectus.
16. MISCELLANEOUS.
(a) The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or controlling person thereof or by or on
behalf of the Company or its directors or officers or the Selling Shareholders
and (iii) delivery of and payment for the Shares under this Agreement.
(b) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware.
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If the foregoing letter is in accordance with your
understanding of our agreement, please sign and return to us the enclosed
duplicates hereof, whereupon it will become a binding agreement among the
Company and the several Underwriters in accordance with its terms.
Any person executing and delivering this Agreement as
Attorney-in-Fact for a Selling Shareholder represents by so doing that he has
been duly appointed as Attorney-in-Fact by such Selling Shareholder pursuant to
a validly existing and binding Power of Attorney which authorizes such
Attorney-in-Fact to take such action.
Very truly yours,
BLUESTONE SOFTWARE, INC.
By:
------------------------------------------
Xxxxx Xxxxxx
Xxxxx Xxxxxx
General Electric Capital Corporation
P/A Fund, L.P.
APA Excelsior IV, L.P.
APA Excelsior IV/Offshore, L.P.
Patricof Private Investment Club, L.P.
By:
------------------------------------------
Attorney-in-Fact
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above written.
DEUTSCHE BANK SECURITIES INC.
SOUNDVIEW TECHNOLOGY GROUP, INC.
X.X. XXXXXXXXX, TOWBIN
XXXX XXXXX XXXX XXXXXX, INC.
As Representatives of the several
Underwriters listed on Schedule I
By: DEUTSCHE BANK SECURITIES INC.
By:
------------------------------
Authorized Officer
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SCHEDULE I
SCHEDULE OF UNDERWRITERS
Underwriter Number of Firm Shares to be Purchased
---------------------------- -------------------------------------
Deutsche Banc Alex. Xxxxx
SoundView Technology Group, Inc.
X.X. Xxxxxxxxx Towbin
Xxxx Xxxxx Xxxx Xxxxxx, Inc.
Total:
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SCHEDULE II
SCHEDULE OF OPTION SHARES
Maximum Number of Percentage of Total
Number of Name of Seller Option Shares Option Shares
------------------------------ --------------------- ------------------------
Total 100%
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SCHEDULE III
LOCK-UP AGREEMENTS
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