Draft of June 27, 1997
3,500,000 Shares
Peritus Software Services, Inc.
Common Stock
Underwriting Agreement
dated __________________, 1997
TABLE OF CONTENTS
Section 1. Representations and Warranties. ......................................................... 2
A. Representations and Warranties of the Company and the Selling Shareholders....................... 2
B. Representations and Warranties of the Selling Shareholders....................................... 9
C. Representations and Warranties of Certain Selling Shareholders................................... 11
Section 2. Purchase, Sale and Delivery of the Common Shares.......................................... 11
Section 3. Additional Covenants...................................................................... 14
A. Covenants of the Company.......................................................................... 14
B. Covenants of the Selling Shareholders............................................................. 17
Section 4. Payment of Expenses....................................................................... 17
Section 5. Conditions of the Obligations of the Underwriters......................................... 18
Section 6. Reimbursement of Underwriters' Expenses................................................... 22
Section 7. Effectiveness of this Agreement........................................................... 22
Section 8. Indemnification........................................................................... 22
Section 9. Contribution.............................................................................. 26
Section 10. Default of One or More of the Several Underwriters....................................... 27
Section 11. Termination of this Agreement............................................................ 28
Section 12. Representations and Indemnities to Survive Delivery...................................... 29
Section 13. Notices.................................................................................. 29
Section 14. Successors............................................................................... 30
Section 15. Partial Unenforceability................................................................. 30
Section 16. Governing Law Provisions................................................................. 30
Section 17. Failure of One or More of the Selling Shareholders to Sell and Deliver Common Shares..... 31
Section 18. General Provisions....................................................................... 31
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Underwriting Agreement
[Date]
XXXXXXXXXX SECURITIES
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
H.C. XXXXXXXXXX & CO., INC.
As Representatives of the several Underwriters
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Introductory. Peritus Software Services, Inc., a Massachusetts corporation
(the "Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 2,800,000 shares of its Common
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Stock, par value $.01 per share (the "Common Stock"); and certain of the
shareholders of the Company named in Schedule B (the "Primary Selling
----------
Shareholders") propose to sell to the Underwriters an aggregate of 700,000
shares of Common Stock, with each Primary Selling Shareholder selling up to the
amount set forth opposite such Primary Selling Shareholder's name in Schedule B
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under the column entitled "Primary Shares to be Sold." The 2,800,000 shares of
Common Stock to be sold by the Company and the 700,000 shares of Common Stock to
be sold by the Primary Selling Shareholders are collectively called the "Firm
Common Shares." In addition, the Selling Shareholders named in Schedule B
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(collectively, together with the Primary Selling Shareholders, the "Selling
Shareholders") have severally granted to the Underwriters an option to purchase
up to an additional 525,000 shares (the "Optional Common Shares") of Common
Stock, as provided in Section 2, with each Selling Shareholder selling up to the
amount set forth opposite such Selling Shareholder's name in Schedule B under
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the column entitled "Secondary Shares to be Sold." The Firm Common Shares and,
if and to the extent such option is exercised, the Optional Common Shares are
collectively called the "Common Shares." Xxxxxxxxxx Securities, Xxxxxxx, Xxxxxx
& Xxxxxxxxx, L.L.C. and X.X. Xxxxxxxxxx & Co., Inc. have agreed to act as
representative of the several Underwriters (in such capacity, the
"Representatives") in connection with the offering and sale of the Common
Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-27087), which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration statement,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any information deemed to be a
part thereof at the time of
effectiveness pursuant to Rule 430A or Rule 434 under the Securities Act, is
called the "Registration Statement." Any registration statement filed by the
Company pursuant to Rule 462(b) under the Securities Act is called the "Rule
462(b) Registration Statement," and from and after the date and time of filing
of the Rule 462(b) Registration Statement the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. Such prospectus, in the
form first used by the Underwriters to confirm sales of the Common Shares, is
called the "Prospectus"; provided, however, if the Company has, with the consent
of Xxxxxxxxxx Securities, elected to rely upon Rule 434 under the Securities
Act, the term "Prospectus" shall mean the Company's prospectus subject to
completion (each, a "preliminary prospectus") dated June 4, 1997 (such
preliminary prospectus is called the "Rule 434 preliminary prospectus"),
together the applicable term sheet (the "Term Sheet") prepared and filed by the
Company with the Commission under Rules 434 and 424(b) under the Securities Act
and all references in this Agreement to the date of the Prospectus shall mean
the date of the Term Sheet. All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the
Prospectus or the Term Sheet, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval System ("XXXXX").
The Company and each of the Selling Shareholders hereby confirm their
respective agreements with the Underwriters as follows:
Section 1. Representations and Warranties.
A. Representations and Warranties of the Company. The Company hereby
represents, warrants and covenants to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration Statement
and any Rule 462(b) Registration Statement have been declared effective by the
Commission under the Securities Act. The Company has complied to the
Commission's satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is in effect
and no proceedings for such purpose have been instituted or are pending or, to
the best knowledge of the Company, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the Prospectus when filed complied in all
material respects with the Securities Act and, if filed by electronic
transmission pursuant to XXXXX (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Common Shares.
Each of the Registration Statement, any Rule 462(b) Registration Statement and
any post-effective amendment thereto, at the time it became effective and at all
subsequent times up to and at the First Closing Date (as defined below) or the
Second Closing Date (as defined below), as the case may be, complied and will
comply in all material respects with the Securities Act and did not and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Prospectus, as amended or supplemented, as of its date and at
all subsequent
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times up to and at the First Closing Date or the Second Closing Date, as the
case may be, did not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two immediately
preceding sentences do not apply to statements in or omissions from the
Registration Statement, any Rule 462(b) Registration Statement, or any post-
effective amendment thereto, or the Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by the Representatives
expressly for use therein. There are no contracts or other documents required to
be described in the Prospectus or to be filed as exhibits to the Registration
Statement which have not been described or filed as required.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to each of the Representatives one complete manually signed copy of
the Registration Statement and of each consent and certificate of experts filed
as a part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives have
reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company. The Company has not
distributed and will not distribute, prior to the later of the Second Closing
Date (as defined below) and the completion of the Underwriters' distribution of
the Common Shares, any offering material in connection with the offering and
sale of the Common Shares other than a preliminary prospectus, the Prospectus or
the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the Company,
enforceable against it 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.
(e) Authorization of the Common Shares. The Common Shares to be purchased
by the Underwriters from the Company have been duly authorized for issuance and
sale pursuant to this Agreement, and, when issued and delivered by the Company
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is given
in the Prospectus: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the financial condition, or in the earnings, business,
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operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as
one entity (any such change is called a "Material Adverse Change"); (ii) the
Company and its subsidiaries, considered as one entity, have not incurred any
material liability or obligation, indirect, direct or contingent, not in the
ordinary course of business nor entered into any material transaction or
agreement not in the ordinary course of business; and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company or,
except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by the
Company or any of its subsidiaries of any class of capital stock.
(h) Independent Accountants. Price Waterhouse LLP, who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) filed with the Commission as
a part of the Registration Statement and included in the Prospectus, are
independent public or certified public accountants as required by the Securities
Act.
(i) Preparation of the Financial Statements. The financial statements filed
with the Commission as a part of the Registration Statement and included in the
Prospectus present fairly the consolidated financial position of the Company and
its subsidiaries as of and at the dates indicated and the results of their
operations and cash flows for the periods specified. Such financial statements
have been prepared in conformity with generally accepted accounting principles
as applied in the United States applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes
thereto. No other financial statements or supporting schedules are required to
be included in the Registration Statement. The financial data set forth in the
Prospectus under the captions "Prospectus Summary--Summary Consolidated
Financial Data," "Selected Consolidated Financial Data" and "Capitalization"
fairly present the information set forth therein on a basis consistent with that
of the audited financial statements contained in the Registration Statement.
(j) Incorporation and Good Standing of the Company and its Subsidiaries.
Each of the Company and its subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and, in the case of the Company, to enter into and perform its
obligations under this Agreement. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Change. Except (i) as otherwise disclosed in the Prospectus, (ii) for
security interests held by Fleet National Bank and Massachusetts Capital
Resource Company and (iii) that the Company has a 99.8% equity interest in
Peritus Software Services (India) Private Limited, all of the issued and
outstanding capital stock of each subsidiary has been duly authorized and
validly issued, is fully paid and nonassessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim. The Company does
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not own or control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed in Exhibit 21 to the
Registration Statement.
(k) Capitalization and Other Capital Stock Matters. The authorized, issued
and outstanding capital stock of the Company is as set forth in the Prospectus
under the caption "Capitalization" (other than for subsequent issuances, if any,
pursuant to employee benefit plans described in the Prospectus or upon exercise
of outstanding options or warrants described in the Prospectus). The Common
Stock (including the Common Shares) conforms in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock (including the shares of Common Stock owned
by Selling Shareholders) have been duly authorized and validly issued, are fully
paid and nonassessable and have been issued in compliance with federal and state
securities laws. None of the outstanding shares of Common Stock were issued in
violation of any preemptive rights, rights of first refusal or other similar
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 its subsidiaries other than those accurately described in the Prospectus and
other than those rights that terminate upon consummation of the Company's
initial public offering or upon payment in full of the Secured Subordinated Note
due June 30, 2002 issued by the Company to Massachusetts Capital Resource
Company (the "MCRC Note"). The description of the Company's stock option, stock
bonus and other stock plans or arrangements, and the options or other rights
granted thereunder, set forth in the Prospectus accurately and fairly presents
the information required to be shown with respect to such plans, arrangements,
options and rights.
(l) Stock Exchange Listing. The Common Shares have been approved for
listing on the Nasdaq National Market, subject only to official notice of
issuance.
(m) Non-Contravention of Existing Instruments; No Further Authorizations or
Approvals Required. Neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws or is in default (or, with the giving of
notice or lapse of time, would be in default) ("Default") under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or other
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound (including, without limitation, the MCRC
Note or the related purchase and security agreements and the Revolving Credit
Facility with Fleet National Bank), or to which any of the property or assets of
the Company or any of its subsidiaries is subject (each, an "Existing
Instrument"), except for such Defaults as would not, individually or in the
aggregate, result in a Material Adverse Change. The Company's execution,
delivery and performance of this Agreement and consummation of the transactions
contemplated hereby (i) have been duly authorized by all necessary corporate
action and will not result in any violation of the provisions of the charter or
by the by-laws of the Company or any subsidiary, (ii) will not conflict with or
constitute a breach of, or Default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, or require the consent of any
other part to, any Existing Instrument, except for such conflicts, breaches,
Defaults, liens, charges or encumbrances as would not,
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individually or in the aggregate, result in a Material Adverse Change and (iii)
will not result in any violation of any law or administrative regulation
applicable to the Company or any subsidiary or any administrative or court
decree specifically naming the Company or any subsidiary. No consent, approval,
authorization or other order of, or registration or filing with, any court or
other governmental or regulatory authority or agency, is required for the
Company's execution, delivery and performance of this Agreement and consummation
of the transactions contemplated hereby, except such as have been obtained or
made by the Company and are in full force and effect and except for such
additional steps as may be required under the Securities Act, applicable state
securities or blue sky laws and the rules and regulations of the National
Association of Securities Dealers, Inc. (the "NASD") and the Nasdaq National
Market.
(n) No Material Actions or Proceedings. There are no legal or governmental
actions, suits or proceedings pending or, to the best of the Company's
knowledge, threatened (i) against the Company or any of its subsidiaries, (ii)
which has as the subject thereof any officer or director of, or property owned
or leased by, the Company or any of its subsidiaries or (iii) relating to
environmental or discrimination matters against the Company or its subsidiaries,
where in any such case (A) there is a reasonable possibility that such action,
suit or proceeding might be determined adversely to the Company or such
subsidiary and (B) any such action, suit or proceeding, if so determined
adversely, would reasonably be expected to result in a Material Adverse Change
or adversely affect the consummation of the transactions contemplated by this
Agreement. No material labor dispute with the employees of the Company or any of
its subsidiaries exists or, to the best of the Company's knowledge, is
threatened or imminent.
(o) Intellectual Property Rights. The Company and its subsidiaries own or
possess sufficient trademarks, trade names, patent rights, copyrights, licenses,
approvals, trade secrets and other similar rights (collectively, "Intellectual
Property Rights") reasonably necessary to conduct their businesses as now
conducted; and the expected expiration of any of such Intellectual Property
Rights would not result in a Material Adverse Change. Neither the Company nor
any of its subsidiaries has received any notice of infringement or conflict with
asserted Intellectual Property Rights of others, which infringement or conflict,
if the subject of an unfavorable decision, would result in a Material Adverse
Change. The Company has duly and properly filed or caused to be filed with the
United States Patent and Trademark Office (the "PTO") and applicable foreign and
international patent authorities all patent applications described or referred
to in the Prospectus, and believes it has complied with the PTO's duty of candor
and disclosure for each of the United States patent and patent applications
described or referred to in the Prospectus; the Company is unaware of any facts
which would preclude the grant of a patent from each of the patent applications
described or referred to in the Prospectus; and the Company has no knowledge of
any facts which would preclude it from having clear title to its patent
applications referenced in the Registration Statement. Except as disclosed in
the Prospectus, the Company is not aware of the granting of any patents to third
parties or the filing of patent applications by third parties or any other
rights of third parties to any of the Intellectual Property Rights.
(p) All Necessary Permits, etc. The Company and each subsidiary possess
such valid and current certificates, authorizations or permits issued by the
appropriate state, federal or
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foreign regulatory agencies or bodies necessary, to conduct their respective
businesses, and neither the Company nor any subsidiary has received any notice
of proceedings relating to the revocation or modification of, or noncompliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
result in a Material Adverse Change.
(q) Title to Properties. Except as described in the Prospectus, the Company
and each of its subsidiaries has good and valid title to all the properties and
assets reflected as owned in the financial statements referred to in Section
1(A)(i) above (or elsewhere in the Prospectus), in each case free and clear of
any security interests, mortgages, liens, encumbrances, equities, claims and
other defects, except such as do not materially and adversely affect the value
of such property and do not materially interfere with the use made or proposed
to be made of such property by the Company or such subsidiary. The real
property, improvements, equipment and personal property held under lease by the
Company or any subsidiary are held under valid and enforceable leases, with such
exceptions as are not material and do not materially interfere with the use made
or proposed to be made of such real property, improvements, equipment or
personal property by the Company, or such subsidiary.
(r) Tax law Compliance. The Company and its consolidated subsidiaries have
filed all necessary federal, state and foreign income and franchise tax returns
and have paid all taxes required to be paid by any of them and, if due and
payable, any related or similar assessment, fine or penalty levied against any
of them, except for assessments, fines or penalties contested in good faith for
which adequate reserves have been provided to the extent required by generally
accepted accounting principles. The Company has made adequate charges, accruals
and reserves in the applicable financial statements referred to in Section
1(A)(i) above in respect of all federal, state and foreign income and franchise
taxes for all periods as to which the tax liability of the Company or any of its
consolidated subsidiaries has not been finally determined.
(s) Company Not an "Investment Company." The Company is not, and after
receipt of payment for the Common Shares will not be, an "investment company"
within the meaning of Investment Company Act of 1940 as amended (the "Investment
Company Act"), and will conduct its business in a manner so that it will not
become subject to the Investment Company Act.
(t) Insurance. Each of the Company and its subsidiaries are insured by
financially sound and reputable institutions with policies in such amounts and
with such deductibles and covering such risks as are generally deemed adequate
and customary for their businesses including, but not limited to, policies
covering real and personal property owned or leased by the Company and its
subsidiaries against theft, damage, destruction and acts of vandalism. The
Company has no reason to believe that it or any subsidiary will not be able (i)
to renew its existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions as may be necessary
or appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change. Neither the Company nor any subsidiary
has been denied any insurance coverage which it has sought or for which it has
applied.
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(u) No Price Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the Common Shares.
(v) Related Party Transactions. There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the benefit of
any of the executive officers or directors of the Company or any of the members
of the families of any of them, except as disclosed in the Registration
Statement and the Prospectus.
(w) No Unlawful Contributions or Other Payments. Neither the Company nor
any of its subsidiaries nor, to the best of the Company's knowledge, any
employee 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.
(x) Company's Accounting System. The Company maintains a system of
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 as applied in the United States 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.
(y) ERISA Compliance. The Company and its subsidiaries and any "employee
benefit plan" (as defined under the Employee Retirement Income Security Act of
1974, as amended. and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Company, its
subsidiaries or their "ERISA Affiliates" (as defined below) are in compliance in
all material respects with ERISA. "ERISA Affiliate" means, with respect to the
Company or a subsidiary, any member of any group of organizations described in
Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended,
and the regulations and published interpretations thereunder (the "Code") of
which the Company or such subsidiary is a member. No "reportable event" (as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. No "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Neither the
Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur during the 18-month period beginning on the date
hereof any liability under (i) Title IV of ERISA with respect to termination of,
or withdrawal from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975
or 4980B of the Code. Each "employee benefit plan" established or maintained by
the Company, its subsidiaries or any of their ERISA Affiliates that is intended
to be qualified
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under Section 401 (a) of the Code is so qualified and nothing has occurred,
whether by action or failure to act, which would cause the loss of such
qualification.
Any certificate signed by an officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
B. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder severally represents, warrants and covenants to each
Underwriter as follows:
(a) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling Shareholder and is a
valid and binding agreement of such Selling Shareholder, enforceable against it
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.
(b) The Custody Agreement and Power of Attorney. Each of the (i) Custody
Agreement signed by such Selling Shareholder and appointing Peritus Software
Services, Inc., as custodian (the "Custodian"), relating to the deposit of the
Common Shares to be sold by such Selling Shareholder (the "Custody Agreement")
and (ii) Power of Attorney appointing certain individuals named therein as such
Selling Shareholder's attorneys-in-fact (each, an "Attorney-in-Fact") to the
extent set forth therein relating to the transactions contemplated hereby and by
the Prospectus (the "Power of Attorney"), of such Selling Shareholder has been
duly authorized, executed and delivered by such Selling Shareholder and is a
valid and binding agreement of such Selling Shareholder, enforceable against it
in accordance with its terms, except as rights to indemnification thereunder may
be limited by applicable law and except as the enforcement thereof 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.
(c) Title to Common Shares to be Sold; All Authorizations Obtained. Such
Selling Shareholder has, and on the First Closing Date and the Second Closing
Date will have, good and valid title to all of the Common Shares which may be
sold by such Selling Shareholder pursuant to this Agreement on such date and the
legal right and power, and all authorizations and approvals required by law and
under its charter or by-laws, partnership agreement, trust agreement or other
organizational documents to enter into this Agreement and its Custody Agreement
and Power of Attorney, to sell, transfer and deliver all of the Common Shares
which may be sold by such Selling Shareholder pursuant to this Agreement and to
comply with its other obligations hereunder and thereunder.
(d) Delivery of the Common Shares to be Sold. Delivery of the Common
Shares which are sold by such Selling Shareholder pursuant to this Agreement
will pass good and valid title to such Common Shares, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or other claim.
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(e) Non-Contravention; No Further Authorizations or Approvals Required.
The execution and delivery by such Selling Shareholder of this Agreement, the
Custody Agreement and the Power of Attorney, and the performance by such Selling
Shareholder of the transactions contemplated hereby and thereby, will not
contravene or conflict with, result in a breach of, or constitute a Default
under, or require the consent of any other party to, the charter or by-laws,
partnership agreement, trust agreement or other organizational documents of such
Selling Shareholder or any other agreement or instrument to which such Selling
Shareholder is a party or by which it is bound or under which it is entitled to
any right or benefit, any provision of law or regulation applicable to such
Selling Shareholder or any judgment, order or decree specifically naming such
Selling Shareholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Shareholder. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the consummation by such Selling Shareholder of the
transactions contemplated in this Agreement, except such as have been obtained
or made and are in full force and effect and except for such additional steps as
may be required under the Securities Act, applicable state securities or blue
sky laws, and the rules and regulations of the NASD and the Nasdaq National
Market.
(f) No Registration or Other Similar Rights. Such Selling Shareholder does
not have any registration or other similar rights to have any additional equity
or debt securities registered for sale by the Company under the Registration
Statement or included in the offering contemplated by this Agreement, except for
such rights as are described in the Prospectus under "Shares Eligible for Future
Sale."
(g) No Further Consents, etc. Except for the (i) exercise by such Selling
Shareholder of certain registration rights pursuant to the Registration Rights
Agreement dated as of March 15, 1996 (which registration rights have been duly
exercised pursuant thereto), (ii) consent of such Selling Shareholder to the
respective number of Common Shares to be sold by all of the Selling Shareholders
pursuant to this Agreement and (iii) waiver by certain other holders of Common
Stock of certain registration rights pursuant to such Registration Rights
Agreement, no consent, approval or waiver is required under any instrument or
agreement to which such Selling Shareholder is a party or by which it is bound
or under which it is entitled to any right or benefit, in connection with the
offering, sale, or purchase by the Underwriters of any of the Common Shares
which may be sold by such Selling Shareholder under this Agreement or the
consummation by such Selling Shareholder of any of the other transactions
contemplated hereby.
(h) Disclosure Made Such Selling Shareholder in the Prospectus. All
information furnished by or on behalf of such Selling Shareholder in writing
expressly for use in the Registration Statement and Prospectus is, and on the
First Closing Date and the Second Closing Date will be, true, correct and
complete in all material respects, and does not, and on the First Closing Date
and the Second Closing Date will not, contain any untrue statement of a material
fact or omit to state any material fact necessary to make such information, in
light of the circumstances in which it was made, not misleading. Such Selling
Shareholder confirms as accurate the number of shares of Common Stock set forth
opposite such Selling Shareholder's
-10-
name in the Prospectus under the caption "Principal and Selling Stockholders"
(both prior to and after giving effect to the sale of the Common Shares).
(i) No Price Stabilization or Manipulation. Such Selling Shareholder has
not taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Common Shares.
Any certificate signed by or on behalf of any Selling Shareholder and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Shareholder to each
Underwriter as to the matters covered thereby.
C. Representations and Warranties of Certain Selling Shareholders. In
addition to the representations, warranties and covenants set forth in Section
1(B), each of the Selling Shareholders indicated with an asterisk on Schedule B
----------
(the "Significant Shareholders") hereby represents, warrants and covenants to
each Underwriter as follows:
Each of the Registration Statement, any Rule 462(b) Registration Statement
and any post-effective amendment thereto, at the time it became effective and at
all subsequent times up to and at the First Closing Date or the Second Closing
Date, as the case may be, complied and will comply in all material respects with
the Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, as
amended or supplemented, as of its date and at all subsequent times up to and at
the First Closing Date or the Second Closing Date, as the case may be, did not
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements thereto,
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by the Representatives expressly
for use therein. There are no contracts or other documents required to be
described in the Prospectus or to be filed as exhibits to the Registration
Statement which have not been described or filed as required.
Section 2. Purchase, Sale and Delivery of the Common Shares.
The Firm Common Shares. Upon the terms herein set forth, (i) the Company
agrees to issue and sell to the several Underwriters an aggregate of 2,800,000
Firm Common Shares and (ii) the Primary Selling Shareholders agree to sell to
the several Underwriters an aggregate of 700,000 Firm Common Shares. On the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Underwriters
agree, severally and not jointly, to purchase from the Company and the Primary
Selling Shareholders the respective number of Firm Common Shares set forth
opposite their names on Schedule A. The purchase price per Firm Common Share to
----------
be paid by the several Underwriters to the Company and the Primary Selling
Shareholders shall be $[__________] per share.
-11-
The First Closing Date. Delivery of certificates for the Firm Common
Shares to be purchased by the Underwriters and payment therefor shall be made at
the offices of Xxxxxxxxxx Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx (or such other place as may be agreed to by the Company and the
Representatives) at 6:00 a.m. San Francisco time, on [__________], or such other
time and date not later than 10:30 a.m. San Francisco time , on [________] as
the Representatives shall designate by notice to the Company (the time and date
of such closing are called the "First Closing Date"). The Company and the
Primary Selling Shareholders hereby acknowledge that circumstances under
which the Representatives may provide notice to postpone the First Closing Date
as originally scheduled include, but are in no way limited to, any determination
by the Company, the Primary Selling Shareholders or the Representatives
to recirculate to the public copies of an amended or supplemented Prospectus or
a delay as contemplated by the provisions of Section 10.
The Optional Common Shares; the Second Closing Date. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Selling
Shareholders hereby grant an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 525,000 Optional Common
Shares from the Selling Shareholders at the purchase price per share to be paid
by the Underwriters for the Firm Common Shares. The option granted hereunder is
for use by the Underwriters solely in covering any over-allotments in connection
with the sale and distribution of the Firm Common Shares. The option granted
hereunder may be exercised at any time (but not more than once) upon notice by
the Representatives to the Selling Shareholders (with a copy to the Company),
which notice may be given at any time within 30 days from the date of this
Agreement. Such notice shall set forth (i) the aggregate number of Optional
Common Shares as to which the Underwriters are exercising the option, (ii) the
names and denominations in which the certificates for the Optional Common Shares
are to be registered and (iii) the time, date and place at which such
certificates will be delivered (which time and date may be simultaneous with,
but not earlier than, the First Closing Date; and in such case the "First
Closing Date" shall refer to the time and date of delivery of certificates for
the Firm Common Shares and the Optional Common Shares). Such time and date of
delivery, if subsequent to the First Closing Date, is called the "Second Closing
Date" and shall be determined by the Representatives and shall not be earlier
than three nor later than five full business days after delivery of such notice
of exercise. If any Optional Common Shares are to be purchased, (a) each
Underwriter agrees, severally and not jointly, to purchase the number of
Optional Common Shares (subject to such adjustments to eliminate fractional
shares as the Representatives may determine) that bears the same proportion to
the total number of Optional Common Shares to be purchased as the number of Firm
Common Shares set forth on Schedule A opposite the name of such Underwriter
----------
bears to the total number of Firm Common Shares, (b) each Selling Shareholder
agrees, severally and not jointly, to sell up to the number of Optional Common
Shares set forth in Schedule B opposite the name of such Selling Shareholder and
----------
(c) the Underwriters and Selling Shareholders agree that if any Optional Common
Shares are to be purchased, the Optional Common Shares to be sold by Bull HN
Information Systems Inc. ("Bull") shall be purchased first and if after all
such Optional Common Shares have been purchased, additional Optional Common
Shares are to be purchased ("Additional Optional Common Shares"), the remaining
Selling Shareholders shall sell the number of Optional Common Shares (subject to
adjustments to eliminate fractional shares as the
-12-
Representative may determine) that bears the same proportion to the total number
of Additional Optional Common Shares to be sold as the number of Optional Common
Shares set forth in Schedule B opposite the name of such remaining Selling
----------
Shareholder bears to the total number of Additional Optional Common Shares. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company and the Selling
Shareholders.
Public Offering of the Common Shares. The Representatives hereby advise
the Company and the Selling Shareholders that the Underwriters intend to offer
for sale to the public, as described in the Prospectus, their respective
portions of the Common Shares as soon after this Agreement has been executed and
the Registration Statement has been declared effective as the Representatives,
in their sole judgment, have determined is advisable and practicable.
Payment for the Common Shares. Payment for the Common Shares to be sold by
the Company shall be made at the First Closing Date (and, if applicable, at the
Second Closing Date) by wire transfer of immediately available funds to the
order of the Company. Payment for the Common Shares to be sold by the Selling
Shareholders shall be made at the First Closing Date and, if applicable, at the
Second Closing Date, by wire transfer of immediately available funds to the
order of the Custodian.
It is understood that the Representatives have been authorized, for their
own account and the accounts of the several Underwriters, to accept delivery of
and receipt for, and make payment of the purchase price for, the Firm Common
Shares and any Optional Common Shares the Underwriters have agreed to purchase.
Xxxxxxxxxx Securities, individually and not as a Representative of the
Underwriters, may (but shall not be obligated to) make payment for any Common
Shares to be purchased by any Underwriter whose funds shall not have been
received by the Representatives by the First Closing Date or the Second Closing
Date, as the case may be, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations under
this Agreement.
The Company hereby agrees that it will pay all stock transfer taxes, stamp
duties and other similar taxes, if any, payable upon the sale or delivery of the
Common Shares to be sold by the Selling Shareholders, to the several
Underwriters, or otherwise in connection with the performance of the Selling
Shareholders obligations hereunder.
Delivery of the Common Shares. The Company and the Primary Selling
Shareholders shall deliver, or cause to be delivered, to the
Representatives for the accounts of the several Underwriters certificates for
the Firm Common Shares to be sold by them at the First Closing Date, against the
irrevocable release of a wire transfer of immediately available funds for the
amount of the purchase price therefor. The Selling Shareholders shall also
deliver, or cause to be delivered, to the Representatives for the accounts of
the several Underwriters certificates for the Optional Common Shares the
Underwriters have agreed to purchase at the First Closing Date or the Second
Closing Date, as the case may be, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The certificates for the Common Shares shall be in definitive form
and registered in such names and denominations
-13-
as the Representatives shall have requested at least two full business days
prior to the First Closing Date (or the Second Closing Date, as the case may be)
and shall be made available for inspection on the business day preceding the
First Closing Date (or the Second Closing Date, as the case may be) at a
location in New York City as the Representatives may designate. Time shall be of
the essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriters.
Delivery of Prospectus to the Underwriters. Not later than 12:00 p.m.
Eastern Standard Time on the second business day following the date the Common
Shares are released by the Underwriters for sale to the public, the Company
shall deliver or cause to be delivered copies of the Prospectus in such
quantities and at such places as the Representatives shall request.
Section 3. Additional Covenants.
A. Covenants of the Company. The Company further covenants and agrees
with each Underwriter as follows:
(a) Representatives' Review of Proposed Amendments and Supplements. During
such period beginning on the date hereof and ending on the later of the First
Closing Date or such date, as in the opinion of counsel for the Underwriters,
the Prospectus is no longer required by law to be delivered in connection with
sales by an Underwriter or dealer (the "Prospectus Delivery Period"), prior to
amending or supplementing the Registration Statement (including any registration
statement filed under Rule 462(b) under the Securities Act) or the Prospectus,
the Company shall furnish to the Representatives for review a copy of each such
proposed amendment or supplement, and the Company shall not file any such
proposed amendment or supplement to which the Representatives reasonably object.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representatives in writing (i) of the receipt
of any comments of, or requests for additional or supplemental information from,
the Commission, (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to any
preliminary prospectus or the Prospectus, (iii) of the time, and date that any
post-effective amendment to the Registration Statement becomes effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Common Stock from any securities
exchange upon which it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at any time,
the Company will use its best efforts to obtain the lifting of such order at the
earliest possible moment. Additionally, the Company agrees that it shall comply
with the provisions of Rules 424(b), 430A and 434, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any filings
made by the Company under such Rule 424(b) were received in a timely manner by
the Commission.
-14-
(c) Amendments and Supplements to the Prospectus and Other Securities Act
Matters. If, during the Prospectus Delivery Period, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the opinion of the Representatives or counsel for the Underwriters it
is otherwise necessary to amend or supplement the Prospectus to comply with law,
the Company agrees to promptly prepare (subject to Section 3(A)(a) hereof), file
with the Commission and furnish at its own expense to the Underwriters and to
dealers, amendments or supplements to the Prospectus so that the statements in
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
(d) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representatives, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any amendments
and supplements thereto as the Representatives may reasonably request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Common Shares for sale under (or obtain exemptions from the application of)
state securities or blue sky laws or Canadian provincial securities laws of
those jurisdictions reasonably designated by the Representatives, shall comply
with such laws and shall continue such qualifications, registrations and
exemptions in effect so long as required for the distribution of the Common
Shares. The Company shall not be required to qualify as a foreign corporation
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise the
Representatives promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Common Shares for offering, sale or
trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company shall use its best efforts
to obtain the withdrawal thereof at the earliest possible moment.
(f) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Common Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Common Stock.
(h) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month period
ending June 30, 1998 satisfies the provisions of Section 11(a) of the Securities
Act.
-15-
(i) Periodic Reporting Obligations. During the Prospectus Delivery Period
the Company shall file, on a timely basis, with the Commission and the Nasdaq
National Market all reports and documents required to be filed under the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder (the "Exchange Act"). Additionally, the Company shall file with the
Commission all reports on Form SR as may be required under Rule 463 under the
Securities Act.
(j) Agreement Not To Offer or Sell Additional Securities. During the
period of 180 days following the date of the Prospectus, the Company will not,
without the prior written consent of Xxxxxxxxxx Securities (which consent may be
withheld at the sole discretion of Xxxxxxxxxx Securities), directly or
indirectly, sell, offer, contract or grant any option to sell, pledge, transfer
or establish an open "put equivalent position" within the meaning of Rule 16a-
1(h) under the Exchange Act, or otherwise dispose of or transfer, or announce
the offering of, or file any registration statement under the Securities Act in
respect of, any shares of Common Stock, options or warrants to acquire shares of
the Common Stock or securities exchangeable or exercisable for or convertible
into shares of Common Stock (other than as contemplated by this Agreement with
respect to the Common Shares); provided, however, that the Company may issue
shares of its Common Stock or options to purchase its Common Stock, or Common
Stock upon exercise of outstanding warrants or options pursuant to any stock
option, stock bonus or other stock plan or arrangement described in the
Prospectus; and provided further, however, that the Company may file (a) at any
time, Registration Statements on Form S-8 relating to shares of Common Stock
issuable under the Company's 1997 Employee Stock Purchase Plan and 1997 Director
Stock Option Plan and (b) at any time after the period of 90 days commencing on
the effective date of the Registration Statement, Registration Statements on
Form S-8 relating to shares of Common Stock issuable under the Company's 1992
Long-Term Incentive Plan and 1997 Stock Incentive Plan.
(k) Future Reports to the Representatives. During the period of five years
after the date hereof the Company will furnish to the Representatives at Xxx
Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000 Attention: M. Xxxxxxxx Xxxx: (i) as soon
as practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, shareholders' equity and cash flows for
the year then ended and the opinion thereon of the Company's independent public
or certified public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on From 8-K or other report filed by the
Company with the Commission, the NASD or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.
B. Covenants of the Selling Shareholders. Each Selling Shareholder
further covenants and agrees with each Underwriter:
(a) Agreement Not to Offer or Sell Additional Securities. Such Selling
Shareholder will not, without the prior written consent of Xxxxxxxxxx Securities
(which consent may be withheld in its sole discretion), directly or indirectly,
sell, offer, contract or grant any option to
-16-
sell (including without limitation any short sale), pledge, transfer, establish
an open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of any shares of Common Stock (other than the
Common Shares offered hereby), options or warrants to acquire shares of Common
Stock, or securities exchangeable or exercisable for or convertible into shares
of Common Stock currently or hereafter owned either of record or beneficially
(as defined in Rule 13d-3 under the Exchange Act) by the undersigned, or
publicly announce the undersigned's intention to do any of the foregoing, for a
period commencing on the date hereof and continuing through the close of trading
on the date 180 days after the date of the Prospectus. Notwithstanding the
foregoing, such Selling Shareholder does not need to obtain the prior written
consent of Xxxxxxxxxx Securities to transfer any securities (i) by gift, will or
intestacy, (ii) as a distribution, without receipt of consideration, to limited
partners or shareholders of such Selling Shareholder, (iii) in the event such
Selling Shareholder is an individual, to his or her immediate family or to a
trust the beneficiaries of which are exclusively the undersigned and/or a member
or members of his or her immediate family; provided, however, that the
transferee execute an agreement stating that the transferee is receiving and
holding the securities subject to the provisions of this Agreement and there
shall be no further transfer of such securities except in accordance with this
Section 3B(a).
(b) Delivery of Forms W-8 and W-9. To deliver to the Representatives prior
to the First Closing Date a properly completed and executed United States
Treasury Department Form W-8 (if the Selling Shareholder is a non-United States
person) or Form W-9 (if the Selling Shareholder is a United States Person).
Xxxxxxxxxx Securities, on behalf of the several Underwriters, may, in its
sole discretion, waive in writing the performance by the Company or any Selling
Shareholder or any one or more of the foregoing covenants or extend the time for
their performance.
Section 4. Payment of Expenses. The Company agrees to pay all costs, fees
and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel, independent public or certified public accountants and
other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the state securities or blue sky laws or the provincial
securities laws of Canada, and, if requested by the Representatives, preparing
and printing a "Blue Sky Survey" or memorandum, and any supplements thereto,
advising the Underwriters of such qualifications, registrations and exemptions,
(vii) the filing fees incident to, and the reasonable
-17-
fees and expenses of counsel for the Underwriters in connection with, the NASD's
review and approval of the Underwriters' participation in the offering and
distribution of the Common Shares, (viii) the fees and expenses associated with
listing the Common Shares on the Nasdaq National Market, and (ix) all other
fees, costs and expenses referred to in Part II of the Registration Statement.
Except as provided in this Section 4, Section 6, Section 8 and Section 9 hereof,
the Underwriters shall pay their own expenses, including the fees and
disbursements of their counsel.
The Company further agrees with each Underwriter to pay (directly or by
reimbursement) all fees and expenses incident to the performance of the
obligations of the Selling Shareholders under this Agreement which are not
otherwise specifically provided for herein, including but not limited to (i)
fees and expenses of counsel and other advisors for such Selling Shareholders,
(ii) fees and expenses of the Custodian and (iii) expenses and taxes incident to
the sale and delivery of the Common Shares to be sold by such Selling
Shareholders to the Underwriters hereunder (which taxes, if any, may be deducted
by the Custodian under the provisions of Section 2 of this Agreement). To the
extent, if at all, that any Selling Shareholder engages special legal counsel to
represent it in connection with the offering contemplated by this Agreement, the
fees and expenses of such counsel shall be borne by such Selling Shareholder.
This Section 4 shall not affect or modify any separate, valid agreement
relating to the allocation of payment of expenses between the Company, on the
one hand, and the Selling Shareholders, on the other hand.
Section 5. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Common
Shares as provided herein on the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Shareholders set forth in Section 1 hereof as of the date hereof and
as of the First Closing Date as though then made and, with respect to the
Optional Common Shares, as of the Second Closing Date as though then made, to
the timely performance by the Company and the Selling Shareholders of their
respective covenants and other obligations hereunder, and to each of the
following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Representatives
shall have received from Price Waterhouse LLP, independent public or certified
public accountants for the Company, a letter dated the date hereof addressed to
the Underwriters, in form and substance satisfactory to the Representatives,
containing statements and information of the type ordinarily included in
accountant's "comfort letters" to underwriters, delivered according to Statement
of Auditing Standards No. 72 (or any successor bulletin), with respect to the
audited and unaudited financial statements and certain financial information
contained in the Registration Statement and the Prospectus (and the
Representatives shall have received an additional four conformed copies of
such accountants' letter for each of the several Underwriters).
-18-
(b) Compliance with Registration Requirements; No Stop Order; No Objection
from NASD. For the period from and after effectiveness of this Agreement and
prior to the First Closing Date and, with respect to the Optional Common Shares,
the Second Closing Date:
(i) the Company shall have filed the Prospectus with the Commission
(including the information required by Rule 430A under the Securities Act) in
the manner and within the time period required by Rule 424(b) under the
Securities Act; or the Company shall have filed a post-effective amendment to
the Registration Statement containing the information required by such Rule
430A, and such post-effective amendment shall have become effective; or, if the
Company elected to rely upon Rule 434 under the Securities Act and obtained the
Representatives' consent thereto, the Company shall have filed a Term Sheet with
the Commission in the manner and within the time period required by such Rule
424(b);
(ii) no stop order suspending the effectiveness of the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment to the Registration Statement, shall be in effect and no proceedings
for such purpose shall have been instituted or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For the period
from and after the date of this Agreement and prior to the First Closing Date
and, with respect to the Optional Common Shares, the Second Closing Date:
(i) in the judgment of the Representatives there shall not have
occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any review
for a possible change that does not indicate the direction of the possible
change, in the rating accorded any securities of the Company or any of its
subsidiaries by any "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(d) Opinions of Counsel for the Company. On each of the First Closing Date
and the Second Closing Date the Representatives shall have received the opinion
of Xxxx and Xxxx LLP, counsel for the Company, dated as of such Closing Date,
the form of which is attached as Exhibit A (and the Representatives shall have
---------
received an additional four conformed copies of such counsel's legal opinion for
each of the several Underwriters). On each of the First Closing Date and the
Second Closing Date the Representatives shall have received the opinion of
Uria & Xxxxxxxx counsel for the Company, dated as of such Closing Date, the
form of which is attached as Exhibit D (and the Representatives shall have
---------
received an additional four conformed copies of such counsel's legal opinion for
each of the several Underwriters). On each of the First Closing Date and the
Second Closing Date the Representatives shall have received the opinion of
P.M. Vasudev counsel for the Company, dated as of such Closing Date, the
form of which is attached as Exhibit E (and the Representatives shall have
---------
received an additional four conformed
-19-
copies of such counsel's legal opinion for each of the several Underwriters). On
each of the First Closing Date and the Second Closing Date the Representatives
shall have received the favorable opinion of Xxxx and Xxxx LLP and Xxxxxxx,
Xxxxx & Xxxxx, LLP, patent counsel for the Company, dated as of such Closing
Date, the form of which is attached as Exhibit F (and the Representatives
---------
shall have received an additional four conformed copies of such counsel's
legal opinion for each of the several Underwriters).
(e) Opinion of Counsel for the Underwriters. On each of the First Closing
Date and the Second Closing Date the Representatives shall have received such
opinion or opinions of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, counsel for the
Underwriters, with respect to the incorporation of the Company, the sufficiency
of all corporate proceedings and other legal matters relating to this Agreement,
the validity of the Common Shares, the Registration Statement and the Prospectus
and other related matters as the Underwriters may reasonably require, and the
Company and the Selling Shareholders shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as they may
reasonably request for the purpose of enabling them to pass upon such matters
(and the Representatives shall have received an additional four conformed copies
of such counsel's legal opinion for each of the several Underwriters).
(f) Officer's Certificate. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received a written
certificate executed by the Chief Executive Officer or President of the Company
and the Chief Financial Officer or Chief Accounting Officer of the Company,
dated as of such Closing Date, to the effect set forth in subsections (b)(ii)
and (c)(ii) of this Section 5, and further to the effect that:
(i) for the period from and after the date of this Agreement and prior
to such Closing Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company set
forth in Section 1 (A) of this Agreement are true and correct with the same
force and effect as though expressly made on and as of such Closing Date; and
(iii) 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.
(g) Bring-down Comfort Letter. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received from Price
Waterhouse LLP, independent public or certified public accountants for the
Company, a letter dated such date, in form and substance satisfactory to the
Representatives, to the effect that they reaffirm the statements made in the
letter furnished by them pursuant to subsection (a) of this Section 5, except
that the specified date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the First Closing Date or
Second Closing Date, as the case may be (and the Representatives shall have
received an additional four conformed copies of such accountants' letter for
each of the several Underwriters).
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(h) Opinion of Counsel for the Selling Shareholders. On each of the First
Closing Date and the Second Closing Date the Representatives shall have received
opinions of Xxxx and Xxxx, LLP, counsel for the Selling Shareholders other than
Bull, and of Xxxxxx X. Xxxxxxxxx, counsel for Bull, each dated as
of such Closing Date, the form of which is attached as Exhibit B (and the
---------
Representatives shall have received an additional four conformed copies of such
counsels' legal opinions for each of the several Underwriters).
(i) Selling Shareholders' Certificate. On each of the First Closing Date
and the Second Closing Date the Representatives shall have received a written
certificate executed by the Attorney-in-Fact of each Selling Shareholder, dated
as of such Closing Date, to the effect that:
(i) the representations, warranties and covenants of such Selling
Shareholder set forth in Section 1 of this Agreement are true and correct with
the same force and effect as though expressly made by such Selling Shareholder
on and as of such Closing Date; and
(ii) such Selling Shareholder 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.
(j) Selling Shareholders' Documents. On the date hereof, the Company and
the Selling Shareholders shall have furnished to the Representatives copies of
the Powers of Attorney and Custody Agreements executed by each of the Selling
Shareholders and such further information, certificates and documents as the
Representatives may reasonably request.
(k) Lock-Up Agreement from Certain Shareholders of the Company Other
Than Selling Shareholders. On the date hereof, the Company shall have furnished
to the Representatives an agreement in the form of Exhibit C hereto from each
---------
director, officer and each beneficial owner (other than those individuals listed
on Schedule C hereto) of at least 10,000 shares of Common Stock (as defined and
----------
determined according to Rule 13d-3 under the Exchange Act, except that a one
hundred eighty day period shall be used rather than the sixty day period set
forth therein), and such agreement shall be in full force and effect on each of
the First Closing Date and the Second Closing Date.
(l) Additional Documents. On or before each of the First Closing Date
and the Second Closing Date, the Representatives and counsel for the
Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Common Shares as contemplated herein, or in order to
evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Shareholders at any
time on or prior to the First Closing Date and, with respect to the Optional
Common Shares, at any time prior to the Second Closing Date, which termination
shall be without liability on the part of any party to any other party, except
that Xxxxxxx 0,
-00-
Xxxxxxx 0, Xxxxxxx 0 and Section 9 shall at all times be effective and shall
survive such termination.
Section 6. Reimbursement of Underwriters' Expenses'. If this
Agreement is terminated by the Representatives pursuant to Section 5, Section 7,
Section 10, Section 11 or Section 17, or if the sale to the Underwriters of the
Common Shares on the First Closing Date is not consummated because of any
refusal, inability or failure on the part of the Company or the Selling
Shareholders to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse the Representatives and the other
Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand for all out-of-pocket expenses
that shall have been reasonably incurred by the Representatives and the
Underwriters in connection with the proposed purchase and the offering and sale
of the Common Shares, including but not limited to fees and disbursements of
counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
Section 7. Effectiveness of this Agreement.
This Agreement shall not become effective until the later of (i) the
execution of this Agreement by the parties hereto and (ii) notification by the
Commission to the Company and the Representatives of the effectiveness of the
Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any
party by notice to each of the other parties hereto, and any such termination
shall be without liability on the part of (a) the Company or the Selling
Shareholders to any Underwriter, except that the Company and the Selling
Shareholders shall be obligated to reimburse the expenses of the Representatives
and the Underwriters pursuant to Sections 4 and 6 hereof, (b) of any Underwriter
to the Company or the Selling Shareholders, or (c) of any party hereto to any
other party except that the provisions of Section 8 and Section 9 shall at all
times be effective and shall survive such termination.
Section 8. Indemnification.
(a) Indemnification of the Underwriters. Each of the Company and each
of the Selling Shareholders, jointly and severally, agrees to indemnify and hold
harmless each Underwriter, its officers and employees, and each person, if any,
who controls any Underwriter within the meaning of the Securities Act and the
Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which such Underwriter or such controlling person may become subject, under
the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, claim, damage, liability or expense (or actions
in respect thereof as contemplated below) arises out of or is based (i) upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A or Rule 434 under the
Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading; or (ii) upon any untrue statement or alleged untrue
-22-
statement of a material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and to reimburse each Underwriter and each such controlling person
for any and all expenses (including the reasonable fees and disbursements of
counsel chosen by Xxxxxxxxxx Securities) as such expenses are reasonably
incurred by such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company and the Selling Shareholders by the Representatives expressly for
use in the Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto); and provided, further, that with
respect to any preliminary prospectus, the foregoing indemnity agreement shall
not inure to the benefit of any Underwriter from whom the person asserting any
loss, claim, damage, liability or expense purchased Common Shares, or any person
controlling such Underwriter, if copies of the Prospectus were timely delivered
to the Underwriter pursuant to Section 2 and a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expanse. The indemnity agreement
set forth in this Section 8(a) with respect to Bull, Xxxxxx X. Xxxxx and Xxxxxx
X. Xxxxxxxx shall apply only to the extent that any such loss, claim, damage,
liability or expense arises out or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by such Selling
Shareholder expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or amendment or supplement thereto). The
Underwriters and Bull hereby acknowledge that the only written information that
Bull has furnished to the Underwriters expressly for use in the Registration
Statement, the preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) are the statements in the seventeenth paragraph under
"Management-Executive Officers and Directors," the first, second and third
(except the second sentence thereof) paragraphs under "Certain Transactions,"
and footnote 8 of the "Principal and Selling Stockholders" table.
Notwithstanding the foregoing, the aggregate liability of any Selling
Shareholder pursuant to the provisions of this Section 8(a) shall be limited to
an amount equal to the net proceeds received by such Selling Shareholder from
the Underwriters in the offering contemplated by this Agreement. Payment shall
not be required from a Selling Shareholder pursuant to this Section 8 until
demand for payment has been made by the Underwriters first upon the Company and
such payment is not made by the Company within 90 days of such demand; provided,
however, that this provision shall not apply to any Selling Shareholder in the
event and to the extent the demand for payment relates to any loss, claim,
damage, liability or expense arising out of or based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with written information furnished to the Company by such
Selling Shareholder expressly for use in
-23-
the Registration Statement, any preliminary prospectus or the Prospectus (or
amendment or supplement thereto). The indemnity agreement set forth in this
Section 8(a) shall be in addition to any liabilities that the Company and the
Selling Shareholders may otherwise have.
(b) Indemnification of the Company, its Directors and Officers and the
Selling Shareholders. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, the Selling Shareholders and
each person, if any, who controls the Company or any Selling Shareholder within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer, Selling Shareholder or controlling person may become subject,
under the Securities Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement if effected with the written consent of such
Underwriter), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
any untrue or alleged untrue statement of a material fact contained in the
Registrant Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Company and the Selling Shareholders by the Representatives
expressly for use therein; and to reimburse the Company, or any such director,
officer, Selling Shareholder or controlling person for any legal and other
expense reasonably incurred by the Company, or any such director, officer,
Selling Shareholder or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. Each of the Company and each of the Selling
Shareholders, hereby acknowledges that the only written information that the
Underwriters have furnished to the Company and the Selling Shareholders
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) are the statements set
forth (A) in the last paragraph of the cover page of the Prospectus, (B) in the
last paragraph on the inside front cover page of the Prospectus and (C) in the
table in the first paragraph and in the second, sixth, seventh and eighth
paragraphs under the caption "Underwriting" in the Prospectus; and the
Underwriters confirm that such statements are correct. The indemnity agreement
set forth in this Section 8(b) shall be in addition to any liabilities that each
Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of
-24-
such failure. In case any such action is brought against any indemnified party
and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it shall elect, jointly with all other indemnifying
parties similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defense
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party's election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (Xxxxxxxxxx Securities in the case of Section 8(b) and Section 9),
representing the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 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
against any loss, claim, damage, liability or expense by reason of such
settlement of judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
8(c) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such
-25-
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
Section 9. Contribution. If the indemnification provided for in
Section 8 is for any reason held to be unavailable to or otherwise insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) 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 hand, from the offering of the
Common Shares pursuant to this Agreement or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Shareholders,
on the one hand, and the Underwriters, on the other hand, in connection with the
statement or omissions or inaccuracies in the representations and warranties
herein which resulted in such losses, claims, damages, liabilities or expenses,
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 hand, in connection with the offering of the Common
Shares pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Common Shares
pursuant to this Agreement (before deducting expenses) received by the Company
and the Selling Shareholders, and the total underwriting discount received by
the Underwriters, in each case as set forth on the front cover page of the
Prospectus (or, if Rule 434 under the Securities Act is used, the corresponding
location on the Term Sheet) bear to the aggregate initial public offering price
of the Common Shares as set froth on such cover. The relative fault of the
Company and the Selling Shareholders, on the one hand, and the Underwriters, on
the other hand, shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact or any such inaccurate or alleged
inaccurate representations or warranty relates to information supplied by the
Company or the Selling Shareholders, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement of omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in Section 8(c) with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 9; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 8(c) for purposes of indemnification.
The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 9
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other
-26-
method of allocation which does not take account of the equitable considerations
referred to in this Section 9.
Notwithstanding the provisions of this Section 9, (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Common Shares underwritten
by it and distributed to the public and (ii) no Selling Shareholder shall be
required to contribute any amount in excess of the net proceeds received by such
Selling Shareholder from the Underwriters in the offering contemplated by this
Agreement. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 9 are several,
and not joint, in proportion to their respective underwriting commitments as set
forth opposite their names in Schedule A. For purposes of this Section 9, each
---------
officer and employee of an Underwriter and each person, if any, who controls an
Underwriter within the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company with the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution
as the Company.
Section 10. Default of One or More of the Several Underwriters. If,
on the First Closing Date or the Second Closing Date, as the case may be, any
one or more of the several Underwriters shall fail or refuse to purchase Common
Shares that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Common Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on Schedule A
----------
bears to the aggregate number of Firm Common Shares set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Common Shares and the
aggregate number of Common Shares with respect to which such default occurs
exceeds 10% of the aggregate number of Common Shares to be purchased on such
date, and arrangements satisfactory to the Representatives and the Company for
the purchase of such Common Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any party to any
other party except that the provisions of Section 4, Section 6, Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
In any such case either the Representatives or the Company shall have the right
to postpone the First Closing Date or the Second Closing Date, as the case may
be, but in no event for longer than seven days in order that the required
changes, if any, to the Registration Statement and the Prospectus or any other
documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this
-27-
Section 10 shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
Section 11. Termination of this Agreement. Prior to the First Closing Date
this Agreement may be terminated by the Representatives by notice given to the
Company and the Selling Shareholders if at any time (i) trading or quotation in
any of the Company's securities shall have been suspended or limited by the
Commission or by the Nasdaq Stock Market, or trading in securities generally on
either the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or the NASD; (ii) a
general banking moratorium shall have been declared by any of federal, New York
or California authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity,
or any change in the United States or international financial markets, or any
substantial change or development involving a prospective substantial change in
the United States' or international political, financial or economic conditions,
as in the judgment of the Representatives is material and adverse and makes it
impracticable to market the Common Shares in the manner and on the terms
described in the Prospectus or to enforce contracts for the sale of securities;
(iv) in the judgment of the Representatives there shall have occurred any
Material Adverse Change; or (v) the Company shall have sustained a loss by
strike, fire, flood, earthquake, accident or other calamity of such character as
in the judgment of the Representatives may interfere materially with the conduct
of the business and operations of the Company regardless of whether or not such
loss shall have been insured. Any termination pursuant to this Section 11 shall
be without liability on the part of (a) the Company or the Selling Shareholders
to any Underwriter, except that the Company and the Selling Shareholder shall be
obligated to reimburse the expenses of the Representatives and the Underwriters
pursuant to Section 4 and 6 hereof, (b) any Underwriter to the Company or any
Selling Shareholder, or (c) of any party hereto to any other party except that
the provisions of Section 8 and Section 9 shall at all times be effective and
shall survive such termination.
Section 12. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Shareholders, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
Notwithstanding any other provision of this Agreement, this Agreement shall
terminate as to Xxxxxx X. Xxxxx (the "Option Selling Stockholder"), and such
Option Selling Stockholder shall have no further obligations hereunder, if the
over-allotment option granted under Section 2 hereof is not exercised in
accordance with such Section. Any such termination shall be without liability of
the Option Selling Stockholder to the Underwriters and without liability of the
Underwriters to the Option Selling Stockholder; provided, however, that in the
event of any such termination, the Option Selling Stockholder agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Option Selling Stockholder under
this Agreement, including any costs and expenses payable by such Option Selling
Stockholder pursuant to Section 4 hereof.
Section 13. Notices. All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to the
parties hereto as follows:
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If to the Representatives:
Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company:
Peritus Software Services, Inc.
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
(000) 000-0000
Facsimile: (000) 000-0000
Attention: President
If to the Selling Shareholders:
Peritus Software Services, Inc., as Custodian
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
(000) 000-0000
Facsimile: (000) 000-00000
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 14. Successors. This Agreement will inure to the benefit of
and binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder. The term "successors" shall not include any purchaser
of the Common Shares as such from any of the Underwriters merely by reason of
such purchase.
-29-
Section 15. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to invalid or unenforceable, there shall be deemed to
be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
Section 16. (a) Governing Law Provisions. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the City of San Francisco (collectively, the
"Specified Courts"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a "Related Judgment"), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
Section 17. Failure of One or More of the Selling Shareholders to
Sell and Deliver Common Shares. If one or more of the Selling Shareholders
shall fail to sell and deliver to the Underwriters the Common Shares to be sold
and delivered by such Selling Shareholder at the First Closing Date pursuant to
this Agreement, then the Underwriters may at their option, by written notice
from the Representatives to the Company and the Selling Shareholders, either (i)
terminate this Agreement without any liability on the part of any Underwriter
or, except as provided in Sections 4, 6, 8, and 9 hereof, the Company or the
Selling Shareholders, or (ii) purchase the shares which the Company and other
Selling Shareholders have agreed to sell and deliver in accordance with the
terms hereof. If one or more of the Selling Shareholders shall fail to sell and
deliver to the Underwriters the Common Shares to be sold and delivered by such
Selling Shareholder pursuant to this Agreement at the First Closing Date, then
the Underwriters shall have the right, by written notice from the
Representatives to the Company and the Selling Shareholders, to postpone the
First Closing Date, but in no event for longer than seven days in order that the
required changes, if any, to the Registration Statement and Prospectus or any
other documents or arrangement may be effected.
Section 18. General Provisions. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This
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Agreement may be executed in two or more counterparts, each one of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein (express
or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Table of Contents and the Section headings
herein are for the convenience of the parties only and shall not affect the
construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and contribution provisions of Section
9, and is fully informed regarding said provisions. Each of the parties hereto
further acknowledges that the provisions of Sections 8 and 9 hereto fairly
allocate the risks in light of the ability of the parties to investigate the
Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company and Custodian the enclosed
copies hereof, whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.
Very truly yours,
PERITUS SOFTWARE SERVICES, INC.
By:
-------------------------------------------
Name:
Title:
SELLING SHAREHOLDERS
By:
-------------------------------------------
(Attorney-in-fact)
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representatives in San Francisco, California as of the date first above
written.
XXXXXXXXXX SECURITIES
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
H.C. XXXXXXXXXX & CO., INC.
Acting as Representatives of the
several Underwriters named in the
attached Schedule A.
By: XXXXXXXXXX SECURITIES
By:
--------------------------------
Name:
Title:
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SCHEDULE A
Underwriters Number of
Firm Common
Shares to be Purchased
Xxxxxxxxxx Securities................ [ ]
Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C. [ ]
X.X. Xxxxxxxxxx & Co., Inc. .........
[_____].............................. [ ]
[_____].............................. [ ]
[_____].............................. [ ]
[_____].............................. [ ]
[_____].............................. [ ]
Total.......................... 3,500,000
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Schedule B
Names and Addresses of Certificates Primary Shares Secondary Shares
------------
Selling Shareholders Deposited to be Sold to be Sold
-------------------- --------- ----------
Bull HN Information
Systems Inc. 360,000 265,000
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxxx X. Xxxx* 300,000 200,000
c/o Peritus Software
Services, Inc.
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxx* 20,000 30,000
c/o Peritus Software
Services, Inc.
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxx 20,000 10,000
c/o Peritus Software
Services, Inc.
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxx 20,000
c/o Peritus Software
Services, Inc.
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
*Denotes Significant Shareholder.
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Schedule C
----------
Xxxx Xxxxxxx
Xxxxxxx Xxxxxx
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EXHIBIT A
The final opinion in draft form will be attached as Exhibit A at the time this
Agreement is executed.
Opinion of counsel for the Company to be delivered pursuant to
Section 5(d) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any supplements
---------
thereto at the Closing Date.
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the Commonwealth of
Massachusetts.
(ii) The Company has corporate power and authority to own and lease
its properties and to conduct its business, as such properties and business
are described in the Prospectus and to enter into and consummate the
transactions contemplated by the Underwriting Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction listed on
Schedule A to the opinion.
----------
(iv) Peritus Software Services Securities Corporation (the "U.S.
Subsidiary") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of
Massachusetts and has corporate power and authority to own and lease its
properties (as known to such counsel) and to conduct its business as
described in the Prospectus.
(v) All of the issued and outstanding capital stock of the U.S.
Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned of record by the Company. To the knowledge of
such counsel, the outstanding shares of capital stock of the U.S.
Subsidiary are owned free and clear or any security interest, mortgage,
pledge, lien, encumbrance or any pending or threatened claim.
(vi) The authorized, issued and outstanding Common Stock of the
Company conforms, or when issued, delivered and paid for in accordance with
the terms of the Underwriting Agreement will conform, in all material
respects to the description thereof set forth in the Prospectus. All of
the outstanding shares of Common Stock (including the shares of Common
Stock owned by Selling Shareholders) have been duly authorized and validly
issued, are fully paid and nonassessable. The form of certificate used to
evidence the Common Stock, assuming it is in the form filed with the
Commission, is in due and proper form and complies with all applicable
requirements of the charter and by-laws of
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the Company and the Business Corporation Laws of the Commonwealth of
Massachusetts.
(vii) Except as described in the Prospectus, no shareholder of the
Company or any other person has any preemptive right, right of first
refusal or other similar right to subscribe for or purchase securities of
the Company arising (i) by operation of the charter or by-laws of the
Company or the Business Corporation Laws of the Commonwealth of
Massachusetts or (ii) to the knowledge of such counsel, otherwise, except
such rights that have been satisfied or waived.
(viii) The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
(ix) The Common Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to the
Underwriting Agreement and, when certificates evidencing the Common Shares
have been duly countersigned by the Company's transfer agent and registrar
and delivered to the Underwriters, or upon the order of the Underwriters,
against payment of the agreed consideration therefor in accordance with the
provisions of the Underwriting Agreement, will be validly issued, fully
paid and nonassessable.
(x) Each of the Registration Statement and the Rule 462(b)
Registration Statement, if any, has been declared effective by the
Commission under the Securities Act. To the knowledge of such counsel, no
stop order suspending the effectiveness of either of the Registration
Statement or the Rule 462(b) Registration Statement, if any, has been
issued under the Securities Act and no proceedings for such purpose have
been instituted or are pending or are threatened by the Commission. Any
required filing of the Prospectus and any supplement thereto pursuant to
Rule 424(b) under the Securities Act has been made in the manner and within
the time period required by such Rule 424(b).
(xi) The Registration Statement, including any Rule 462(b)
Registration Statement, the Prospectus, and each amendment or supplement to
the Registration Statement and the Prospectus, as of their respective
effective or issue dates (other than the financial statements, including
the notes and schedules thereto, or any other financial, statistical or
accounting information, or information relating to the Underwriters or the
method of distribution of the Common Shares by the Underwriters, included
therein, as to which no opinion need be rendered) complied as to form in
all material respects with the applicable requirements of the Securities
Act. In passing upon the form of such documents, such counsel is not
passing upon the statements made therein and takes no responsibility
therefor.
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(xii) The statements in the Prospectus under the captions "Risk
Factors--Shares Eligible for Future Sale; Registration Rights," "Risk
Factors--Potential Adverse Effects of Anti-Takeover Provisions; Possible
Issuance of Preferred Stock," "Description of Capital Stock," "Shares
Eligible for Future Sale," "Management--Employment Agreements," and
"Management--Stock Plans," insofar as such statements constitute matters of
law or legal conclusions, have been reviewed by such counsel and are
correct in all material respects.
(xiii) To the knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or threatened which are
required to be described in the Registration Statement which are not
described as required.
(xiv) To the knowledge of such counsel, there are no contracts or
documents required to be described in the Registration Statement or to be
filed as exhibits thereto other than those described therein or filed as
exhibits thereto.
(xv) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the Company's execution and delivery of the
Underwriting Agreement and consummation of the transactions contemplated
thereby (other than as may be required under the Securities Act, applicable
state or provincial securities or blue sky laws and from the NASD) except
such as have been obtained or made.
(xvi) The execution and delivery of the Underwriting Agreement by
the Company and the consummation by the Company of the transactions
contemplated thereby (i) have been duly authorized by all necessary
corporate action on the part of the Company; (ii) will not result in any
violation of the provisions of the charter or by-laws of the Company; or
(iii) will not constitute a breach of, or Default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company under any agreement or instrument to which the
Company is a party which is listed as an exhibit to the Registration
Statement.
(xvii) The Company is not, and will not become, as a result of the
consummation of the transactions contemplated by the Underwriting
Agreement, and application of the net proceeds therefrom as described in
the Prospectus, required to register as an "investment company" within the
meaning of Investment Company Act.
(xviii) Except as disclosed in the Prospectus, to the knowledge of
such counsel, there are no persons with registration or other similar
rights to have any equity or debt securities registered for sale under the
Registration Statement or included in the offering contemplated by the
Underwriting Agreement, except for such rights as have been duly waived or
satisfied.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants
for the Company and with
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representatives of the Underwriters at which the contents of the
Registration Statement and the Prospectus, and any supplements or
amendments thereto, and related matters were discussed and, although the
limitations inherent in the independent verification of factual matters and
the character of determinations involved in the registration process are
such that such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (other than as
specified in paragraph 12 above), and subject to the foregoing and based on
such participation, nothing has come to their attention which would lead
them to believe that either the Registration Statement or any amendments
thereto, at the time the Registration Statement or such amendments became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its
date or at the First Closing Date or the Second 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 therein, in
the light of the circumstances under which they were made, not misleading
(it being understood that such counsel need express no belief as to the
financial statements, including the notes and schedules thereto, or any
other financial, statistical or accounting information, or information
relating to the Underwriters or the method of distribution of the Shares by
the Underwriters included in the Registration Statement or the Prospectus
or any amendments or supplements thereto).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the Business
Corporation Laws of the Commonwealth of Massachusetts or the federal law of the
United States, to the extent they deem proper and specified in such opinion,
upon the opinion (which shall be dated the First Closing Date or the Second
Closing Date, as the case may be, shall be satisfactory in form and substance to
the Underwriters, shall expressly state that the Underwriters may rely on such
opinion as if it were addressed to them and shall be furnished to the
Representatives) of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters; provided,
however, that such counsel shall further state that they believe that they and
the Underwriters are justified in relying upon such opinion of other counsel,
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials.
-39-
EXHIBIT B
The final opinion in draft form will be attached as Exhibit B at the time this
Agreement is executed.
The opinion of such counsel pursuant to Section 5(h) shall be rendered to
the Representatives at the request of the Company and shall so state therein.
References to the Prospectus in this Exhibit B includes any supplements thereto
---------
at the Closing Date.
(i) The Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder.
(ii) The execution and delivery by such Selling Shareholder of, and the
consummation by such Selling Shareholder of the transactions contemplated by,
the Underwriting Agreement, and its Custody Agreement and its Power of Attorney
will not contravene or conflict with, result in a breach of, or constitute a
default under, the charter or by-laws, partnership agreement, trust agreement or
other organizational documents, as the case may be, of such Selling Shareholder,
or, to such counsel's knowledge, violate or contravene any provision of law or
regulation applicable to such Selling Shareholder, or violate, result in a
breach of or constitute a default under the terms of any other agreement or
instrument known to such counsel to which such Selling Shareholder is a party or
by which it is bound, or any judgment, order or decree known to such counsel and
specifically naming such Selling Shareholder of any court or any other
governmental authority or agency having jurisdiction over such Selling
Shareholder.
(iii) To the knowledge of such counsel, such Selling Shareholder has good
and valid title to all of the Common Shares which may be sold by such Selling
Shareholder under the Underwriting Agreement and has the legal right and power,
and all authorizations and approvals required [under its charter and by-laws,]
[partnership agreement,] [trust agreement] [or other organizational documents,
as the case may be,] to enter into the Underwriting Agreement and its Custody
Agreement and its Power of Attorney, to sell, transfer and deliver all of the
Common Shares which may sold by such Selling Shareholder under the Underwriting
Agreement and to consummate the transactions contemplated by the Underwriting
Agreement, its Custody Agreement and its Power of Attorney.
(iv) Each of the Custody Agreement and Power of Attorney of such Selling
Shareholder has been duly authorized, executed and delivered by such Selling
Shareholder and is a valid, irrevocable instrument legally sufficient for the
purposes intended.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the Business
Corporation Laws of the Commonwealth of Massachusetts or the federal law of the
United States, to the extent they deem proper and specified in such opinion,
upon the opinion (which shall be dated the First Closing
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Date or the Second Closing Date, as the case may be, shall be satisfactory in
form and substance to the Underwriters, shall expressly state that the
Underwriters may rely on such opinion as if it were addressed to them and shall
be furnished to the Representatives) of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the Underwriters;
provided, however, that such counsel shall further state that they believe that
they and the Underwriters are justified in relying upon such opinion of other
counsel, and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials and, in
the case of Selling Shareholders that are natural persons, on representations
made by such Selling Shareholders (including without limitation the
representations of the Selling Shareholders in the Underwriting Agreement and
their respective Custody Agreements).
-41-
EXHIBIT C
__________, 1997
Xxxxxxxxxx Securities
Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C.
H.C. Xxxxxxxxxx & Co., Inc.
As Representatives of the Several Underwriters
c/x Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: Peritus Software Services, Inc. (the "Company")
--------------------------------
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of Class
A Common Stock and/or Class B Common Stock of the Company (these securities,
along with the shares constituting the common stock of the Company after the
consummation of the Offering (as defined herein), shall be hereinafter referred
to as the "Common Stock") or securities convertible into or exchangeable or
exercisable for Common Stock. The Company proposes to carry out a public
offering of Common Stock (the "Offering") for which you will act as the
representatives of the underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into an underwriting arrangement with
the Company with respect to the Offering (the "Underwriting Agreement").
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of Xxxxxxxxxx Securities
(which consent may be withheld in its sole discretion), directly or indirectly,
sell, offer, contract or grant any option to sell (including without limitation
any short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
or otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock, or securities exchangeable or exercisable for or
convertible into shares of Common Stock currently or hereafter owned either of
record or beneficially (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) by the undersigned (collectively, "Securities"), or publicly
announce the undersigned's intention to do any of the foregoing, for a period
commencing on the date hereof and continuing through the close of trading on the
date 180 days after the date of the Prospectus (as defined in the Underwriting
Agreement. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
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Notwithstanding the foregoing, the undersigned does not need to obtain the prior
written consent of Xxxxxxxxxx Securities to transfer any or all of the
Securities (i) included in the Registration Statement filed in connection with
the Offering, (ii) by gift, will or intestacy, (iii) as a distribution, without
receipt of consideration, to limited partners or shareholders or members (in the
case of a limited liability company) of the undersigned, (iv) in the event the
undersigned is an individual, to his or her immediate family or to a trust the
beneficiaries of which are exclusively the undersigned and/or a member or
members of his or her immediate family; provided, however, that in the case of
transfers under clauses (ii), (iii) and (iv), it shall be a condition to the
transfer that the transferee execute an agreement stating that the transferee is
receiving and holding the Securities subject to the provisions of this
agreement, and there shall be no further transfer of such Securities except in
accordance with this agreement.
It is understood that, if the Underwriting Agreement between the underwriters
and the Company does not become effective by May 1, 1998, or if the Underwriting
Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the shares of
Common Stock, you will release the undersigned from the obligations under this
letter agreement.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
----------------------------
Printed Name of Holder
By
--------------------------
Signature
----------------------------
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
Representatives
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EXHIBIT D
The final opinion in draft form will be attached as Exhibit D at the time this
Agreement is executed.
Opinion of counsel for the Company to be delivered pursuant to Section 5(d)
of the Underwriting Agreement.
References to the Prospectus in this Exhibit D include any supplements
---------
thereto at the Closing Date.
(i) Persist Service's Software, S.A. ("Persist") has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of ________________.
(ii) Persist has corporate power and authority to own and, lease and
operate its properties and to conduct its business, as such properties and
business are described in the Prospectus.
(iii) Persist is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason or the ownership or leasing or
property or the conduct of business, except for such jurisdictions where
the failure to so qualify or to be in good standing would not, individually
or in the aggregate, result in a Material Adverse Change.
(iv) Except as described in the Prospectus, all of the issued and
outstanding capital stock of Persist has been duly authorized and validly
issued, is fully paid and non-assessable and is owned of record by the
Company. To the knowledge of such counsel, the outstanding shares of
capital stock of Persist are owned free and clear or any security interest,
mortgage, pledge, lien, encumbrance or any pending or threatened claim.
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EXHIBIT E
The final opinion in draft form will be attached as Exhibit E at the time this
Agreement is executed.
Opinion of counsel for the Company to be delivered pursuant to Section 5(d)
of the Underwriting Agreement.
References to the Prospectus in this Exhibit E include any supplements
---------
thereto at the Closing Date.
(i) Peritus Software Services (India) Private Ltd. ("Peritus
(India)") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of ________________.
(ii) Peritus (India) has corporate power and authority to own and,
lease and operate its properties and to conduct its business, as such
properties and business are described in the Prospectus.
(iii) Peritus (India) is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason or the ownership or
leasing or property or the conduct of business, except for such
jurisdictions where the failure to so qualify or to be in good standing
would not, individually or in the aggregate, result in a Material Adverse
Change.
(iv) Except as described in the Prospectus, all of the issued and
outstanding capital stock of Peritus (India) has been duly authorized and
validly issued, is fully paid and non-assessable and is owned of record by
the Company. To the knowledge of such counsel, the outstanding shares of
capital stock of Peritus (India) are owned free and clear or any security
interest, mortgage, pledge, lien, encumbrance or any pending or threatened
claim.
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EXHIBIT F
The final opinion in draft form will be attached as Exhibit F at the time this
Agreement is executed.
Opinion of patent counsel for the Company to be delivered pursuant to
Section 5(d) of the Underwriting Agreement.
Such counsel is unaware of any facts which would preclude the Company from
having clear title to U.S. Patent Application Serial No. ______, except as
described in the Prospectus. Such counsel is unaware of any facts that indicate
that the Company has not complied with the required duty of candor and good
faith in dealing with the Patent and Trademark Office in connection with the
prosecution of U.S. Patent Application Serial No. ______, including the duty to
disclose to the PTO all information believed to be material to the patentability
of such pending application. Such counsel has no knowledge of any patents or
patent applications of third parties, which, if issued, would limit or prohibit
the business now conducted or proposed to be conducted by the Company as
described in the Prospectus, except as described therein.
-46-
