HALE AND DORR
Draft 5/22/96
-------------
CITRIX SYSTEMS, INC.
2,398,664 SHARES*
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
June __, 1996
HAMBRECHT & QUIST LLC
ROBERTSON, STEPHENS & COMPANY LLC
NEEDHAM & COMPANY, INC.
as Representatives of the Several Underwriters
c/o Hambrecht & Quist LLC
One Bush Street
San Francisco, CA 94104
Ladies and Gentlemen:
Citrix Systems, Inc., a Delaware corporation (herein called the Company),
proposes to issue and sell 2,000,000 shares of its authorized but unissued
Common Stock, $.001 par value per share (herein called the Common Stock), and
the stockholders of the Company named in Schedule II hereto (herein collectively
called the Selling Securityholders) propose to sell an aggregate of 398,664
shares of Common Stock of the Company (said 2,398,664 shares of Common Stock
being herein called the Underwritten Stock). The Company proposes to grant to
the Underwriters (as hereinafter defined) an option to purchase up to 359,800
additional shares of Common Stock (herein called the Option Stock and with the
Underwritten Stock herein collectively called the Stock). The Common Stock is
more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.
The Company and the Selling Securityholders severally hereby confirm the
agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent and
warrant that you have been authorized by each of the other Underwriters to
______________________
* Plus an option to purchase from the Company up to 359,800 additional shares
to cover over-allotments.
enter into this Agreement on its behalf and to act for it in the manner herein
provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities and
Exchange Commission (herein called the Commission) a registration statement on
Form S-1 (No. 333-______), including the related Preliminary Prospectus, for the
registration under the Securities Act of 1933, as amended (herein called the
Securities Act), of the Stock. Copies of such registration statement and of each
amendment thereto, if any, including the related Preliminary Prospectus (meeting
the requirements of Rule 430A of the rules and regulations of the Commission)
heretofore filed by the Company with the Commission have been delivered to you.
The term Registration Statement as used in this Agreement shall mean such
registration statement, including all exhibits and financial statements, all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, and any registration statement filed pursuant to
Rule 462(b) of the rules and regulations of the Commission with respect to the
Stock (herein called a Rule 462(b) registration statement) in the form in which
it became effective and, in the event of any amendment thereto after the
effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended including any Rule 462(b) registration
statement. The term Prospectus as used in this Agreement shall mean the
prospectus relating to the Stock first filed with the Commission pursuant to
Rule 424(b) and Rule 430A or (if no such filing is required) as included in the
Registration Statement, and, in the event of any supplement or amendment to such
prospectus after the Effective Date, shall also mean (from and after the filing
with the Commission of such supplement or of the effectiveness of such
amendment) such prospectus as so supplemented or amended. The term Preliminary
Prospectus as used in this Agreement shall mean each preliminary prospectus
included in such registration statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Securities Act.
-2-
2. REPRESENTATIONS AND WARRANTIES OF EACH OF THE COMPANY AND THE SELLING
SECURITYHOLDERS.
(a) Each of the Company and the Selling Securityholders
hereby represents and warrants respectively as follows:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own or lease its properties and conduct its business
as described in the Registration Statement and the Prospectus and as
currently being conducted, and is duly qualified as a foreign corporation
and in good standing in all jurisdictions in which the character of the
property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so qualified
would not have a material adverse effect on the business, operations,
financial condition or income of the Company and its subsidiaries, taken as
a whole). The outstanding shares of capital stock of each such subsidiary
have been duly authorized and validly issued, are fully paid and
nonassessable and are owned by the Company free and clear of all liens,
encumbrances and security interests; and no options, warrants or other
rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into shares of capital stock or ownership
interests in any such subsidiary are outstanding.
(ii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
material adverse change in the business, operations, financial condition,
income or business prospects of the Company and its subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course of
business, other than as set forth in the Registration Statement and the
Prospectus, and since such dates, except in the ordinary course of
business, neither the Company nor any of its subsidiaries has entered into
any material transaction not referred to in the Registration Statement and
the Prospectus.
(iii) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus, nor instituted
proceedings for that purpose. The Registration Statement and the
Prospectus comply, and on the Closing Date (as hereinafter defined) and
any later date on which Option Stock is to be purchased, the Prospectus
will comply in all material respects with the provisions of the Securities
Act and the rules and regulations of the
-3-
Commission thereunder; on the Effective Date and on the Closing Date and
any later date on which Option Stock may be purchased, neither the
Registration Statement nor any amendment thereto, and neither the
Prospectus nor any supplements thereto, contains or will contain any untrue
statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; provided, however, that none of the
representations and warranties in this subparagraph (iii) shall apply to
statements in, or omissions from, the Registration Statement or the
Prospectus made in reliance upon and in conformity with information herein
or otherwise furnished in writing to the Company by or on behalf of the
Underwriters for use in the Registration Statement or the Prospectus. There
are no contracts or documents of the Company which would be required by the
Securities Act or by the rules and regulations of the Commission to be
filed as exhibits to the Registration Statement which have not been so
filed.
(iv) The Stock is duly and validly authorized, is (or, in the case of
shares of the Stock to be sold by the Company, will be, when issued and
sold to the Underwriters as provided herein) duly and validly issued, fully
paid, nonassessable, free of pre-emptive rights and conforms to the
description thereof in the Prospectus in all material respects. There are
no outstanding options, warrants or other rights granted to or by the
Company to purchase shares of Common Stock or other securities of the
Company other than as described in the Registration Statement; and no such
option, warrant or other right has been granted to any person, the exercise
of which would cause such person to own more than five percent of the
Common Stock outstanding immediately after the offering other than as
described in the Prospectus. No person or entity holds a right to require
or participate in the registration under the Securities Act of shares of
Common Stock of the Company which right has not been waived by the holder
thereof as of the date hereof with respect to the registration of shares
pursuant to the Registration Statement, and except as described in the
Prospectus, no person holds a right to require registration under the
Securities Act of shares of Common Stock of the Company at any other time.
No person or entity has a right of participation with respect to the sale
of shares of the Stock by the Company or the Selling Securityholders. No
further approval or authority of the stockholders or the Board of Directors
of the Company will be required for the transfer and sale of the Stock to
be sold by the Selling Securityholders or the issuance and sale of the
Stock as contemplated herein.
-4-
(v) The Company and its subsidiaries now hold, and at the Closing
Date (as defined in Section 5(a) hereof) will hold, all material licenses,
certificates and permits from state, federal and other regulatory
authorities which are necessary for the conduct of the business of the
Company and its subsidiaries taken as a whole; neither the Company nor any
of its subsidiaries is in violation of its corporate charter or by-laws, or
in default in the performance or observance of any provision of any
obligation, agreement, covenant or condition contained in any bond,
debenture or in any contract, indenture, mortgage, loan agreement, joint
venture or other agreement or instrument to which the Company or such
subsidiary is a party or by which it or any of its properties is bound or,
to the best of the Company's knowledge, is in violation of any law, order,
rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign.
(vi) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and its subsidiaries have sufficient trademarks,
trade names, patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct their businesses as now conducted;
and neither the Company nor any Selling Securityholder has any knowledge of
any material infringement by the Company or its subsidiaries of trademark,
trade name rights, patent rights, mask works, copyrights, licenses, trade
secret or other similar rights of others, and there is no claim being made
against the Company or its subsidiaries regarding trademark, trade name,
patent, mask work, copyright, license, trade secret or other infringement
which could have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the Company and
its subsidiaries taken as a whole.
(vii) This Agreement has been duly authorized, executed and delivered
by the Company; the performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, (A) any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the property of the Company or any of
the subsidiaries is bound, (B) the corporate charter or by-laws of the
Company or any of the subsidiaries or (C) (assuming the making of all
filings required under Rule 424(b) or Rule 430A and the due qualification
of the Stock for public offering by the Underwriters under state and
foreign securities laws) any statute or any order, rule or regulation of
any court or
-5-
governmental agency or body having jurisdiction over the Company or any of
the subsidiaries or over the properties of the Company.
(viii) Except as set forth in the Prospectus, there is not any action,
suit or proceeding, at law or in equity, pending against the Company or any
subsidiary before any court or administrative agency, which, if determined
adversely to the Company or any subsidiary, would materially adversely
affect the business, operations, financial condition, income or business
prospects of the Company and the subsidiaries taken as a whole, or prevent
consummation of the transactions contemplated hereby.
(ix) The consolidated financial statements of the Company and its
subsidiaries, together with the related notes and schedules as set forth in
the Registration Statement, present fairly the consolidated financial
position and the results of operations of the Company and its subsidiaries,
at the indicated dates and for the indicated periods. Such financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
and all adjustments necessary for a fair presentation of results for such
periods have been made. The summary financial and statistical data included
in the Registration Statement present fairly the information shown therein
and have been compiled on a basis consistent with the financial statements
presented therein.
(x) The Company and its subsidiaries have filed all federal, state
and foreign income tax returns which have been required to be filed (or
have filed extensions therefor or obtained any required extensions in
connection therewith), and have paid all taxes indicated by said returns
and all assessments received by them or any of them to the extent that such
taxes have become due and are not being contested in good faith.
(xi) Each approval, consent, order, authorization, designation,
declaration or filing by or with any United States regulatory,
administrative or other governmental body necessary in connection with the
execution and delivery by the Company of this Agreement and the
consummation by the Company of the transactions herein contemplated (except
(A) such additional steps as may be required by the National Association of
Securities Dealers, Inc. (the "NASD"), (B) as may be necessary to make the
Registration Statement effective (and to maintain such effectiveness) and
to qualify the Stock for public offering by the Underwriters under state
and foreign securities laws or (C) filings required under Rule
-6-
424(b) or Rule 430(A)) has been obtained or made and is in full force and
effect.
(xii) Ernst & Young LLP, who have certified the financial statements
filed with the Commission as part of the Registration Statement, are
independent public accountants as required by the Securities Act and the
rules and regulations thereunder.
(xiii) The Company and the subsidiaries have good and marketable title
to all of the properties and assets reflected in the financial statements
(or as described in the Registration Statement) described as owned by them,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind
except those reflected in such financial statements (or as described in the
Registration Statement) or which are not material in amount.
(xiv) Neither the Company nor any of its subsidiaries is involved in
any material labor dispute nor, to the knowledge of the Company, is any
such dispute threatened.
(xv) The Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (hereinafter the Exchange Act),
and is listed on the Nasdaq National Market, and the Company has taken no
action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the Nasdaq National Market, nor has the Company received
any notification that the Commission or the NASD is contemplating
terminating such registration or listing has been approved, subject to
notice of issuance of the Stock.
(xvi) Neither the Company nor, to its knowledge, any of its officers,
directors or affiliates have taken, and at the Closing Date and at each
purchase of the Option Stock, neither the Company nor, to its knowledge,
any of its officers, directors or affiliates will have taken, directly or
indirectly, any action which has constituted, or might reasonably be
expected to constitute, the stabilization or manipulation of the price of
sale or resale of the Stock.
(xvii) Neither the Company nor any Subsidiary has been an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
-7-
(xviii) The Company has timely and properly filed with the Commission all
reports and other documents required to have been filed with the
Commission.
(b) Each of the Selling Securityholders represents and warrants
respectively as follows:
(i) The Selling Securityholder has good and marketable title to all
the shares of Stock to be sold by such Selling Securityholder hereunder, free
and clear of all liens, encumbrances, equities, security interests and claims
whatsoever, with full right and authority to deliver the same hereunder,
subject, in the case of each Selling Securityholder, to the rights of the
Company, as custodian (herein called the Custodian), and that upon the delivery
of and payment for such shares of the Stock hereunder, the several Underwriters
will receive good and marketable title thereto, free and clear of all liens,
encumbrances, equities, security interests and claims whatsoever.
(ii) Certificates in negotiable form for the shares of the Stock to
be sold by such Selling Securityholder have been placed in custody under a
Letter of Transmittal, Waiver and Custody Agreement (herein called the Custody
Agreement) for delivery under this Agreement with the Custodian; the Selling
Securityholder specifically agrees that the shares of the Stock represented by
the certificates so held in custody for such Selling Securityholder are subject
to the interests of the several Underwriters and the Company, that the
arrangements made by such Selling Securityholder for such custody, including the
Selling Securityholder's Irrevocable Power of Attorney (herein called the Power
of Attorney) provided for in the Custody Agreement, are to that extent
irrevocable, and that the obligations of such Selling Securityholder shall not
be terminated by any act of such Selling Securityholder or by operation of law,
whether by the death or incapacity of such Selling Securityholder or the
occurrence of any other event; if any such death, incapacity, dissolution,
liquidation or other such event should occur before the delivery of such shares
of the Stock hereunder, certificates for such shares of the Stock shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death, incapacity, dissolution, liquidation or other event
had not occurred, regardless of whether the Custodian shall have received notice
of such death, incapacity, dissolution, liquidation or other event.
(iii) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Securityholder of this Agreement, the
Power of Attorney and the Custody Agreement, and (assuming the making of all
filings required under Rule 424(b) or Rule 430A and the due qualification
-8-
of the Stock for public offering by the Underwriters under state and foreign
securities laws) for the sale and delivery of the Stock to be sold by the
Selling Securityholder hereunder, have been obtained; and the Selling
Securityholder has the right, power and authority to enter into this Agreement,
the Power of Attorney and Custody Agreement and to sell, assign, transfer and
deliver the Stock to be sold by the Selling Securityholder hereunder; the Power
of Attorney and the Custody Agreement constitute valid and binding obligations
and agreements of such Selling Securityholder in accordance with their
respective terms.
(iv) The performance of this Agreement, the Selling Stockholder's
Irrevocable Power of Attorney and the Letter of Transmittal and Custodian
Agreement and the consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such Selling
Securityholder is a party or by which such Selling Securityholder is bound, or
(assuming the making of all filings required under Rule 424(b) or Rule 430A and
the due qualification of the Stock for public offering by the Underwriters under
state and foreign securities laws) any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over such
Selling Securityholder or the property of such Selling Securityholder.
(v) Such Selling Securityholder has not taken and will not take,
directly or indirectly, any action which has constituted, or which is designed
to or might reasonably be expected to cause or result in, stabilization or
manipulation of the price of sale or resale of the Stock.
(vi) The Selling Securityholder has reviewed the Registration
Statement and Prospectus and nothing has come to the attention of the Selling
Securityholder that would lead the Selling Securityholder to believe that either
(A) on the Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, or (B) on the Effective Date the Prospectus contained and, on the
Closing Date and any later date on which Option Stock is to be purchased,
contains any untrue statement of a material fact or omitted or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
-9-
3. Purchase of the Stock by the Underwriters.
(a) On the basis of the representations and warranties and subject to the
terms and conditions herein set forth, the Company agrees to issue and sell
2,000,000 shares of the Underwritten Stock to the several Underwriters, each
Selling Securityholder agrees to sell to the several Underwriters the number of
shares of the Underwritten Stock set forth in Schedule II opposite the name of
such Selling Securityholder, and each of the Underwriters agrees to purchase
from the Company and the Selling Securityholders the respective aggregate number
of shares of Underwritten Stock set forth opposite its name in Schedule I. The
price at which such shares of Underwritten Stock shall be sold by the Company
and the Selling Securityholders and purchased by the several Underwriters shall
be [$_____] per share. The obligation of each Underwriter to the Company and
each of the Selling Securityholders shall be to purchase from the Company and
the Selling Securityholders that number of shares of the Underwritten Stock
which represents the same proportion of the total number of shares of the
Underwritten Stock to be sold by each of the Company and the Selling
Securityholders pursuant to this Agreement as the number of shares of the
Underwritten Stock set forth opposite the name of such Underwriter in Schedule I
hereto represents of the total number of shares of the Underwritten Stock to be
purchased by all Underwriters pursuant to this Agreement, as adjusted by you in
such manner as you deem advisable to avoid fractional shares. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraphs (b) and (c) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 8 or 9 hereof) to purchase and pay for
the number of shares of the Stock agreed to be purchased by such Underwriter or
Underwriters, the non-defaulting Underwriters shall have the right within
twenty-four (24) hours after such default to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any part of the shares of the Stock which such
defaulting Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such shares
and portion, the number of shares of the Stock which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase;
-10-
provided, however, that the non-defaulting Underwriters shall not be obligated
to purchase the shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such shares of the
Stock exceeds 10% of the total number of shares of the Stock which all
Underwriters agreed to purchase hereunder. If the total number of shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company and the Selling Securityholders shall have the right, within twenty-four
(24) hours next succeeding the 24-hour period above referred to, to make
arrangements with other underwriters or purchasers satisfactory to you for
purchase of such shares and portion on the terms herein set forth. In any such
case, either you or the Company and the Selling Securityholders shall have the
right to postpone the Closing Date determined as provided in Section 5 hereof
for not more than seven business days after the date originally fixed as the
Closing Date pursuant to said Section 5 in order that any necessary changes in
the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If neither the non-defaulting Underwriters nor the
Company and the Selling Securityholders shall make arrangements within the 24-
hour periods stated above for the purchase of all the shares of the Stock which
the defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the part of the Company or the Selling Securityholders to any non-
defaulting Underwriter and without any liability on the part of any non-
defaulting Underwriter to the Company or the Selling Securityholders. Nothing in
this paragraph (b), and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
grants an option to the several Underwriters to purchase, severally and not
jointly, up to 300,000 shares in the aggregate, of the Option Stock from the
Company at the same price per share as the Underwriters shall pay for the
Underwritten Stock. Said options may be exercised only to cover over-allotments
in the sale of the Underwritten Stock by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the 30th
day after the date of this Agreement upon written or telegraphic notice by you
to the Company setting forth the aggregate number of shares of the Option Stock
as to which the several Underwriters are exercising the option. Delivery of
certificates for the shares of Option Stock, and payment therefor, shall be made
as provided in Section 5 hereof. The number of shares of the Option Stock to be
purchased
-11-
by each Underwriter shall be the same percentage of the total number of shares
of the Option Stock to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Stock, as adjusted by you in such
manner as you deem advisable to avoid fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of the
Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front cover page
and under "Underwriting" in the Registration Statement, any Preliminary
Prospectus and the Prospectus relating to the Stock (insofar as such information
relates to the Underwriters) constitutes the only information furnished by the
Underwriters to the Company for inclusion in the Registration Statement, any
Preliminary Prospectus, and the Prospectus, and you on behalf of the respective
Underwriters represent and warrant to the Company that the statements made
therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten Stock and
the Option Stock (if the option granted by Section 3(c) hereof shall have been
exercised not later than 7:00 a.m., San Francisco time, on the date two business
days preceding the Closing Date), and payment therefor, shall be made at the
office of Testa, Hurwitz & Thibeault, LLP, 125 High Street Boston, Massachusetts
02110 at 7:00 a.m., San Francisco time, on the third business day after the date
of this Agreement, or at such time on such other day, not later than seven full
business days after such third business day, as shall be agreed upon in writing
by the Company, the Selling Securityholders and you. The date and hour of such
delivery and payment (which may be postponed as provided in Section 3(b) hereof)
are herein called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised after
7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, and on or before the 30th day after the date of this Agreement,
delivery of certificates for the shares of Option Stock, and payment therefor,
shall be made at the office of Testa, Hurwitz & Thibeault, LLP, 125 High Street,
Boston, Massachusetts 02110 at 7:00 a.m., San
-12-
Francisco time, on the third business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made to the
Company or its order, and payment for the Stock purchased from the Selling
Securityholders shall be made to the Custodian, for the account of the Selling
Securityholders, in each case by one or more certified or official bank check or
checks in next day funds (and the Company and the Selling Securityholders agree
not to deposit any such check in the bank on which drawn until the day following
the date of its delivery to the Company or the Custodian, as the case may be).
Such payment shall be made upon delivery of certificates for the Stock to you
for the respective accounts of the several Underwriters against receipt therefor
signed by you. Certificates for the Stock to be delivered to you shall be
registered in such name or names and shall be in such denominations as you may
request at least two business days before the Closing Date, in the case of
Underwritten Stock, and at least two business days prior to the purchase
thereof, in the case of the Option Stock. Such certificates will be made
available to the Underwriters for inspection, checking and packaging at the
offices of Lewco Securities Corporation, 2 Broadway, New York, New York 10004
not less than one full business day prior to the Closing Date or, in the case of
the Option Stock, by 3:00 p.m., New York time, on the business day preceding the
date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholders for shares to be purchased by any Underwriter
whose check shall not have been received by you on the Closing Date or any later
date on which Option Stock is purchased for the account of such Underwriter. Any
such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING SECURITYHOLDERS. Each
of the Company and the Selling Securityholders respectively covenants and agrees
as follows:
(a) The Company will (i) prepare and timely file with the Commission under
Rule 424(b) a Prospectus containing information previously omitted at the time
of effectiveness of the Registration Statement in reliance on Rule 430A and (ii)
not file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished
with a copy or to which you shall have reasonably objected in writing or which
is not in compliance in all material respects with the Securities Act or the
rules and regulations of the Commission.
-13-
(b) The Company will promptly notify you in the event of (i) the request by
the Commission for amendment of the Registration Statement or for supplement to
the Prospectus or for any additional information, (ii) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, (iii) the institution or notice of intended institution of any action
or proceeding for that purpose, (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification of the Stock
for sale in any jurisdiction, or (v) the receipt by the Company of notice of the
initiation or threatening of any proceeding for such purpose. The Company and
the Selling Securityholders will make every reasonable effort to prevent the
issuance of such a stop order and, if such an order shall at any time be issued,
to obtain the withdrawal thereof at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you a
signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each post-
effective amendment, if any, to the Registration Statement (together with, in
each case, all exhibits thereto unless previously furnished to you) and will
also deliver to you, for distribution to the Underwriters, a sufficient number
of additional conformed copies of each of the foregoing (but without exhibits)
so that one copy of each may be distributed to each Underwriter, (ii) as
promptly as possible deliver to you and send to the several Underwriters, at
such office or offices as you may designate, as many copies of the Prospectus as
you may reasonably request, and (iii) thereafter from time to time during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, likewise send to the Underwriters as many additional
copies of the Prospectus and as many copies of any supplement to the Prospectus
and of any amended prospectus, filed by the Company with the Commission, as you
may reasonably request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the reasonable opinion
of counsel for the Company or of counsel for the Underwriters, to supplement or
amend the Prospectus in order to make the Prospectus not misleading in the light
of the circumstances existing at the time it is delivered to a purchaser of the
Stock, the Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus so that the Prospectus as
so supplemented or amended will not contain any untrue statement of a
-14-
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time such
Prospectus is delivered to such purchaser, not misleading. If, after the initial
public offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the reasonable opinion either
of counsel for the Company or of counsel for the Underwriters such proposed
variation requires that the Prospectus be supplemented or amended, the Company
will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended prospectus setting forth such variation. The Company
authorizes the Underwriters and all dealers to whom any of the Stock may be sold
by the several Underwriters to use the Prospectus, as from time to time amended
or supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, in
keeping such qualifications in good standing under said securities or blue sky
laws; provided, however, that the Company shall not be obligated to make any
undertaking with respect to the conduct of its business, subject itself to
taxation as a foreign corporation in any jurisdiction, enter into any agreement
with any state securities or "blue sky" commission or agency, including, without
limitation, any agreement to escrow shares of its capital stock, or file any
general consent to service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. The Company will, from time to
time, prepare and file such statements, reports, and other documents as are or
may be required to continue such qualifications in effect for so long a period
as you may reasonably request for distribution of the Stock.
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special
-15-
reports furnished to stockholders of the Company and of all information,
documents and reports filed with the Commission.
(h) The Company and the Selling Securityholders jointly and severally agree
to pay all costs and expenses incident to the performance of their obligations
under this Agreement, including all costs and expenses incident to (i) the
preparation, printing and filing with the Commission and the NASD of the
Registration Statement, any Preliminary Prospectus and the Prospectus, (ii) the
furnishing to the Underwriters of copies of any Preliminary Prospectus and of
the several documents required by paragraph (c) of this Section 6 to be so
furnished, (iii) the printing of this Agreement and related documents delivered
to the Underwriters, (iv) the preparation, printing and filing of all
supplements and amendments to the Prospectus referred to in paragraph (d) of
this Section 6, (v) the furnishing to you and the Underwriters of the reports
and information referred to in paragraph (g) of this Section 6 and (vi) the
printing and issuance of stock certificates, including the transfer agent's
fees. The Selling Securityholders will pay any transfer taxes incident to the
transfer to the Underwriters of the shares of the Stock being sold by the
Selling Securityholders.
(i) The Company and the Selling Securityholders jointly and severally agree
to reimburse you, for the account of the several Underwriters, for blue sky fees
and related disbursements (including reasonable counsel fees and disbursements
and cost of printing memoranda for the Underwriters) paid by or for the account
of the Underwriters or their counsel in qualifying the Stock under state
securities or blue sky laws and for filing fees incident to the review of the
offering by the NASD.
(j) The provisions of paragraphs (h) and (i) of this Section are intended
to relieve the Underwriters from the payment of the expenses and costs which the
Company and the Selling Securityholders hereby agree to pay and shall not affect
any agreement which the Company and the Selling Securityholders may make, or may
have made, for the sharing of any such expenses and costs.
(k) The Company agrees that, without your prior written consent, the
Company will not, directly or indirectly, sell, offer, contract to sell, make
any short sale, pledge or otherwise dispose of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for or any rights to
purchase or acquire Common Stock for a period of 90 days following the Effective
Date, other than (i) the Stock to be sold to the Underwriters pursuant to this
Agreement, (ii) shares of Common Stock issued pursuant to the Employee Stock
Purchase Plan or upon the exercise of options granted under the stock option
-16-
plans of the Company (the "Option Plans"), all as described in the Prospectus
and (iii) options to purchase Common Stock granted under the Option Plans. For
purposes of this paragraph (l), a sale, offer, or other disposition shall be
deemed to include any sale to an institution which can, following such sale,
sell Common Stock to the public in reliance on Rule 144A.
(l) The Selling Securityholders agree that, without your prior written
consent, the Selling Securityholders will not, directly or indirectly, sell,
offer, contract to sell, make any short sale, pledge or otherwise dispose of any
shares of Common Stock or any securities convertible into or exchangeable or
exercisable for or any rights to purchase or acquire Common Stock for a period
of 90 days following the Effective Date.
(m) Until the termination of the offering of the Stock, the Company will
timely file all documents, and any amendments to previously filed documents,
required to be filed by it pursuant to Sections 13, 14 or 15(d) of the Exchange
Act.
(n) The Company is familiar with the Investment Company Act of 1940, as
amended, and has in the past conducted its affairs, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not and
will not be an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
(o) The Company will make generally available to its securityholders as
soon as practicable, but in any event not later than the end of the fiscal
quarter first occurring after the first anniversary of the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the Securities Act),
an earnings statement (which will be in reasonable detail but need not be
audited) complying with the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Securities Act and covering a twelve period beginning after
the effective date of the Registration Statement (as so defined), and will
advise you in writing when such statement has been made available.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) below, the Company and the
Selling Securityholders jointly and severally agree to indemnify and hold
harmless each Underwriter and each person (including each partner or officer
thereof) who controls any Underwriter within the meaning of Section 15 of the
Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the
-17-
Exchange Act, or the common law or otherwise, and the Company and the Selling
Securityholders jointly and severally agree to reimburse each such Underwriter
and controlling person for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto including any Rule 462(b) registration statement, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that (1) the indemnity agreements of the Company and the
Selling Securityholders contained in this paragraph (a) shall not apply to any
such losses, claims, damages, liabilities or expenses if such statement or
omission was made in reliance upon and in conformity with information furnished
as herein stated or otherwise furnished in writing to the Company by or on
behalf of any Underwriter for use in any Preliminary Prospectus or the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, and (2) the indemnity agreement contained in this paragraph
(a) with respect to any Preliminary Prospectus shall not inure to the benefit of
any Underwriter from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Stock which is the subject thereof (or to
the benefit of any person controlling such Underwriter) if at or prior to the
written confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof. The indemnity agreements of
the Company and the Selling Securityholders contained in this paragraph (a) and
the representations and warranties of the Company and the Selling
Securityholders contained in Section 2 hereof shall remain
-18-
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party and shall survive the delivery of any
payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its officers who signs the Registration Statement on his own
behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Securities Act, and the Selling Securityholders from and against any
and all losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or the common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus and any 462(b) registration
statement as part thereof) or any post-effective amendment thereto including any
462(b) registration statement or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus or the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, if such statement or omission was made in reliance upon
and in conformity with information furnished as herein stated or otherwise
furnished in writing to the Company by or on behalf of such indemnifying
Underwriter for use in the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto. The indemnity agreement of each
Underwriter contained in this paragraph (b) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and (b)
of this Section 7 agrees that, upon the service of a summons or other initial
legal process upon it in any action or
-19-
suit instituted against it or upon its receipt of written notification of the
commencement of any investigation or inquiry of, or proceeding against it, in
respect of which indemnity may be sought on account of any indemnity agreement
contained in such paragraphs, it will promptly give written notice (herein
called the Notice) of such service or notification to the party or parties from
whom indemnification may be sought hereunder. No indemnification provided for in
such paragraphs shall be available to any party who shall fail so to give the
Notice if the party to whom such Notice was not given was unaware of the action,
suit, investigation, inquiry or proceeding to which the Notice would have
related and was prejudiced by the failure to give the Notice, but the omission
so to notify such indemnifying party or parties of any such service or
notification shall not relieve such indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of such indemnity agreement. Any indemnifying party
shall be entitled at its own expense to participate in the defense of any
action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(herein called the Notice of Defense) to the indemnified party, to assume (alone
or in conjunction with any other indemnifying party or parties) the entire
defense of such action, suit, investigation, inquiry or proceeding, in which
event such defense shall be conducted, at the expense of the indemnifying party
or parties, by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties; provided, however,
that (i) if the indemnified party or parties reasonably determine that there may
be a conflict between the positions of the indemnifying party or parties and of
the indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties and (ii) in any event, the
indemnified party or parties shall be entitled, at its or their expense (except
as to matters covered by the preceding subclause (i), as to which the expense of
such counsel should be borne by the indemnifying party or parties, as noted
below) to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after receipt of
the Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties
-20-
will not be liable under paragraphs (a) through (c) of this Section 7 for any
legal or other expenses subsequently incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding, except that (A) the indemnifying party or parties shall
bear the legal and other expenses of not more than one separate counsel for the
indemnified party or parties incurred in connection with the conduct of the
defense as referred to in clause (i) of the proviso to the preceding sentence
and (B) the indemnifying party or parties shall bear such other expenses as it
or they have authorized to be incurred by the indemnified party or parties. If,
within a reasonable time after receipt of the Notice, no Notice of Defense has
been given, the indemnifying party or parties shall be responsible for any legal
or other expenses incurred by the indemnified party or parties in connection
with the defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under paragraph (a) or (b)
of this Section 7, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in paragraph (a) or (b) of this Section 7 (i) in such proportion as
is appropriate to reflect the relative benefits received by each indemnifying
party from the offering of the Stock 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 each indemnifying party in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Securityholders on the one hand and the Underwriters on the other shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Stock received by the Company and the Selling
Securityholders and the total underwriting discount received by the
Underwriters, as set forth in the table on the cover page of the Prospectus,
bear to the aggregate public offering price of the Stock. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by each indemnifying party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission.
-21-
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities, or actions in respect thereof, referred to in the first sentence
of this paragraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigation,
preparation to defend or defense against any action or claim which is the
subject of this paragraph (d). Notwithstanding the provisions of this paragraph
(d), no Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Stock purchased by such Underwriter. 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 in this paragraph (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
(e) No indemnifying party will, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such indemnified
party or any person who controls such indemnified party within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act is a party to
such claim, action, suit or proceeding) unless such settlement, compromise or
consent includes an unconditional release of such indemnified party and each
such controlling person from all liability arising out of such claim, action,
suit or proceeding. No indemnifying party shall be liable for any settlement of
any proceeding entered into without its written consent.
(f) In no event shall the liability of any Selling Securityholder for
indemnification under this Section 7 exceed the
-22-
lesser of (i) that percentage of the total amount of such losses, claims,
damages or liabilities indemnified against which equals the percentage obtained
by dividing the total number of shares of Stock sold by such Selling
Securityholder hereunder by the total number of shares of Stock sold hereunder,
or (ii) the proceeds received by such Selling Securityholder from the
Underwriters in the offering.
8. TERMINATION. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company and the
Selling Securityholders if after the date of this Agreement trading in the
Common Stock shall have been suspended, or if there shall have occurred (i) the
engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States on
or after the date hereof, (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change in economic or
political conditions in the financial markets of the United States would, in the
Underwriters' reasonable judgment, make the offering or delivery of the Stock
impracticable, (iii) suspension of trading in securities generally or a material
adverse decline in the value of securities generally on the New York Stock
Exchange, the American Stock Exchange, the NASD Automated Quotation System or
the Nasdaq National Market, or limitation on prices (other than limitations on
hours or numbers of days of trading) for securities on either such exchange or
system, (iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of, or commencement of any
proceeding or investigation by, any court, legislative body, agency or other
governmental authority which in the Underwriters' reasonable opinion materially
and adversely affects or will materially or adversely affect the business or
operations of the Company, (v) declaration of a banking moratorium by either
federal or New York State authorities or (vi) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the Underwriters' reasonable opinion has a material
adverse effect on the securities markets in the United States. If this Agreement
shall be terminated pursuant to this Section 8, there shall be no liability of
the Company or the Selling Securityholders to the Underwriters and no liability
of the Underwriters to the Company or the Selling Securityholders; provided,
however, that in the event of any such termination the Company and the Selling
Securityholders agree to indemnify and hold harmless the Underwriters from all
costs or expenses incident to the performance of the obligations of the Company
and the Selling Securityholders under this Agreement, including all costs and
expenses referred to in paragraphs (h) and (i) of Section 6 hereof.
-23-
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company and by the Selling Securityholders of all their
respective obligations to be performed hereunder at or prior to the Closing Date
or any later date on which Option Stock is to be purchased, as the case may be,
and to the following further conditions:
(a) The Registration Statement shall have become effective; and no
stop order suspending the effectiveness thereof shall have been issued and
no proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock hereunder
and the validity and form of the certificates representing the Stock, all
corporate proceedings and other legal matters incident to the foregoing,
and the form of the Registration Statement and of the Prospectus (except as
to the financial statements contained therein), shall have been approved at
or prior to the Closing Date by Hale and Dorr, counsel for the
Underwriters.
(c) You shall have received from Testa, Hurwitz & Thibeault, LLP,
counsel for the Company and the Selling Securityholders, an opinion,
addressed to the Underwriters and dated the Closing Date, covering the
matters set forth in Annex A hereto. If Option Stock is purchased at any
date after the Closing Date, you shall receive an additional opinion from
the aforementioned counsel, addressed to the Underwriters and dated such
later date, confirming that the statements expressed as of the Closing Date
in each such opinion remain valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true
and correct in all material respects and neither the Registration Statement
nor the Prospectus omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, respectively,
not misleading, (ii) since the Effective Date, no event has occurred which
should have been set forth in a supplement or amendment to the Prospectus
which has not been set forth in such a supplement or amendment, (iii) since
the respective dates as of which information is given in the Registration
Statement in the form in which it originally became effective and the
Prospectus contained therein, there has not been any material adverse
change or any development involving a prospective material adverse change
in or affecting the business, properties, financial condition or earnings
of the Company and its subsidiaries as a whole,
-24-
whether or not arising from transactions in the ordinary course of
business, and, since such dates, except in the ordinary course of business,
neither the Company nor any of its subsidiaries has entered into any
material transaction not referred to in the Registration Statement in the
form in which it originally became effective and the Prospectus contained
therein, (iv) neither the Company nor any of its subsidiaries has any
material contingent obligations which are not disclosed in the Registration
Statement and the Prospectus, (v) there are not any pending or known
threatened legal proceedings to which the Company or any of its
subsidiaries is a party or of which property of the Company or any of its
subsidiaries is the subject which are material and which are not disclosed
in the Registration Statement and the Prospectus, (vi) there are not any
franchises, contracts, leases or other documents which are required to be
filed as exhibits to the Registration Statement which have not been filed
as required, (vii) the representations and warranties of the Company herein
are true and correct in all material respects as of the Closing Date or any
later date on which Option Stock is to be purchased, as the case may be,
and (viii) there has not been any material change in the market for
securities in general or in political, financial or economic conditions
from those reasonably foreseeable as to render it impracticable in your
reasonable judgment to make a public offering of the Stock, or a material
adverse change in market levels for securities in general (or those of
companies in particular) or financial or economic conditions which render
it inadvisable to proceed.
(e) You shall have received on the Closing Date and on any later date
on which Option Stock is purchased a certificate, dated the Closing Date or
such later date, as the case may be, and signed by the Chief Executive
Officer, the Chairman of the Board and the Chief Financial Officer of the
Company, stating that the respective signers of said certificate have
carefully examined the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein and any
supplements or amendments thereto, and that the statements included in
clauses (i) through (vii) of paragraph (d) of this Section 9 are true and
correct.
(f) You shall have received from Ernst & Young LLP, a letter or
letters, addressed to the Underwriters and dated the Closing Date and any
later date on which Option Stock is purchased, confirming that they are
independent public accountants with respect to the Company within the
meaning of the Securities Act and the applicable published rules and
regulations thereunder and based upon the procedures
-25-
described in its letter delivered to you concurrently with the execution of
this Agreement (herein called the Original Letter), but carried out to a
date not more than five business days prior to the Closing Date or such
later date on which Option Stock is purchased (i) confirming, to the extent
true, that the statements and conclusions set forth in the Original Letter
are accurate as of the Closing Date or such later date, as the case may be,
and (ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to reflect
any changes in the facts described in the Original Letter since the date of
the Original Letter or to reflect the availability of more recent financial
statements, data or information. The letters shall not disclose any change,
or any development involving a prospective change, in or affecting the
business or properties of the Company or any of its subsidiaries which, in
your sole judgment, makes it impractical or inadvisable to proceed with the
public offering of the Stock or the purchase of the Option Stock as
contemplated by the Prospectus.
(g) You shall have received on the Closing Date a certificate from
each Selling Securityholder stating that:
(i) The representations and warranties made by such Selling
Securityholder herein are true and correct on the Closing Date; and
(ii) Such Selling Securityholder has complied with each
obligation which is required to be performed on his or its part at or
prior to the Closing Date.
(h) You shall have received from Ernst & Young LLP a letter stating
that their review of the Company's system of internal accounting controls,
to the extent they deemed necessary in establishing the scope of their
examination of the Company's financial statements as of and as at September
30, 1995, did not disclose any weakness in internal controls that they
considered to be material weaknesses.
(i) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several states, or
other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(j) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been duly authorized for inclusion on the Nasdaq
National Market upon official notice of issuance.
-26-
(k) On or prior to the Closing Date, you shall have received from all
directors, executive officers, holders of more than [______] shares of the
outstanding Common Stock, and all Selling Securityholders, stockholders
agreements stating that without your prior written consent, each of such
holders will not, directly or indirectly, sell, offer, contract to sell,
make any short sale, pledge, grant any option to purchase or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any right to purchase or acquire Common
Stock held by such holder for a period of 90 days after the Effective Date.
All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Hale and Dorr, counsel for the Underwriters, shall be
reasonably satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Selling Securityholders. Any such termination shall be
without liability of the Company or the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders; provided, however, that (i) in the event of such
termination, the Company and the Selling Securityholders agree to indemnify and
hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all costs and expenses referred to in paragraphs
(h) and (i) of Section 6 hereof, and (ii) if this Agreement is terminated by you
because of any refusal, inability or failure on the part of the Company or the
Selling Securityholders to perform any agreement herein, to fulfill any of the
conditions herein, or to comply with any provision hereof other than by reason
of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. The obligation of the Company and the Selling Securityholders
to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
-27-
In case either of the conditions specified in this Section 10 shall not be
fulfilled, this Agreement may be terminated by the Company and the Selling
Securityholders by giving notice to you. Any such termination shall be without
liability of the Company and the Selling Securityholders to the Underwriters and
without liability of the Underwriters to the Company or the Selling
Securityholders; provided, however, that in the event of any such termination
the Company and the Selling Securityholders jointly and severally agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement, the Company and the Selling
Securityholders hereby jointly and severally agree to reimburse on a quarterly
basis the Underwriters for all reasonable legal and other expenses incurred in
connection with investigating or defending any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in paragraph (a) of
Section 7 of this Agreement, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 11 and the possibility that such payments might later be held to be
improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure
to the benefit of the Company, the Selling Securityholders and the several
Underwriters and, with respect to the provisions of Section 7 hereof, the
several parties (in addition to the Company, the Selling Securityholders and the
several Underwriters) indemnified under the provisions of said Section 7, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and,
-28-
if to the Underwriters, shall be mailed, telegraphed or delivered to Hambrecht &
Quist LLC, One Bush Street, San Francisco, California 94104; and if to the
Company, shall be mailed, telegraphed or delivered to it at its office, 210
University Drive, Suite 700, Coral Springs, FL 33071, Attention: Chief Executive
Officer; and if to the Selling Securityholders, shall be mailed, telegraphed or
delivered to the Selling Securityholders in care of the Custodian, Citrix
Systems, Inc., 210 University Drive, Suite 700, Coral Springs, FL 33071,
Attention: Chief Executive Officer. All notices given by telegraph shall be
promptly confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or the Selling Securityholders or their respective directors or
officers, and (c) delivery and payment for the Stock under this Agreement;
provided, however, that if this Agreement is terminated prior to the Closing
Date, the provisions of paragraphs (k) and (l) of Section 6 hereof shall be of
no further force or effect.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California.
-29-
Please sign and return to the Company and to the Selling Securityholders in
care of the Company the enclosed duplicates of this letter, whereupon this
letter will become a binding agreement among the Company, the Selling
Securityholders and the several Underwriters in accordance with its terms.
Very truly yours,
CITRIX SYSTEMS, INC.
By:________________________________
Roger W. Roberts
President and Chief Executive
Officer
SELLING SECURITYHOLDERS LISTED ON
SCHEDULE II HERETO
By:________________________________
Attorney-in-Fact
The foregoing Agreement
is hereby confirmed and
accepted as of the date
first above written.
HAMBRECHT & QUIST LLC
ROBERTSON, STEPHENS & COMPANY LLC
NEEDHAM & COMPANY, INC.
By Hambrecht & Quist LLC
By: ____________________________________
Managing Director
Acting on behalf of the several
Underwriters, including themselves,
named in Schedule I hereto.
-30-
SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES
TO BE
UNDERWRITERS PURCHASED
------------ ---------
Hambrecht & Quist LLC..............................
Robertson, Stephens & Company LLC..................
Needham & Company, Inc.............................
Total.............................................. 2,398,664
=========
-31-
SCHEDULE II
SELLING SECURITYHOLDERS
NUMBER OF
NAME AND ADDRESS* SHARES
OF SELLING SECURITYHOLDERS TO BE SOLD
-------------------------- ----------
Roger W. Roberts................................. 73,332
Edward E. Iacobucci.............................. 190,000
James J. Felcyn, Jr.............................. 48,666
Michael F. Passaro............................... 20,000
Bruce C. Chittenden.............................. 20,000
Barry J. Dockswell............................... 20,000
Mark B. Templeton................................ 26,666
Total............................................ 398,664
=======
*Address of each Selling Securityholder is c/o Citrix Systems, Inc., 210
University Drive, Suite 700, Coral Springs, FL 33071
-32-
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF
TESTA, HURWITZ & THIBEAULT, LLP
COUNSEL FOR THE COMPANY
AND THE SELLING SECURITYHOLDERS
(i) Each of the Company and the subsidiary has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation; the Company is duly qualified as a foreign
corporation and in good standing in Florida and California, and has full
corporate power and authority to own or lease its properties and to conduct its
business as described in the Registration Statement; based upon such counsel's
review of the minute books and stock record books of the subsidiary, all the
issued and outstanding capital stock of the subsidiary has been duly authorized
and validly issued and is fully paid and nonassessable, and to such counsel's
knowledge, is owned by the Company free and clear of all liens, encumbrances and
security interests, and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in such
subsidiary are outstanding;
(ii) Following the closing of the sale of the Stock under the Underwriting
Agreement, the duly authorized capital stock of the Company consists of
5,000,000 shares of Preferred Stock, $.01 par value, of which no shares are
outstanding, and 60,000,000 shares of Common Stock, $.001 par value, of which
there will be [___________] shares outstanding (including the Underwritten
Stock); all of the outstanding shares of such capital stock (including the
Underwritten Stock) have been duly and validly issued and are fully paid and
nonassessable; and no preemptive rights of, or rights of refusal in favor of,
stockholders exist with respect to the Stock, or the issuance and sale thereof,
pursuant to the Certificate of Incorporation or By-Laws of the Company and, to
such counsel's knowledge, there are no contractual preemptive rights with
respect to the issuance and sale of the Stock that have not been waived or
rights of first refusal or rights of co-sale which exist with respect to the
issuance and sale of the Stock or with respect to the Stock being sold by the
Selling Securityholders;
(iii) Such counsel has been orally advised by a member of the staff of the
Commission that the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus is in effect
A-1
and no proceedings for that purpose have been instituted or are pending or
contemplated by the Commission;
(iv) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial and statistical data
contained therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the Securities Act and
with the rules and regulations of the Commission thereunder;
(v) the information required to be set forth in the Registration
Statement in answer to Item 9, Item 10 (insofar as it relates to such counsel)
and Item 11(c) of Form S-1 is to such counsel's knowledge accurately and
adequately set forth therein in all material respects or no response is required
with respect to such Items; and, to such counsel's knowledge the description of
the Company's stock option plans and the options granted and which may be
granted thereunder and the options granted otherwise than under such plans set
forth in the Registration Statement accurately and fairly presents in all
material respects the information required to be shown with respect to said
plans and options to the extent required by the Securities Act and the rules and
regulations of the Commission thereunder;
(vi) such counsel does not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion of
such counsel are of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement, which are not described and filed as required;
(vii) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the Underwriting Agreement has been duly executed and delivered by
or on behalf of the Selling Securityholders and the Letter of Transmittal and
Custodian Agreement between the Selling Securityholders and the Company, as
Custodian, and the Power of Attorney referred to in such Letter of Transmittal
and Custodian Agreement have been duly executed and delivered by the several
Selling Securityholders;
(ix) to such counsel's knowledge each Selling Securityholder has full legal
right, power and authority, and any approval required by law (other than any
approval required by the applicable federal or state securities and Blue Sky
laws) to sell, assign, transfer and deliver the Stock to be sold by him in the
manner provided in the Underwriting Agreement and the Letter of Transmittal
Custody Agreement and the Selling Stockholder's Irrevocable Power of Attorney;
A-2
(x) the issuance and sale by the Company of the shares of Stock sold by the
Company as contemplated by the Underwriting Agreement will not conflict with, or
result in a breach of, the Certificate of Incorporation or By-Laws of the
Company or any agreement or instrument known to such counsel to which the
Company or its subsidiary is a party or any applicable law or regulation (other
than federal or state securities or blue sky laws), or so far as is known to
such counsel, any order, writ, injunction or decree, of any jurisdiction, court
or governmental instrumentality;
(xi) to such counsel's knowledge no holder of securities of the Company has
rights to the registration of shares of Common Stock, or other securities,
because of the filing of the Registration Statement by the Company other than
such rights as have been duly waived or have lapsed following notification of
the Company's intent;
(xii) good and marketable title to the shares of Stock sold by the Selling
Securityholders under the Underwriting Agreement, free and clear of all liens,
encumbrances, equities, security interests and claims, has been transferred to
the Underwriters who have severally purchased such shares of Stock under the
Underwriting Agreement, assuming for the purpose of this opinion that the
Underwriters purchased the same in good faith without notice of any adverse
claims; and
(xiii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated in the Underwriting Agreement, except such as have been obtained
under the Securities Act and such as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the Stock by
the Underwriters.
In addition to the matters set forth above, counsel rendering the foregoing
opinion shall also include a statement to the effect that nothing has come to
the attention of such counsel that leads them to believe that the Registration
Statement (except as to the financial statements and schedules, or notes
thereto, and other financial and statistical data contained or incorporated by
reference therein, as to which such counsel need not express any opinion or
belief) at the Effective Date contained any 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 (except as
to the financial statements and schedules, or notes thereto, and other financial
and statistical data contained or incorporated by reference therein as to which
such counsel need not express any opinion or belief) as of its date or at the
Closing Date (or any
A-3
later date on which Option Stock is purchased), contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
_______________________________________
Counsel rendering the foregoing opinion may rely as to questions of law not
involving the laws of the United States, the State of Delaware or of the
Commonwealth of Massachusetts, upon opinions of local counsel satisfactory in
form and scope to counsel for the Underwriters. Copies of any opinions so relied
upon shall be delivered to the Representatives and to counsel for the
Underwriters and the foregoing opinion shall also state that counsel knows of no
reason the Underwriters are not entitled to rely upon the opinions of such local
counsel.
A-4