EXHIBIT 1.1
FORM OF UNDERWRITING AGREEMENT
[ ] Shares
---------------
NATURAL MICROSYSTEMS CORPORATION
Common Stock
($.01 Par Value)
EQUITY UNDERWRITING AGREEMENT
-----------------------------
[ ], 2000
------------- --
DEUTSCHE BANK SECURITIES INC.
XXXX XXXXXXXX INCORPORATED
U.S. BANCORP XXXXX XXXXXXX INC.
FIRST ALBANY CORPORATION
As Representatives of the Several Underwriters
c/o Deutsche Bank Securities Inc.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Natural MicroSystems Corporation, 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 [ ] shares of the Company's Common
----------
Stock, $.01 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 also proposes to sell at the
Underwriters' option an aggregate of up to [ ] additional shares of the
----------
Company's Common Stock (the "Option Shares") as set forth below.
As the Representatives, you have advised the Company (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 numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option Shares
if 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-3 (File No. 333-95431) 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-3 and the registration statement
filed by electronic transmission pursuant to the Commission's
Electronic Data Gathering, Analysis and Retrieval System ("XXXXX")
(except as may be permitted by Regulation S-T under the Act) was
identical to the copy thereof delivered to you for use in connection
with the offer and sale of the Shares. 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 the form of prospectus
first filed with the Commission pursuant to Rule 424(b). 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 not distributed and will not distribute, prior to the
later of the Option Closing Date (as defined below) and the completion
of the Underwriters' distribution of the Shares, any offering material
in connection with the offering and sale of the Shares other than the
Preliminary Prospectus, the Prospectus or the Registration Statement.
(c) This Agreement has been duly authorized, executed and delivered by,
and is a valid and binding agreement of, the Company, enforceable
against the Company
2
in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
(d) 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 to
enter into and perform its obligations under this Agreement. Each of
the subsidiaries of the Company listed in Exhibit A hereto
(collectively, the "Subsidiaries") has been duly organized and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, with corporate power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement. The Subsidiaries are the only
subsidiaries, direct or indirect, of the Company and the Company does
not own or control, directly or indirectly, any corporation,
association or other entity other than the Subsidiaries. The
Subsidiaries listed on Exhibit B hereto (collectively, the
"Significant Subsidiaries") and the Company collectively generated
more than 98% of the consolidated revenue of the Company and the
Subsidiaries during the year ended December 31, 1999, and currently
own more than 98% of the consolidated assets of the Company and the
Subsidiaries. The Company and each of the Subsidiaries are duly
qualified to transact business in all jurisdictions in which the
conduct of their business requires such qualification. The outstanding
shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable and
are owned by the Company or another Subsidiary free and clear of all
liens, encumbrances and equities and claims; and no options, warrants
or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into shares of capital
stock or ownership interests in the Subsidiaries are outstanding.
(e) The outstanding shares of Common Stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable;
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. None of the outstanding shares of Common
Stock were issued in violation of any preemptive rights, rights of
first refusal or other rights to subscribe for or purchase securities
of the Company. There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other rights
to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or
any of the Subsidiaries other than those described in the Prospectus.
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.
3
(f) The Company has filed a notification of listing of the Shares on the
Nasdaq National Market.
(g) The information set forth under the caption "Capitalization" in the
Prospectus is true and correct. All of the Shares conform to the
description thereof contained in the Registration Statement. The form
of certificates for the Shares conforms to the corporate law of the
jurisdiction of the Company's incorporation.
(h) 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. The documents incorporated by
reference in the Prospectus, at the time filed with the Commission,
conformed in all material respects to the requirements of the
Securities Exchange Act of 1934 or the Act, as applicable, and the
rules and regulations of the Commission thereunder. The Registration
Statement and any amendments 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.
(i) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth
or incorporated by reference in the Registration Statement, present
fairly the financial position and the results of operations and cash
flows of the Company and the consolidated Subsidiaries, at the
indicated dates and for the indicated periods. Such financial
statements and related schedules have been prepared in accordance with
generally accepted accounting principles, consistently applied
throughout the periods involved, except as disclosed therein, and all
adjustments necessary for a fair presentation of results for such
periods have been made. No other financial statements or supporting
schedules are required to be included in the Registration Statement.
The summary financial and statistical data included or incorporated by
reference in the Registration Statement presents fairly the
4
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.
(j) PricewaterhouseCoopers LLP, who have certified certain of the
financial statements filed with the Commission as part of, or
incorporated by reference in, the Registration Statement, are
independent public accountants as required by the Act and the Rules
and Regulations.
(k) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency or otherwise
which if determined adversely to the Company or any of its
Subsidiaries might result in any material adverse change in the
earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the
Company and of the Subsidiaries taken as a whole or prevent the
consummation of the transactions contemplated hereby.
(l) The Company and the Subsidiaries have good and marketable title to all
of the properties and assets reflected in the financial statements
hereinabove described (or as described in the Registration Statement),
and such properties and assets are not subject to any lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in
such financial statements (or as described in the Registration
Statement) or which are not material, individually or in the
aggregate, in amount. The Company and the Subsidiaries occupy their
leased properties under valid and binding leases.
(m) The Company and the Subsidiaries have filed all federal, state, local
and foreign tax returns which have been required to be filed and have
paid all taxes indicated by said returns and all assessments received
by them or any of 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.
(n) 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,
condition (financial or otherwise), or prospects of the Company and
its Subsidiaries taken as a whole, whether or not occurring in the
ordinary course of business, and there has not been any material
transaction entered into or any material transaction that is probable
of being entered into by the Company or any Subsidiary, 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 and the Subsidiaries have no
material contingent obligations which are not disclosed in the
Company's financial statements and described in the Registration
Statement.
5
(o) Neither the Company nor any of the Subsidiaries is or with the giving
of notice or lapse of time or both, will 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 or assets, is bound and
which default is of material significance in respect of the business,
management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole. 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 breach of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any Subsidiary is a
party or by which its properties or assets are bound, or of the
charter or by-laws of the Company or any order, rule or regulation
applicable to the Company or any Subsidiary of any court or of any
regulatory body or administrative agency or other governmental body
having jurisdiction.
(p) 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.
(q) The Company and each of the Subsidiaries holds all material licenses,
certificates and permits from governmental authorities which are
necessary to the conduct of their respective businesses and are in
compliance with the terms thereof, and all such licenses, certificates
and permits are in full force and effect.
(r) The Company and each of the Subsidiaries are conducting their business
in compliance with all the local, state, federal and foreign laws,
rules and regulations of the jurisdictions in which the Company and
each of the Subsidiaries are conducting their respective businesses.
(s) The Company and the Subsidiaries own or possess sufficient trademarks,
trade names, service marks, patents, patent rights, copyrights,
licenses, approvals, inventions, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and
intellectual property necessary to conduct their businesses as now
conducted and have taken all steps reasonably necessary to secure
assignments of such intellectual property from their employees and
6
contractors; to the knowledge of the Company none of the technology
employed by the Company or its Subsidiaries has been obtained or is
being used by the Company or its Subsidiaries in violation of any
contractual or fiduciary obligation binding on the Company, its
Subsidiaries or any of their respective directors or executive
officers or, to the Company's knowledge, any of their respective
employees or consultants; and the Company and its Subsidiaries have
taken and will maintain reasonable measures to prevent the
unauthorized dissemination or publication of its confidential
information.
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. The Company has good and marketable title to
the patents and patent applications referred to in the Prospectus.
Neither the Company nor any of the Subsidiaries has infringed,
interfered with or misappropriated any patents, patent rights, trade
names, trademarks, copyrights or other intellectual property rights of
others, which infringement, if the subject of any unfavorable
decision, ruling or finding would, individually or in the aggregate,
be reasonably likely to result in a material adverse change in the
earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the
Company and the Subsidiaries taken as a whole.
To the Company's knowledge, there are no legal or governmental
proceedings pending relating to trademarks, trade names, patent
rights, mask works, copyrights, licenses, trade secrets or other
intellectual property rights of the Company or any of the Subsidiaries
other than the prosecution by the Company and the Subsidiaries of
their patent applications before the United States Patent Office and
appropriate foreign government agencies, and no proceedings are
threatened or contemplated by governmental authorities or others
relating to trademarks, trade names, patent rights, mask works,
copyrights, licenses or other intellectual property rights of the
Company or the Subsidiaries.
(t) Neither the Company nor, to the Company's knowledge, any of its
affiliates, has taken, 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 stabilizing and passive market making transactions in the
Shares on the Nasdaq National Market and other activities in
accordance with Regulation M under the Exchange Act.
(u) Neither the Company nor any Subsidiary is, or after the issuance and
sale of, and the receipt of payment for, the Shares and the
application of the net proceeds therefrom as described in the
Prospectus will be, an "investment company" or an entity "controlled"
by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations of the Commission thereunder.
7
(v) 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.
(w) The Company and each of its Subsidiaries, taken as a whole, carry, or
are covered by, insurance from recognized, financially sound and
reputable institutions in such amounts and covering such risks as is
adequate for the conduct of their businesses and the value of their
properties and as is customary for companies engaged in similar
industries.
(x) 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 nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
(y) To the Company's knowledge, there are no affiliations or associations
between any member of the NASD and any of the Company's officers or
directors.
(z) Neither the Company nor any of its Subsidiaries nor, to the Company's
knowledge, any employee or agent of the Company or any Subsidiary, has
made any contribution or other payment to any official of, or
candidate for, any federal, state or foreign office in violation of
any law or of a character required to be disclosed in the Prospectus.
(aa) There are no costs or liabilities associated with applicable foreign,
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 ("Environmental
Laws"), including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or
8
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties, which would be reasonably expected,
singly or in the aggregate, to have a material adverse effect on the
Company and the Subsidiaries, taken as a whole.
(bb) The Company has reviewed its operations and that of its Subsidiaries
and any third parties with which the Company or any of its
Subsidiaries has a material relationship to evaluate the extent to
which the business or operations of the Company or any of its
Subsidiaries will be affected by the Year 2000 Problem. As a result of
such review, the Company has no reason to believe, and does not
believe, that the Year 2000 Problem will result in a material adverse
change in the earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of
the Company and of the Subsidiaries taken as a whole or result in any
material loss or interference with the Company's business or
operations. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000.
(cc) Any certificate signed by an officer of the Company or any of its
Subsidiaries delivered to the Representatives or to counsel for the
Underwriters shall be deemed to be a representation and warranty
hereunder by the Company to each Underwriter as to the matters covered
thereby.
2. 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 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made in New
York Clearing House funds by federal (same day) funds against delivery
of certificates therefor to the Representatives for the several
accounts of the Underwriters. Such payment and delivery are to be
made through the facilities of the Depository Trust Company, New York,
New York at 10:00 a.m., New York 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
9
open for business and are not permitted by law or executive order
to be closed. [The certificates for the Firm Shares, if any, 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 terms and conditions herein set forth,
the Company hereby grants 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 2. 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) only once thereafter within 30 days
after the date of this Agreement, by you, as Representatives of the
several Underwriters, to the Company 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. 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 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 being sold hereunder, adjusted by you in
such manner as to avoid fractional shares. The option with respect to
the Option Shares granted hereunder may be exercised only to cover
over-allotments in the sale of the Firm Shares by the Underwriters.
You, as 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. To the extent, if any, that the
option is exercised, payment for the Option Shares shall be made on
the Option Closing Date in federal (same day funds) through the
facilities of the Depository Trust Company in New York, New York.
3. 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 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.
10
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.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
------------------------
several Underwriters that:
(a) The Company will (A) use its best efforts 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, (B) not file any amendment to the Registration Statement
or supplement to the Prospectus 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 (C) 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 (A) when the
Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the
Commission, (C) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any
additional information, and (D) 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 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
11
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, 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
Underwriters, 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 Securities Exchange Act of 1934 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
earning 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 earning
statement shall satisfy the requirements of Section 11(a) of the Act
and Rule 158 of the Rules and Regulations and will advise you in
writing when such statement has been so made available.
(g) Prior to the Closing Date, the Company will furnish to the
Underwriters, 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) 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
12
agreement for such) will be made for a period of 90 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.; provided, however, that this Section 4(h) shall
not apply to (I) the sale of the Shares to the Underwriters hereunder;
(II) the issuance by the Company of shares of Common Stock upon the
exercise of an option or warrant or the conversion of a security
outstanding on the date hereof of which Deutsche Bank Securities Inc.
has been advised in writing; or (III) the issuance of additional
options under the Company's existing stock option plans, provided that
such stock options are not exercisable during such 90 day period, or
additional shares of Common Stock under the Company's existing
employee stock purchase plan.
(i) The Company has caused the persons listed on Exhibit C 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 90 days after the date of this Agreement, directly or
indirectly, except with the prior written consent of Deutsche Bank
Securities Inc. (the "Lockup Agreements").
(j) The Company shall apply the net proceeds of its sale of the Shares as
set forth in the Prospectus.
(k) 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 or any of the Subsidiaries to register as an
investment company under the 1940 Act.
(l) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar for the
Common Stock.
(m) The Company will not take, and will use its best efforts to cause its
affiliates not to 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.
5. COSTS AND EXPENSES.
------------------
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement, including,
without limiting the generality of the foregoing, 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
13
Underwriters copies of the Registration Statement, Preliminary Prospectuses, the
Prospectus, this Agreement, the Underwriters' Selling Memorandum, if any, the
Underwriters' Invitation Letter, the Blue Sky Survey and any supplements or
amendments thereto; the filing fees of the Commission; the filing fees and
expenses (including 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 National Market; and the expenses, including the fees and
disbursements of counsel for the Underwriters, incurred in connection with the
qualification of the Shares under state securities or blue sky laws. Any
transfer taxes imposed on the sale of the Shares to the several Underwriters
will be paid by the Company. The Company 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 because this Agreement is terminated by the
Representatives pursuant to Section 11 hereof, or by reason of any failure,
refusal or inability on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on its 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 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;
but the Company 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.
6. 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 contained
herein, and to the performance by the Company of its 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 or the Option Closing Date, as
the case may be, which would prevent the issuance of the Shares.
14
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Xxxxxx, Xxxx &
Xxxxxxx, 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; each of the Significant Subsidiaries has
been duly organized and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease
its properties and conduct its business as described in the
Registration Statement; the Company and each of the Significant
Subsidiaries are 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 and
the Subsidiaries taken as a whole; and the outstanding shares of
capital stock of each of the Significant Subsidiaries have been
duly authorized and validly issued and are fully paid and non-
assessable and are owned of record and, to the knowledge of such
counsel, beneficially by the Company or a Subsidiary; and, to
such counsel's knowledge (A) the outstanding shares of capital
stock of each of the Significant Subsidiaries is owned free and
clear of all liens, encumbrances and equities and claims, (B)
there are no outstanding securities convertible or exchangeable
into or evidencing the right to purchase or subscribe for any
shares of capital stock of the Significant Subsidiaries, and (C)
there are no outstanding or authorized options, warrants or
rights of any character obligating the Company or the Significant
Subsidiaries to issue any shares of any Significant Subsidiary's
capital stock or any securities convertible or exchangeable into
or evidencing the right to purchase or subscribe for any shares
of such stock.
(ii) The Company has authorized and outstanding capital stock as set
forth in the column entitled "Actual" 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 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; 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 no preemptive rights of stockholders exist with
respect to any of the Shares or the issue or sale thereof.
15
(iii) Except as described in or contemplated by the Prospectus, to the
knowledge of such counsel, there are no outstanding securities of
the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of
the Company and there are no outstanding or authorized options,
warrants or rights of any character obligating the Company to
issue any shares of its capital stock or any securities
convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of such stock; and except as
described in the Prospectus, to the knowledge of such counsel, 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) The Registration Statement has become effective under the Act
and, to the knowledge of such counsel, 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 Securities Exchange Act of 1934, as applicable,
and the applicable rules and regulations thereunder (except that
such counsel need express no opinion as to the financial
statements and related schedules included or incorporated by
reference therein). The conditions for use of Form S-3 set forth
in the General Instructions thereto, have been satisfied.
(vi) The statements (i) in the Company's Registration Statement on
Form 8-A dated February 17, 1994, describing the Common Stock,
(ii) in the Company's Registration Statement on Form 8-A dated
January 19, 1999, as amended on June 15, 1999, describing the
Company's preferred share purchase rights, and (iii) in Item 15
of the Registration Statement, 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 or incorporated by reference in the
Registration Statement or described in the Registration Statement
or the Prospectus
16
which are not so filed, incorporated by reference 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 or any of
the Subsidiaries 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 by-
laws of the Company, or any agreement or instrument known to such
counsel to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries 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.
In rendering such opinion Xxxxxx, Xxxx & Xxxxxxx may rely as to
matters governed by the laws of states other than The Commonwealth of
Massachusetts, the General Corporation Law of the State of Delaware or
federal laws on local counsel in such jurisdictions, provided that in
each case Xxxxxx, Hall & Xxxxxxx shall state that they believe that
they and the Underwriters are justified in relying on such other
counsel. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to
the attention of such counsel which leads them to believe that (i) the
Registration Statement, at the time it became effective under the Act
(but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act) and as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
17
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 statements,
schedules and statistical information included or incorporated by
reference therein). With respect to such statement, Xxxxxx, Hall &
Xxxxxxx may state that their belief is based upon the procedures set
forth therein, but is without independent check and verification.
(c) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., intellectual property 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 statements in the portions of the Registration Statement and
the Prospectus headed: "Risk Factors -- We may not be able to
adequately protect our intellectual property, which may
facilitate the development of competing products by others",
"Risk Factors -- Our products may infringe on the intellectual
property rights of third parties, which may result in lawsuits
and prohibit us from selling our products" and "Business -
Intellectual Property and Proprietary Rights" (collectively, the
"Intellectual Property Portion"), insofar as such statements
constitute a summary of documents referred to therein or matters
of law, are accurate summaries and fairly and correctly present,
in all material respects, the information called for with respect
to such documents and matters.
(ii) Such counsel has no knowledge of any facts which would preclude
the Company from having clear title to its patents or patent
applications referenced in the Intellectual Property Portion. To
such counsel's knowledge, the Company owns or possesses
sufficient licenses or other rights to use all trademarks, trade
names, patents, copyrights, licenses, trade secrets, know-how and
other intellectual property necessary to conduct the business now
conducted or proposed to be conducted by the Company as described
in the Prospectus and, to such counsel's knowledge, the Company
is in compliance in all material respects with the terms of any
such licenses and no claims, assertions or allegations with
respect to such licenses have been made to the contrary.
(iii) To such counsel's knowledge, there are no legal or governmental
proceedings pending relating to trademarks, trade names, patents,
patent applications, mask works, copyrights, licenses, trade
secrets or other intellectual property rights which could result
in any material adverse
18
effect upon the Company other than the prosecution by the Company
of its patent applications before the United States Patent and
Trademark Office and appropriate foreign government agencies, and
to such counsel's knowledge no such proceedings are threatened or
contemplated by governmental authorities or others.
(iv) Such counsel does not know of any contract or other document
relating to the Company's intellectual property of a character
required to be filed as an exhibit to the Registration Statement
or required to be described in the Registration Statement or the
Prospectus that has not been filed or described as required.
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
Intellectual Property Portion of the Registration Statement, at the
time the Registration Statement 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 Intellectual Property Portion of the
Prospectus, or any supplement to the Prospectus, on the date such
Prospectus or supplement 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. With respect to such statement, Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C. 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 from Ropes & Xxxx, counsel for
the Underwriters, an opinion dated the Closing Date or the Option
Closing Date, as the case may be, with respect to the incorporation of
the Company, the validity of the Shares delivered on the Closing Date
or the Option Closing Date, as the case may be, the Registration
Statement, the Prospectus and other related matters as the
Representatives may require, and the Company shall have furnished to
such counsel such documents as they request for the purpose of
enabling them to pass upon such matters. In rendering such opinion,
Ropes & Xxxx may rely as to all matters governed other than by the
laws of The Commonwealth of Massachusetts, the General Corporation Law
of the State of Delaware, 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
19
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 statements,
schedules and statistical information included or incorporated by
reference therein). With respect to such statement, Ropes & Xxxx may
state that their belief is based upon the procedures set forth
therein, but is without independent check and verification.
(e) The Representatives shall have received at or prior to the Closing
Date from Ropes & Xxxx 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.
(f) 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
PricewaterhouseCoopers LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable 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 as to 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.
(g) 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 Registrations
Statement has been issued, and no proceedings for such purpose
have been taken or are, to his knowledge, contemplated by the
Commission;
20
(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) The Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or
prior to such closing date;
(v) He has carefully examined the Registration Statement and the
Prospectus and, in his 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
(vi) 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 and its
Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business.
(h) On each of the Closing Date and the Option Closing Date, if any, the
Representatives shall have received a certificate or certificates of
the Secretary of the Company in form and substance reasonably
satisfactory to the Representatives.
(i) 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.
(j) The Lockup Agreements described in Section 4(j) 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 satisfactory to the Representatives and to Ropes & Xxxx, counsel for
the Underwriters.
21
If any of the conditions hereinabove provided for in this Section 6 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 of such termination in writing, by
telecopy 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 and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
--------------------------------------------
The obligations of the Company 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.
8. INDEMNIFICATION.
---------------
(a) The Company agrees:
(i) 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 (A) 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, (B) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, or (C) 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 (A) or (B)
above (provided, that the Company shall not be liable under this
clause (C) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss,
claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by
such Underwriter through its gross negligence or willful
misconduct); 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
22
written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof.
(ii) 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) 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 and each person, if any, who
controls the Company within the meaning of the Act, against any
losses, claims, damages or liabilities to which the Company or any
such director, officer, or controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances under which they were made; and will reimburse
any legal or other expenses reasonably incurred by the Company or any
such director, officer, 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.
(c) 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 8, 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 8(a) or (b) shall be
available to any party who shall fail to give notice as provided in
this Section 8(c) if the party to whom notice was not given was
23
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 8(a) or (b). 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 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 acceptable to the
indemnified party within a reasonable period of time after notice of
commencement of the action. It is understood that the indemnifying
party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable
fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you
in the case of parties indemnified pursuant to Section 8(a) and by the
Company in the case of parties indemnified pursuant to Section 8(b).
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 and does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under Section
8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party
24
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
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 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 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 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 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 and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) 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 8(d). The amount paid or payable by
an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
above in this Section 8(d) 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 (d), (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, and (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. The Underwriters' obligations
in this Section 8(d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(e) 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 8 hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing
25
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.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under
this Section 8 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
contained in this Section 8 and the representations and warranties of
the Company 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 8.
9. DEFAULT BY UNDERWRITERS.
-----------------------
If on the Closing Date or the Option Closing Date, as the case may be, any
Underwriter shall fail to purchase and pay for the portion of the Shares which
such Underwriter has agreed to purchase and pay for on such date (otherwise than
by reason of any default on the part of the Company), 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 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 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 or of the Company except to the extent provided in Section 8
hereof. In the event of a default by any Underwriter or Underwriters, as set
forth in this Section 9, the
26
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 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. NOTICES.
-------
All communications hereunder shall be in writing and, except as otherwise
provided herein, will be mailed, delivered, telecopied or telegraphed and
confirmed as follows: if to the Underwriters, to Deutsche Bank Securities Inc.,
Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Xxx X. Xxxxxxx; with a
copy to Deutsche Bank Securities Inc., One Bankers Trust Plaza, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General Counsel; if to the Company,
to Natural MicroSystems Corporation, 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxxx 00000, Attention: President, with a copy to Xxxxxx, Hall &
Xxxxxxx, Exchange Place, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxx, Esq..
11. TERMINATION.
-----------
(a) This Agreement may be terminated by you by notice to the Company 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 condition, financial or otherwise,
of the Company and its Subsidiaries taken as a whole or the earnings,
business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole, 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 or inadvisable 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, the American
Stock Exchange or the Nasdaq National Market or limitation on prices
(other than limitations on hours or numbers of days of trading) for
securities on either such Exchange or the Nasdaq National Market, (iv)
the enactment, publication, decree or other promulgation of any
statute, regulation, rule or order of any court or other governmental
authority which in your opinion materially and adversely affects or
may materially and adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by United States or
New York State authorities, (vi) any downgrading, or placement on any
watch list for possible downgrading, in the rating of the Company's
debt securities by any "nationally recognized statistical rating
organization" (as
27
defined for purposes of Rule 436(g) under the Exchange Act); (vii) the
suspension of trading of the Company's common stock by the Nasdaq
National Market, the Commission, or any other governmental authority
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) This Agreement may be terminated as provided in Sections 6 and 9 of
this Agreement.
12. SUCCESSORS.
----------
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company 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.
13. 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 (relating to
the Underwriters' expected delivery of the Shares) and the information set forth
in the table after the first paragraph, the third paragraph (insofar as it
relates to concessions and reallowances) and seventh paragraph under the caption
"Underwriting" in the Prospectus.
14. MISCELLANEOUS.
-------------
The reimbursement, indemnification and contribution agreements contained in
this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers, and (c) delivery of and payment for the Shares under
this Agreement.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland.
28
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
NATURAL MICROSYSTEMS CORPORATION
By:
---------------------------------------------
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
DEUTSCHE BANK SECURITIES INC.
XXXX XXXXXXXX INCORPORATED
U.S. BANCORP XXXXX XXXXXXX INC.
FIRST ALBANY CORPORATION
As Representatives of the several
Underwriters listed on Schedule I
By: DEUTSCHE BANK SECURITIES INC.
By:
------------------------------------
Authorized Officer
29
SCHEDULE I
Schedule of Underwriters
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
Deutsche Bank Securities Inc.
Xxxx Xxxxxxxx Incorporated
U.S. Bancorp Xxxxx Xxxxxxx Inc.
First Albany Corporation
TOTAL [ ]
========
30
EXHIBIT A
SUBSIDIARIES
31
EXHIBIT B
SIGNIFICANT SUBSIDIARIES
32
EXHIBIT C
LOCKUP AGREEMENTS
Xxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx, III
W. Xxxxx Xxxx, Ph.D.
Xxxxxx X. X. Xxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxxx X. Xxxxxxxxxx, Ph.D.
Xxxxxxx X. Xxxxxxx
R. Xxxxxx Xxxxxx
Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
33
