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Exhibit 1.01
[_______________] SHARES
CONCORD COMMUNICATIONS, INC.
COMMON STOCK
FORM OF UNDERWRITING AGREEMENT
DATED [________], 1997
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TABLE OF CONTENTS
SECTION 1. REPRESENTATIONS AND WARRANTIES ...............................................2
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................2
Compliance With Registration Requirements.....................................2
Offering Materials Furnished To Underwriters..................................3
Distribution Of Offering Material By The Company..............................3
The Underwriting Agreement....................................................3
Authorization Of The Common Shares............................................3
No Applicable Registration Or Other Similar Rights............................3
No Material Adverse Change....................................................3
Independent Accountants.......................................................4
Preparation Of The Financial Statements.......................................4
Incorporation And Good Standing Of The Company ...............................4
Capitalization And Other Capital Stock Matters................................4
Stock Exchange Listing........................................................5
Non-Contravention Of Existing Instruments; No Further Authorizations Or
Approvals Required........................................................5
No Material Actions Or Proceedings............................................5
Intellectual Property Rights..................................................5
All Necessary Permits, Etc....................................................6
Title To Properties...........................................................6
Tax Law Compliance............................................................6
Company Not An Investment Company.............................................6
Insurance.....................................................................6
No Price Stabilization Or Manipulation........................................6
Related Party Transactions....................................................7
No Unlawful Contributions Or Other Payments...................................7
Company's Accounting System...................................................7
Compliance With Environmental Laws............................................7
Periodic Review Of Costs Of Environmental Compliance..........................8
ERISA Compliance..............................................................8
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS....................8
The Underwriting Agreement....................................................8
The Custody Agreement And Power Of Attorney...................................9
Title To Common Shares To Be Sold; All Authorizations Obtained................9
Delivery Of The Common Shares To Be Sold......................................9
Non-Contravention; No Further Authorizations Or Approvals Required............9
No Registration Or Other Similar Rights.......................................9
No Further Consents, Etc.....................................................10
Disclosure Made By Such Selling Shareholder In The Prospectus................10
No Price Stabilization Or Manipulation.......................................10
Confirmation Of Company Representations And Warranties.......................10
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SECTION 2. PURCHASE, SALE AND DELIVERY OF COMMON SHARES.................................10
The Firm Common Shares.......................................................10
The First Closing Date.......................................................11
The Optional Common Shares; The Second Closing Date..........................11
Public Offering Of The Common Shares.........................................12
Payment For The Common Shares................................................12
Delivery Of The Common Shares................................................12
Delivery Of Prospectus To The Underwriters...................................13
SECTION 3. ADDITIONAL COVENANTS.........................................................13
A. COVENANTS OF THE COMPANY.....................................................13
Representatives' Review Of Proposed Amendments And Supplements...............13
Securities Act Compliance....................................................13
Amendments And Supplements To The Prospectus And Other Securities Act
Matters...................................................................13
Copies Of Any Amendments And Supplements To The Prospectus...................14
Blue Sky Compliance..........................................................14
Use Of Proceeds..............................................................14
Transfer Agent...............................................................14
Earnings Statement...........................................................14
Periodic Reporting Obligations...............................................14
Agreement Not To Offer Or Sell Additional Securities.........................15
Future Reports To The Representatives........................................15
B. COVENANTS OF THE SELLING SHAREHOLDERS........................................15
Agreement Not To Offer Or Sell Additional Securities.........................15
Delivery Of Forms W-8 And W-9................................................15
SECTION 4. PAYMENT OF EXPENSES..........................................................16
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS............................16
Accountants' Comfort Letter..................................................17
Compliance With Registration Requirements; No Stop Order, No Objection
From NASD.................................................................17
No Material Adverse Change Or Ratings Agency Change..........................18
Opinion Of Counsel For The Company...........................................18
Opinion Of Counsel For The Underwriters......................................18
Officers' Certificate........................................................18
Bring-Down Comfort Letter....................................................18
Opinion Of Counsel For The Selling Shareholders..............................18
Selling Shareholders' Certificate............................................19
Selling Shareholders' Documents..............................................19
Lock-Up Agreement From Certain Shareholders Of The Company ..................19
Additional Documents.........................................................19
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SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES......................................19
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT..............................................20
SECTION 8. INDEMNIFICATION..............................................................20
Indemnification Of The Underwriters..........................................20
Indemnification Of The Company, Its Directors And Officers...................21
Notifications And Other Indemnification Procedures...........................22
Settlements..................................................................22
SECTION 9. CONTRIBUTION.................................................................23
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS...........................24
SECTION 11. TERMINATION OF THIS AGREEMENT................................................25
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY..........................25
SECTION 13. NOTICES......................................................................25
SECTION 14. SUCCESSORS...................................................................26
SECTION 15. PARTIAL UNENFORCEABILITY.....................................................26
SECTION 16. GOVERNING LAW PROVISIONS.....................................................26
SECTION 17. FAILURE OF ONE OR MORE OF THE SELLING SHAREHOLDERS TO SELL AND
DELIVER COMMON SHARES.....................................................27
SECTION 18. GENERAL PROVISIONS...........................................................28
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UNDERWRITING AGREEMENT
[ ], 1997
MONTGOMERY SECURITIES
ROBERTSON, STEPHENS & COMPANY, LLC
WESSELS, ARNOLD & HENDERSON, L.L.C.
As Representatives of the several Underwriters
c/o MONTGOMERY SECURITIES
600 Montgomery Street
San Francisco, California 94111
Ladies and Gentlemen:
INTRODUCTORY. Concord Communications, Inc., a Massachusetts corporation
(the "Company"), proposes to issue and sell to the several underwriters named in
SCHEDULE A attached hereto (the "Underwriters") an aggregate of [ ] shares
of its Common Stock, par value $.01 per share (the "Common Stock"); and the
shareholders of the Company named in SCHEDULE B attached hereto (collectively,
the "Selling Shareholders") severally propose to sell to the Underwriters an
aggregate of [ ] shares of Common Stock. The [ ] shares of Common
Stock to be sold by the Company and the [ ] shares of Common Stock to be
sold by the Selling Shareholders are collectively called the "Firm Common
Shares". [In addition, the Company has granted to the Underwriters an option to
purchase up to an additional [ ] shares (the "Optional Common Shares") of
Common Stock, as provided in Section 2.] [In addition, the Selling Shareholders
have severally granted to the Underwriters an option to purchase up to an
additional [ ] shares (the "Optional Common Shares") of Common Stock, as
provided in Section 2, each Selling Shareholder selling up to the amount set
forth opposite such Selling Shareholder's name in SCHEDULE B.] [In addition, the
Company has granted to the Underwriters an option to purchase up to an
additional [ ] shares of Common Stock and the Selling Shareholders have
severally granted to the Underwriters an option to purchase up to an additional
[ ] shares of Common Stock, each Selling Shareholder selling up to the
amount set forth opposite such Selling Shareholder's name in SCHEDULE B, all as
provided in Section 2. The additional [ ] shares to be sold by the Company
and the additional [ ] shares to be sold by the Selling Shareholders
pursuant to such option are collectively called the "Optional Common Shares".]
The Firm Common Shares and, if and to the extent such option is exercised, the
Optional Common Shares are collectively called the "Common Shares". Montgomery
Securities, Robertson, Stephens & Company, LLC and Wessels, Arnold &
Henderson, L.L.C. have agreed to act as representatives of the several
Underwriters (in such capacity, the "Representatives") in connection with the
offering and sale of the Common Shares.
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The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-[ ]), 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 Montgomery 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 [ ], 1997 (such preliminary prospectus is called
the "Rule 434 preliminary prospectus"), together with 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 ("EDGAR").
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, the copy filed by
electronic
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transmission pursuant to EDGAR (except as may be permitted by Regulation
S-T under the Securities Act), was identical in all material respects to
the copy 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 until the
Prospectus is no longer required by law to be delivered in connection with
sales by an Underwriter or dealer, 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, 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 Representative 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 each
Representative has 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 in accordance with its terms, except as rights
to indemnification and contribution 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.
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(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 [, other than the
Selling Shareholders with respect to the Common Shares included in the
Registration Statement], 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 condition, financial or otherwise, or in
the earnings, business, properties, results of operations or prospects
(insofar as reasonably foreseeable), whether or not arising from
transactions in the ordinary course of business, of the Company (any such
change is called a "Material Adverse Change"); (ii) the Company has not
incurred any material liability or obligation, indirect, direct or
contingent, other than in the ordinary course of business nor entered into
any material transaction or agreement other than 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 on any class of capital stock or
repurchase or redemption by the Company of any class of capital stock.
(h) Independent Accountants. Arthur Andersen LLP, who have
expressed their opinion with respect to the financial statements of the
Company and supporting schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus (which financial
statements, schedules and related notes thereto are referred to as the
"Financial Statements"), are independent public or certified public
accountants as required by the Securities Act.
(i) Preparation of the Financial Statements. The Financial
Statements present fairly the consolidated financial position of the
Company as of and at the dates indicated and the results of its operations
and cash flows for the periods specified. The supporting schedules included
in the Registration Statement present fairly the information required to be
stated therein. 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 Selected Financial Data",
"Selected Financial Data" and "Capitalization" fairly present the
information set forth therein on a basis
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consistent with that of the audited financial statements contained in the
Registration Statement.
(j) Incorporation and Good Standing of the Company. The Company
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of Massachusetts and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement. The Company 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. The Company has no subsidiaries.
(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 other than those accurately
described in the Prospectus. The description of the Company's stock
option, stock purchase, 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. The Company is not in violation of
its charter or by-laws nor is it in default (nor, with the giving of notice
or lapse of time, would the Company be in default) (a "Default") under any
indenture, mortgage, loan or credit agreement, note, contract, franchise,
lease or other instrument to which the Company is a party or by which it
may be bound (including, without limitation, the Company's working capital
line of credit with Silicon Valley Bank, as lender), or to which any of the
property or assets of the Company is subject (each, an "Existing
Instrument"), except for such
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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
and by the Prospectus (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-laws of the Company, (ii) will not conflict with or
constitute a breach of, or Default or a Debt Repayment Triggering Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant
to, or require the consent of any other party to, any Existing Instrument,
except for such conflicts, breaches, Defaults, liens, charges or
encumbrances as would not, individually or in the aggregate, result in a
Material Adverse Change and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable
to the Company. 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 and by the Prospectus, 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 from the National
Association of Securities Dealers, Inc. (the "NASD") and the Nasdaq
National Market. As used herein, a "Debt Repayment Triggering Event" means
any event or condition which gives, or with the giving of notice or lapse
of time would give, the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company.
(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 or affecting the Company, (ii)
which has as the subject thereof any officer or director of, or property
owned or leased by, the Company or (iii) relating to environmental or
discrimination matters, where in any such case (A) there is a reasonable
possibility that such action, suit or proceeding might be determined
adversely to the Company 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 exists or, to the best of the Company's knowledge,
is threatened or imminent.
(o) Intellectual Property Rights. The Company owns or possesses
sufficient trademarks, trade names, patent rights, copyrights, licenses,
approvals, trade secrets and other similar rights (collectively,
"Intellectual Property Rights") reasonably necessary to conduct its
business as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse Change.
The Company has not 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.
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(p) All Necessary Permits, etc. The Company possesses such valid
and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct its business, and the Company has not received any
notice of proceedings relating to the revocation or modification of, or
non-compliance 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 has good and marketable title to all the properties and assets
reflected as owned in the Financial Statements (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. The real property, improvements, equipment
and personal property held under lease by the Company 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.
(r) Tax Law Compliance. The Company has filed all necessary
federal, state and foreign income and franchise tax returns and has paid
all taxes required to be paid by it and, if due and payable, any related or
similar assessment, fine or penalty levied against it, except for
assessments, fines or penalties contested in good faith for which adequate
reserves have been taken on the Financial Statements. The Company has made
adequate charges, accruals and reserves in the applicable Financial
Statements in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the
Company has not been finally determined.
(s) Company Not an "Investment Company." The Company has been
advised of the rules and requirements under the Investment Company Act of
1940, as amended (the "Investment Company Act"). 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 and will conduct its
business in a manner so that it will not become subject to the Investment
Company Act.
(t) Insurance. The Company is insured by recognized, 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 its business including, but not limited to, policies
covering real and personal property owned or leased by the Company against
theft, damage, destruction, and acts of vandalism. The Company has no
reason to believe that it 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.
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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 any security of the Company to facilitate the
sale or resale of the Common Shares.
(v) Related Party Transactions. There are no business
relationships or related-party transactions involving the Company or any
other person required to be described in the Prospectus which have not been
described as required.
(w) No Unlawful Contributions or Other Payments. Neither the
Company nor, to the best of the Company's knowledge, any employee or agent
of the Company, has made any contribution or other payment to any official
of, or candidate for, any federal, state or foreign office in violation of
any law or of the character required to be disclosed in the Prospectus.
(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) Compliance with Laws. Except as would not, individually or
in the aggregate, result in a Material Adverse Change, the Company is
conducting its business in compliance with all, and is not in violation of
any, applicable laws, rules and regulations of the jurisdictions in which
it is conducting its business, including, without limitation, federal,
state, local or foreign laws and regulations relating to environmental
matters.
(z) ERISA Compliance. The Company 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, or its
"ERISA Affiliates" (as defined below) are in compliance in all material
respects with ERISA. "ERISA Affiliate" means, with respect to the Company,
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 or any of its ERISA Affiliates. No "employee benefit plan"
established or maintained by the Company or any of its ERISA Affiliates,
if such "employee benefit plan" were terminated, would have any "amount of
unfunded benefit liabilities" (as defined under
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ERISA). Neither the Company nor any of its ERISA Affiliates has incurred
or reasonably expects to incur 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 or any of
its ERISA Affiliates that is intended to be qualified 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 and not jointly 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 such Selling Shareholder in accordance
with its terms, except as rights to indemnification and contribution
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 [the Company], 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 in accordance with its terms, except as rights to
indemnification and contribution 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 (as defined below) 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
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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.
(e) Non-Contravention; No Further Authorizations or Approvals
Required. The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement, the Custody Agreement and the Power of Attorney 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
applicable law or any judgment, order, decree or regulation applicable to
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 except for additional steps as
may be required under the Securities Act, applicable state securities or
blue sky laws and from 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 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 [ ] (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.
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(h) Disclosure Made by 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 not misleading. Such
Selling Shareholder confirms as accurate the number of shares of Common
Stock set forth opposite such Selling Shareholder's 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 any security of the
Company 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.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
(a) 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 [ ] Firm Common Shares and (ii) the Selling Shareholders
agree to sell to the several Underwriters an aggregate of [ ] Firm Common
Shares, each Selling Shareholder selling the number of Firm Common Shares
set forth opposite such Selling Shareholder's name on SCHEDULE B. 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 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
Selling Shareholders shall be $[ ] per share.
(b) 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 Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., One Financial Center, Boston, Massachusetts (or such other
place as may be agreed to by the Company and the Representatives) at 9:00
a.m. Boston time, on [ ], 1997, or such other time and date not later
than 1:30 p.m. Boston time, on [ ], 1997, as the Representatives shall
designate by notice to the Company (the time and date of
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such closing are called the "First Closing Date"). The Company and the
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 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.
(c) 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 Company] [the Selling Shareholders] [the Company and the
Selling Shareholders] hereby grant[s] an option to the several Underwriters
to purchase, severally and not jointly, up to an aggregate of [ ]
Optional Common Shares from [the Company] [the Selling Shareholders] [the
Company and 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
Company], [the Selling Shareholders (with a copy to the Company)] [the
Company and the Selling Shareholders], 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 term "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 [and (b) [each Selling Shareholder][the Company and each
Selling Shareholder] agree[s], severally and not jointly, to sell 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 sold as the
number of Optional Common Shares set forth in SCHEDULE B opposite the name
of such Selling Shareholder [(or, in the case of the Company, as the number
of Optional Common Shares to be sold by the Company as set forth in the
paragraph "Introductory" of this Agreement)] bears to the total number of
Optional Common Shares]. The Representatives may cancel the option at
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any time prior to its expiration by giving written notice of such
cancellation to [the Company] [the Selling Shareholders (with a copy to the
Company)] [the Company and the Selling Shareholders].
(d) 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.
(e) 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 accounts 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. Montgomery Securities,
individually and not as the 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 Representative 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.
Each Selling Shareholder hereby agrees that (i) 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 such
Selling Shareholder to the several Underwriters, or otherwise in connection
with the performance of such Selling Shareholder's obligations hereunder
and (ii) the Custodian is authorized to deduct for such payment any such
amounts from the proceeds to such Selling Shareholder hereunder and to hold
such amounts for the account of such Selling Shareholder with the Custodian
under the Custody Agreement.
(f) Delivery of the Common Shares. The Company [and the 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 Company [and 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
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purchase [from them] 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 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 Representative 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.
(g) Delivery of Prospectus to the Underwriters. Not later than
12:00 p.m. 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) Representative's 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
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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.
(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 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.
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(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, but in any event
not later than 45 days after the end of the Company's first quarter ending
after one year following the "effective date of the Registration Statement"
(as defined in Rule 158(c) of the Rules and Regulations), the Company will
make generally available to its security holders and to the Representatives
an earnings statement (which need not be audited) covering a period of
twelve consecutive months beginning after the effective date of the
Registration Statement that satisfies the provisions of Section 11(a) of
the Securities Act.
(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 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 Montgomery Securities (which
consent may be withheld at the sole discretion of Montgomery 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 options, pursuant to any stock option, stock purchase, stock
bonus or other stock plan or arrangement described in the Prospectus, and
the Company may file registration statements on Form S-8 (or any successor
form) with respect to its 1997 Stock Plan, and, commencing on the date
which is 30 days after the First Closing Date, may file registration
statements on Form S-8 (or any successor form) with respect to its 1995
Stock Plan.
(k) Future Reports to the Representatives. During the period of
five years hereafter the Company will furnish to the Representatives at
Montgomery Securities, Two International Place, Boston, MA 02110 Attention:
M. Benjamin Howe; Robertson, Stephens & Company, LLC, 555 California
Street, San Francisco, CA 94104 Attention: Paul Scherer; and Wessels,
Arnold & Henderson, L.L.C., 601 Second Avenue South, Minneapolis, MN 55402,
Attention: Bryson D. Hollimon: (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
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fiscal year and statements of income, stockholders' 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 Form 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
Montgomery 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 Exchange Act, 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 Securities Exchange Act of 1934, as
amended) 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.
(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).
Montgomery Securities, on behalf of the several Underwriters, may,
in its sole discretion, waive in writing the performance by the Company or any
Selling Shareholder of 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 the
Company's and the Selling Shareholders' 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
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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 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 Stock on the Nasdaq National Market, and (ix)
all other fees, costs and expenses referred to in Item 13 of 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); provided,
however, to the extent, if at all, that any Selling Shareholder engages special
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 Sections 1(A) and 1(B) 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 Arthur Andersen LLP, independent
public or certified public accountants for the Company, a letter dated the
date hereof addressed to the
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Underwriters, in form and substance satisfactory to the Representative,
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 additional
conformed copies of such accountants' letter for each of the several
Underwriters).
(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
Representative's 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, in the judgment of the Representatives there shall not have
occurred any Material Adverse Change nor shall any event have occurred or
development have arisen which, in the judgment of the Representatives, is
likely to result in a Material Adverse Change.
(d) Opinion of Counsel for the Company. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of Testa, Hurwitz & Thibeault, LLP, counsel
for the Company, dated as of such Closing Date, in form and substance
satisfactory to the Representatives (and the Representatives shall have
received an additional [ ] conformed copies of such counsel's legal
opinion for each of the several Underwriters).
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(e) Opinion of Counsel for the Underwriters. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., counsel for the Underwriters, dated as of such Closing Date,
in form and substance satisfactory to the Representatives (and the
Representatives shall have received an additional [ ] conformed copies of
such counsel's legal opinion for each of the several Underwriters).
(f) Officers' Certificate. On each of the First Closing Date and
the Second Closing Date the Representatives shall have received a written
certificate executed by the Chairman of the Board, 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
Arthur Andersen 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 [ ] conformed
copies of such accountants' letter for each of the several Underwriters).
(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 the favorable opinion of counsel for the Selling
Shareholders (which counsel shall be reasonably satisfactory to the
Representatives), dated as of such Closing Date, in form and substance
satisfactory to the Representatives (and the Representatives shall have
received an additional [ ] conformed copies of such counsel's legal
opinion for each of the several Underwriters).
(i) Selling Shareholders' Certificate. On each of the First
Closing Date and the Second Closing Date the Representative shall received
a written certificate
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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(B) 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.
On the date hereof, the Company shall have furnished to the Representatives
an agreement in the form of EXHIBIT A attached hereto from each director,
officer and each beneficial owner of at least shares of Common
Stock (as defined and determined according to Rule 13d-3 under the Exchange
Act), 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 Section 4, Section 6, Section 8 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 Representative pursuant to Section 5, clause
(iv) of the first sentence of 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
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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. Subject to the
provisions of this Section 8, the Company and each of the Selling
Shareholders, jointly and severally, agree 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 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; or (iii) in whole or in part upon any inaccuracy in the
representations
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and warranties of the Company or the Selling Shareholders contained
herein; or (iv) in whole or in part upon any failure of the Company or the
Selling Shareholders to perform their respective obligations hereunder or
under law; and to reimburse each Underwriter and each such controlling
person for any and all expenses (including the fees and disbursements of
counsel chosen by Montgomery 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 or 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 expense; and provided, further that the
liability of each Selling Shareholder under the foregoing indemnity
agreement shall be limited to an amount equal to the initial public
offering price of the Common Shares sold by such Selling Shareholder, less
the underwriting discount, as set forth on the front cover page of the
Prospectus. Notwithstanding the foregoing, the indemnity agreement set
forth in this Section 8(a) with respect to the Selling Shareholders shall
apply only to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon (i) any untrue statement or alleged
untrue statement 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) or (ii) any untrue
statement or alleged untrue statement in the Registration Statement, any
preliminary prospectus or the Prospectus as the case may be, of which such
Selling Shareholder had actual knowledge (for the purposes of this
sentence, it is assumed that each Selling Shareholder has in good faith
reviewed such Registration Statement, Preliminary Prospectus or
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.
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
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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 is 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
Registration 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 or the Selling Shareholders by the Representative 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. The Company and each of the Selling
Shareholders, hereby acknowledge that the only written information that the
Underwriters have furnished to the Company or 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) as the last paragraph on the inside front cover
page of the Prospectus concerning stabilization by the Underwriters and (B)
in the table in the first paragraph and as the second and seventh
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 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
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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 defenses 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 (Montgomery 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 or 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 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
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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 statements
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 forth 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
representation 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 or 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 method of allocation
which does not take account of the equitable considerations referred to in this
Section 9.
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Notwithstanding the provisions of this Section 9, 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. 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 Representative 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 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
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action taken under this 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, Delaware 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 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 any event shall have occurred or development shall have arisen which,
in the judgment of the Representatives, is likely to result in a Material
Adverse Change. 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 Shareholders shall be
obligated to reimburse the expenses of the Representatives and the Underwriters
pursuant to Sections 4 and 6 hereof, (b) 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 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.
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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:
If to the Representative:
Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
Facsimile: (415) 249-5558
Attention: Richard A. Smith
with a copy to:
Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
Facsimile: (415) 249-5553
Attention: David A. Baylor, Esq.
If to the Company:
Concord Communications, Inc.
33 Boston Post Road West
Marlboro, Massachusetts 01752
Facsimile: (508) 481-9772
Attention: John Blaeser, President
If to the Selling Shareholders:
Concord Communications, Inc.
33 Boston Post Road West
Marlboro, Massachusetts 01752
Facsimile: (508) 481-9772
Attention: Gary Haroian, Chief Financial Officer
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 be 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 personal
representatives, and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of
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the Common Shares as such from any of the Underwriters merely by reason of such
purchase.
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 be 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 and County of San
Francisco or the courts of the State of California in each case located in the
City and County 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 Shareholders at the First Closing Date pursuant to
this Agreement, then the Underwriters may at their option, by written notice
from the Representative 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 Shareholders pursuant to this Agreement at the First Closing Date or the
Second 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 or the Second Closing
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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.
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 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 the 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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36
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company and the 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,
CONCORD COMMUNICATIONS, INC.
By:__________________________
John Blaeser
President
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.
MONTGOMERY SECURITIES
ROBERTSON, STEPHENS & COMPANY, LLC
WESSELS, ARNOLD & HENDERSON, L.L.C.
Acting as Representatives of the several Underwriters named in the attached
SCHEDULE A.
By: MONTGOMERY SECURITIES
By:__________________________________
Richard A. Smith
Authorized Signatory
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37
SCHEDULE A
NUMBER OF
FIRM COMMON SHARES
UNDERWRITERS TO BE PURCHASED
------------ ---------------
Montgomery Securities ................................ [ ]
Robertson, Stephens & Company LLC ................... [ ]
Wessels, Arnold & Henderson, L.L.C.................... [ ]
[ ] ............................................. [ ]
[ ] ............................................. [ ]
[ ]
Total.............................................
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SCHEDULE B
NUMBER OF MAXIMUM
SELLING SHAREHOLDER FIRM NUMBER OF
- ------------------- COMMON OPTIONAL COMMON
SHARES SHARES
TO BE SOLD TO BE SOLD
---------- ----------
Selling Shareholder #1
[address]
Attention: [ ] .......................... [ ] [ ]
Selling Shareholder #2
[address]
Attention: [ ] .......................... [ ] [ ]
Total: .................................. [ ] [ ]
B-1
39
EXHIBIT A
Montgomery Securities
Robertson, Stephens & Company, LLC
Wessels, Arnold & Henderson, L.L.C.
As Representatives of the Several Underwriters
c/o Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
RE: CONCORD COMMUNICATIONS, INC. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of Common Stock of the Company ("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 underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that
(other than with respect to shares of Common Stock held by the undersigned which
are being registered and sold in the Offering) the undersigned will not, without
the prior written consent of Montgomery 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 Securities Exchange Act of 1934, as amended) 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. 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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40
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Securities Act of any
Common Stock owned either of record or beneficially by the undersigned,
including any rights to receive notice of the Offering.
THIS AGREEMENT is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
Dated: , 1997
________________________________
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)
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