EXHIBIT 1.1
2,540,000 Shares
Westell Technologies, Inc.
Class A Common Stock
UNDERWRITING AGREEMENT
June __, 1996
MONTGOMERY SECURITIES
COWEN & COMPANY
PUNK, ZIEGEL & KNOELL
c/o MONTGOMERY SECURITIES
600 Montgomery Street
San Francisco, California 94111
Ladies & Gentlemen:
SECTION 1
INTRODUCTORY
Westell Technologies, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell 1,665,000 shares of its authorized but unissued
Class A Common Stock (sometimes referred to as the "Common Stock") and certain
stockholders of the Company named in Schedule B annexed hereto (the "Selling
Stockholders") propose to sell severally an aggregate of 875,000 shares of the
Company's issued and outstanding Class A Common Stock to the several
underwriters named in Schedule A annexed hereto (the "Underwriters"). Said
aggregate of 2,540,000 shares are herein called the "Firm Common Shares." In
addition, the Company and the Selling Stockholders propose to grant severally
to the Underwriters options to purchase up to an aggregate of 381,000
additional shares of Common Stock (the "Optional Common Shares"), as provided
in Section 5 hereof. The Firm Common Shares and, to the extent such option is
exercised, the Optional Common Shares are hereinafter collectively referred to
as the "Common Shares." For all purposes hereunder, the term Selling
Stockholders shall include the Insider Selling Stockholders (as defined below).
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is
advisable.
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
INSIDER SELLING STOCKHOLDERS
The Company and each of the Selling Stockholders listed on Schedule C
annexed hereto (the "Insider Selling Stockholders") represent and warrant to the
several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-04973) with
respect to the Common Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission. The Company has prepared and has filed or proposes to file prior to
the effective date of such registration statement an amendment or amendments to
such registration statement, which amendment or amendments have been or will be
similarly prepared. There have been delivered to you two signed copies of such
registration statement and amendments, together with two copies of each exhibit
filed therewith. Conformed copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested for each of
the Underwriters. The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration statement, a further
amendment thereto, including the form of final prospectus, or (ii) a final
prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations. As filed, such amendment and form of final prospectus, or such
final prospectus, shall include all Rule 430A Information and, except to the
extent that you shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the date and time
that this Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the latest
Preliminary prospectus) as the Company shall have previously advised you in
writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended; provided, however, that such
term shall also include (i) all Rule 430A Information deemed to be included in
such registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations and (ii) a
registration statement, if any, filed pursuant to Rule 462(b) of the Rules and
Regulations relating to the Common Shares. The term "Preliminary Prospectus"
shall mean any preliminary prospectus referred to in the preceding paragraph and
any preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean the prospectus relating to the Common Shares
in the form in which it is first filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations or, if no filing pursuant to Rule 424(b) of
the Rules and Regulations is required, shall mean the form of final prospectus
included in the Registration Statement at the time such registration statement
becomes effective. The term "Rule 430A Information" means information with
respect to the Common Shares and the offering thereof permitted to be omitted
from the Registration Statement when it becomes effective pursuant to Rule 430A
of the Rules and Regulations.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act and the Rules
and Regulations and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including each Closing
Date hereinafter mentioned, the Registration Statement and the Prospectus, and
any amendments or supplements thereto, will contain all material statements and
information required to be included therein by the Act and the Rules and
Regulations and will in all material respects conform to the requirements of the
Act and the Rules and Regulations, and neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, will include 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;
provided, however, no representation or warranty contained in this subsection
2(b) shall be applicable to information contained in or omitted from any
Preliminary Prospectus, the Registration Statement, the Prospectus or any such
amendment or supplement in reliance upon and
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in conformity with written information furnished to the Company by or on
behalf of any Underwriter specifically for use in the preparation thereof.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in
Exhibit 22 to the Registration Statement. The Company and each of its
subsidiaries have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective jurisdictions
of incorporation, with full power and authority (corporate and other) to own and
lease their properties and conduct their respective businesses as described in
the Prospectus; except with respect to the 11% minority interest in Conference
Plus, Inc. (which, in turn, owns 100% of Video Conference Plus, Inc.) and the
15% minority interests in each of Key Prestige Information Network Systems, Inc.
and Schoolhouse Interactive, Inc. described in the Registration Statement and
Prospectus, the Company owns all of the outstanding capital stock of its
subsidiaries free and clear of all claims, liens, charges and encumbrances; the
Company and each of its subsidiaries are in possession of and operating in
compliance with all authorizations, licenses, permits, consents, certificates
and orders material to the conduct of their respective businesses, all of which
are valid and in full force and effect; the Company and each of its subsidiaries
are duly qualified to do business and in good standing as foreign corporations
in each jurisdiction in which the ownership or leasing of properties or the
conduct of their respective businesses requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a material
adverse effect upon the Company and its subsidiaries taken as a whole; and, to
the best of the Company's knowledge, no proceeding has been instituted in any
such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.
(d) The Company has an authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock and Class B Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable, are duly listed
for quotation on the Nasdaq National Market, have been issued in compliance with
all federal and state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities, and conform to the description thereof contained in the Prospectus.
All issued and outstanding shares of capital stock of each subsidiary of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. Except for rights of first refusal held by certain minority
stockholders of Conference Plus, Inc. and Key Prestige Information Network
Systems, Inc. in connection with certain sales of such subsidiaries by the
Company, and except as disclosed in or contemplated by the Prospectus and the
financial statements of the Company, and the related notes thereto, included in
the Prospectus, neither the Company nor any subsidiary has outstanding any
options to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations. The description of the
Company's stock option, stock bonus and other stock plans or arrangements, and
the options or other rights granted and exercised 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.
(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set forth in
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus. No preemptive rights or other rights to subscribe for or purchase
exist with respect to the issuance and sale of the Common Shares by the Company
pursuant to this Agreement. No stockholder of the Company has any right which
has not been waived to require the Company to register the sale of any shares
owned by such stockholder under the Act in the public offering contemplated by
this Agreement. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the transfer and sale of
the Common Shares to be sold by the Selling Stockholders or the issuance and
sale of the Common Shares to be sold by the Company as contemplated herein.
(f) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company in accordance with its terms,
except as enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally. The making and performance of this Agreement by
the Company and the consummation of the transactions herein contemplated will
not violate any provisions of the certificate of incorporation or bylaws, or
other organizational documents, of the Company or any of its subsidiaries, and
will not conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries
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or any of its respective properties may be bound or affected, any statute
or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental body
applicable to the Company or any of its subsidiaries or any of their respective
properties. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is required
for the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement, except for compliance with the Act,
the Blue Sky laws applicable to the public offering of the Common Shares by the
several Underwriters and the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD").
(g) Arthur Andersen, LLP, who have expressed their opinion with respect
to the financial statements and schedules filed with the Commission as a part of
the Registration Statement and included in the Prospectus and in the
Registration Statement, are independent accountants as required by the Act and
the Rules and Regulations.
(h) The consolidated financial statements and schedules of the Company
and its subsidiaries, and the related notes thereto, included in the
Registration Statement and the Prospectus present fairly the financial position
of the Company and its subsidiaries as of the respective dates of such financial
statements and schedules, and the results of operations and changes in financial
position of the Company and its subsidiaries for the respective periods covered
thereby. Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis as certified by the independent accountants named in subsection 2(g). No
other financial statements or schedules are required to be included in the
Registration Statement. The selected financial data set forth in the Prospectus
under the captions "Capitalization" and "Selected Consolidated Financial Data"
fairly present the information set forth therein on the basis stated in the
Registration Statement.
(i) Except as to defaults which individually or in the aggregate would
not be material to the Company, neither the Company nor any of its subsidiaries
is in violation or default of any provision of its certificate of incorporation
or bylaws, or other organizational documents, or is in breach of or default with
respect to any provision of any agreement, judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
to which it is a party or by which it or any of its properties are bound; and
there does not exist any state of facts which constitutes an event of default on
the part of the Company or any such subsidiary as defined in such documents or
which, with notice or lapse of time or both, would constitute such an event of
default.
(j) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations which have not been
described or filed as required. The contracts so described in the Prospectus
are in full force and effect on the date hereof; and neither the Company nor any
of its subsidiaries, nor to the best of the Company's knowledge, any other party
is in breach of or default under any of such contracts.
(k) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is or may be a party or of which property owned or leased by the Company or any
of its subsidiaries is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings might, individually
or in the aggregate, prevent or adversely affect the transactions contemplated
by this Agreement or result in a material adverse change in the condition
(financial or otherwise), properties, business, results of operations or
prospects of the Company and its subsidiaries; and no labor disturbance by the
employees of the Company or any of its subsidiaries exists or is imminent which
might be expected to affect adversely such condition, properties, business,
results of operations or prospects. Neither the Company nor any of its
subsidiaries is a party or subject to the provisions of any material injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other governmental body.
(l) The Company or the applicable subsidiary has good and marketable
title to all the properties and assets reflected as owned in the financial
statements hereinabove described (or elsewhere in the Prospectus), subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such financial statements (or elsewhere in the Prospectus), or
(ii) those which are not material in amount and do not adversely affect the use
made and proposed to be made of such property by the Company and its
subsidiaries. The Company or the applicable subsidiary holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company.
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Except as disclosed in the Prospectus, the Company owns or leases all
such properties as are necessary to its operations as now conducted or as
proposed to be conducted.
(m) Since the respective dates as of which information is given in the
Registration Statement and Prospectus and except as specifically disclosed in
the Registration Statement and Prospectus: (i) the Company and its subsidiaries
have not incurred any material liabilities or obligations, indirect, direct or
contingent, or entered into any material verbal or written agreement or other
transaction which is not in the ordinary course of business; (ii) the Company
and its subsidiaries have not sustained any material loss or interference with
their respective businesses or properties from fire, flood, windstorm, accident
or other calamity, whether or not covered by insurance; (iii) the Company has
not paid or declared any dividends or other distributions with respect to its
capital stock and the Company and its subsidiaries are not in default in the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock (other than upon the sale of the
Common Shares hereunder) or indebtedness material to the Company and its
subsidiaries (other than in the ordinary course of business); and (v) there has
not been any material adverse change in the condition (financial or otherwise),
business, properties, results of operations or prospects of the Company and its
subsidiaries.
(n) The Company and its subsidiaries have sufficient trademarks, trade
names, patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct their businesses as now conducted; and
the Company has no knowledge of any material infringement by it or its
subsidiaries of trademark, trade name rights, patent rights, mask works,
copyrights, licenses, trade secret or other similar rights of others, and there
is no claim being made against the Company or its subsidiaries regarding
trademark, trade name, patent, mask work, copyright, license, trade secret or
other infringement which could have a material adverse effect on the condition
(financial or otherwise), business, results of operations or prospects of the
Company and its subsidiaries.
(o) The Company has not been advised, and has no reason to believe,
that either it or any of its subsidiaries is not conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, including, without limitation, all
applicable local, state and federal environmental laws and regulations; except
where failure to be so in compliance would not materially adversely affect the
condition (financial or otherwise), business, results of operations or prospects
of the Company and its subsidiaries.
(p) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns and have paid all taxes shown
as due thereon; and the Company has no knowledge of any tax deficiency which has
been or might be asserted or threatened against the Company or its subsidiaries
which could materially and adversely affect the business, operations or
properties of the Company and its subsidiaries, other than any such taxes as are
being contested in good faith.
(q) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute prior to
the First Closing Date any offering material in connection with the offering and
sale of the Common Shares other than the Prospectus, the Registration Statement
and the other materials permitted by the Act.
(s) Each of the Company and its subsidiaries maintains insurance of the
types and in the amounts generally deemed adequate for its business, including,
but not limited to, insurance covering real and personal property owned or
leased by the Company and its subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(t) Neither the Company nor any of its subsidiaries has at any time
during the last five years (i) made any unlawful contribution to any candidate
for foreign office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States of
any jurisdiction thereof.
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(u) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Common Shares.
SECTION 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLING STOCKHOLDERS
(a) Each of the Selling Stockholders represents and warrants, severally
and not jointly, to, and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has, and on the First Closing Date
and the Second Closing Date hereinafter mentioned will have, good and
marketable title to the Common Shares proposed to be sold by such Selling
Stockholder hereunder on such Closing Date and full right, power and authority
to enter into this Agreement and to sell, assign, transfer and deliver such
Common Shares hereunder, free and clear of all voting trust arrangements,
liens, encumbrances, equities, security interests, restrictions and claims
whatsoever; and upon delivery of and payment for such Common Shares hereunder,
the Underwriters will acquire good and marketable title thereto, free and clear
of all liens, encumbrances, equities, claims, restrictions, security interests,
voting trusts or other defects of title whatsoever.
(ii) Such Selling Stockholder has executed and delivered a
Power of Attorney and caused to be executed and delivered on his behalf
a Custody Agreement (hereinafter collectively referred to as the "Stockholders
Agreement") and in connection herewith such Selling Stockholder further
represents, warrants and agrees that such Selling Stockholder has deposited in
custody, under the Stockholders Agreement, with the agent named therein (the
"Agent") as custodian, certificates in negotiable form for the Common Shares
(or shares convertible into the Common Shares) to be sold hereunder by such
Selling Stockholder, for the purpose of further delivery pursuant to this
Agreement. Such Selling Stockholder agrees that the Common Shares to be sold
by such Selling Stockholder on deposit with the Agent are subject to the
interests of the Company and the Underwriters, that the arrangements made for
such custody are to that extent irrevocable, and that the obligations of such
Selling Stockholder hereunder shall not be terminated, except as provided in
this Agreement or in the Stockholders Agreement, by any act of such Selling
Stockholder, by operation of law, by the death or incapacity of such Selling
Stockholder or by the occurrence of any other event. If the Selling
Stockholder should die or become incapacitated, or if any other event should
occur, before the delivery of the Common Shares hereunder, the documents
evidencing Common Shares then on deposit with the Agent shall be delivered by
the Agent in accordance with the terms and conditions of this Agreement as if
such death, incapacity or other event had not occurred, regardless of whether
or not the Agent shall have received notice thereof. This Agreement and the
Stockholders Agreement have been duly executed and delivered by or on behalf of
such Selling Stockholder and the form of such Stockholders Agreement has been
delivered to you.
(iii) The performance of this Agreement and the Stockholders
Agreement and the consummation of the transactions contemplated hereby
and by the Stockholders Agreement will not result in a breach or violation by
such Selling Stockholder of any of the terms or provisions of, or constitute a
default by such Selling Stockholder under, any indenture, mortgage, deed of
trust, trust (constructive or other), loan agreement, lease, franchise, license
or other agreement or instrument to which such Selling Stockholder is a party
or by which such Selling Stockholder or any of its properties is bound, any
statute, or any judgment, decree, order, rule or regulation of any court or
governmental agency or body applicable to such Selling Stockholder or any of
its properties.
(iv) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Common Shares.
(v) Each Preliminary Prospectus and the Prospectus, insofar as
it has included information about such Selling Stockholder, has conformed in all
material respects to the requirements of the Act and the Rules and Regulations
and has not included any untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein
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not misleading in light of the circumstances under which they were made;
and neither the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, as it relates to such Selling Stockholder, will include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.
(b) Each of the Selling Stockholders agrees with the Company and the
Underwriters not to offer to sell, sell or contract to sell or otherwise dispose
of any shares of Common Stock or securities convertible into or exchangeable for
any shares of Common Stock, for a period of 90 days after the first date that
any of the Common Shares are released by you for sale to the public, without the
prior written consent of Montgomery Securities which consent may be withheld at
the sole discretion of Montgomery Securities.
(c) Each of the Selling Stockholders that is a trust (other than a
revocable trust) hereby covenants and agrees with the Underwriters that such
Selling Stockholder will at all times maintain sufficient assets in the trust to
satisfy the obligations and potential obligations of such Selling Stockholder to
the Underwriters hereunder (including the obligations of such Selling
Stockholder pursuant to Section 11 hereof). In addition, each of the Selling
Stockholders that is a revocable trust hereby covenants and agrees with the
Underwriters that the rights of the Underwriters against such Selling
Stockholder hereunder (including pursuant to Section 11 hereof) may be enforced
against the grantor or grantors of such trust with the same force and effect as
if such rights were enforced against such trust.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS
The several Underwriters represent and warrant to the Company and to the
Selling Stockholders that the information set forth (i) on the cover page of the
Prospectus with respect to price, underwriting discounts and commissions and
terms of offering and (ii) under "Underwriting" in the Prospectus was furnished
to the Company by and on behalf of the Underwriters for use in connection with
the preparation of the Registration Statement and the Prospectus and is correct
in all material respects.
SECTION 5
PURCHASE, SALE AND DELIVERY OF COMMON SHARES
On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, (i) the
Company agrees to issue and sell to the Underwriters 1,665,000 of the Firm
Common Shares, and (ii) the Selling Stockholders agree, severally and not
jointly, to sell to the Underwriters in the respective amounts set forth in
Schedule B hereto, an aggregate of 875,000 of the Firm Common Shares. The
Underwriters agree, severally and not jointly, to purchase from the Company and
the Selling Stockholders, respectively, the number of Firm Common Shares
described below. The purchase price per share to be paid by the several
Underwriters to the Company and to the Selling Stockholders, respectively, shall
be $____ per share.
The obligation of each Underwriter to the Company shall be to purchase
from the Company that number of full shares which (as nearly as practicable,
as determined by you) bears to 2,540,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares. The obligation of each
Underwriter to the Selling Stockholders shall be to purchase from the Selling
Stockholders that number of full shares which (as nearly as practicable, as
determined by you) bears to 2,540,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares.
Delivery of certificates for the Firm Common Shares to be purchased by
the Underwriters shall be made as directed by the Underwriters and payment
therefor shall be made at the offices of McDermott, Will & Emery, 227 West
Monroe Street, Chicago, IL 60606-5096 (or such other place as may be agreed
upon by the Company and the Underwriters) at such time and date, not later than
the third (or, if the Firm Common Shares are priced as contemplated by Rule
15c6-1(c) of the Exchange Act,
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after 4:30 p.m. Washington, D.C. time, the fourth) full business day
following the first date that any of the Common Shares are released by you for
sale to the public, as you shall designate by at least 48 hours prior notice to
the Company (or at such other time and date, not later than one week after such
third or fourth, as the case may be, full business day as may be agreed upon by
the Company and the Underwriters) (the "First Closing Date"); provided, however,
that if the Prospectus is at any time prior to the First Closing Date
recirculated to the public, the First Closing Date shall occur upon the later of
the third or fourth, as the case may be, full business day following the first
date that any of the Common Shares are released by you for sale to the public or
the date that is 48 hours after the date that the Prospectus has been so
recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or
on behalf of the Company and the Selling Stockholders to you, for the respective
accounts of the Underwriters with respect to the Firm Common Shares to be sold
by the Company and by the Selling Stockholders against payment by you, for the
accounts of the several Underwriters, of the purchase price therefor by wire
transfer of federal funds to accounts designated in writing by the Company and
of the Agent in proportion to the number of Firm Common Shares to be sold by the
Company and the Selling Stockholders, respectively. The certificates for the
Firm Common Shares shall be registered in such names and denominations as you
shall have requested at least two full business days prior to the First Closing
Date, and shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in New York, New York, as may be
designated by you. 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.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the (i) Selling Stockholders, severally and not jointly, hereby grant
options to the several Underwriters to purchase, severally and not jointly, up
to an aggregate of 226,000 Optional Common Shares in the respective amounts set
forth opposite the name of each such Selling Stockholder in Schedule B hereto
and (ii) the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to 155,000 Optional Common Shares; in
each case at the purchase price per share to be paid for the Firm Common Shares,
for use solely in covering any over-allotments made by you for the account of
the Underwriters in the sale and distribution of the Firm Common Shares. In the
event that the Underwriters elect to purchase less than all of the Optional
Common Shares, the number of Optional Common Shares to be purchased from each
Selling Stockholder and the Company shall be determined by multiplying the
aggregate number of Optional Common Shares to be purchased by a fraction, the
numerator of which is the total number of Optional Common Shares set forth
opposite the name of such Selling Stockholder or the Company in Schedule B
hereto and the denominator of which is 381,000. The option granted hereunder may
be exercised at any time (but not more than once) within 30 days after the first
date that any of the Common Shares are released by you for sale to the public,
upon notice by you to the Company and said Selling Stockholders setting forth
the aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, the names and denominations in which the certificates for
such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of delivery (which may not be earlier
than the First Closing Date), being herein referred to as the "Second Closing
Date," shall be determined by you, but if at any time other than the First
Closing Date shall not be earlier than three full business days after delivery
of such notice of exercise. The number of Optional Common Shares to be
purchased by each Underwriter shall be determined by multiplying the number of
Optional Common Shares to be sold by the Selling Stockholders and the Company
pursuant to such notice of exercise by a fraction, the numerator of which is the
number of Firm Common Shares to be purchased by such Underwriter as set forth
opposite its name in Schedule A and the denominator of which is 2,540,000
(subject to such adjustments to eliminate any fractional share purchases as you
in your discretion may make). Certificates for the Optional Common Shares will
be made available for checking and packaging on the business day preceding the
Second Closing Date at a location in New York, New York, as may be designated by
you. The manner of payment for and delivery of the Optional Common Shares shall
be the same as for the Firm Common Shares purchased from the said Selling
Stockholders and the Company as specified in the two preceding paragraphs. At
any time before lapse of the option, you may cancel such option by giving
written notice of such cancellation to the Company and said Selling
Stockholders. If the option is cancelled or expires unexercised in whole or in
part, the Company will deregister under the Act the number of Optional Common
Shares as to which the option has not been exercised.
You have advised the Company and the Selling Stockholders that each
Underwriter has authorized you to accept delivery of its Common Shares, to make
payment and to receipt therefor. You 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 you by the First Closing
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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.
Subject to the terms and conditions hereof, the Underwriters propose to
make a public offering of their respective portions of the Common Shares as soon
after the effective date of the Registration Statement as in the judgment of the
Underwriters is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the Prospectus.
SECTION 6
COVENANTS OF THE COMPANY
The Company covenants and agrees that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A of the Rules and Regulations, or the filing of the
Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations,
the Company will file the Prospectus, properly completed, pursuant to the
applicable paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of such timely
filing. The Company will promptly advise you in writing (i) of the receipt of
any comments of the Commission, (ii) of any request of the Commission for
amendment of or supplement to the Registration Statement (either before or after
it becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have become
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose. 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. The Company will not
file any amendment or supplement to the Registration Statement (either before or
after it becomes effective), any Preliminary Prospectus or the Prospectus of
which you have not been furnished with a copy a reasonable time prior to such
filing or to which you reasonably object or which is not in compliance with the
Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon your request, a registration statement pursuant to Rule 462(b) of the Rules
and Regulations related to the Common Shares and any amendments or supplements
to the Registration Statement or the Prospectus which in your judgment may be
necessary or advisable to enable the several Underwriters to continue the
distribution of the Common Shares and will use its best efforts to cause the
same to become effective as promptly as possible. The Company will fully and
completely comply with the provisions of Rule 430A of the Rules and Regulations
with respect to information omitted from the Registration Statement in reliance
upon such Rule.
(c) If at any time within the nine-month period referred to in Section
10(a)(3) of the Act during which a prospectus relating to the Common Shares is
required to be delivered under the Act any event occurs, as a result of which
the Prospectus, including any amendments or supplements, would include an untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or if
it is necessary at any time to amend the Prospectus, including any amendments or
supplements, to comply with the Act or the Rules and Regulations, the Company
will promptly advise you thereof and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will correct
such statement or omission or an amendment or supplement which will effect such
compliance and will use its best efforts to cause the same to become effective
as soon as possible; and, in case any Underwriter is required to deliver a
prospectus after such nine-month period, the Company upon request, but at the
expense of such Underwriter, will promptly prepare such amendment or amendments
to the Registration Statement and such Prospectus or Prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of the
Act.
(d) As soon as practicable, but not later than 45 days after the end of
the 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
an earnings statement (which need not be audited) covering a period
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of 12 consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of Section
11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company, at
its expense, but only for the nine-month period referred to in Section 10(a) (3)
of the Act, will furnish to you and the Selling Stockholders or mail to your
order copies of the Registration Statement, the Prospectus, the Preliminary
Prospectus and all amendments and supplements to any such documents in each case
as soon as available and in such quantities as you and the Selling Stockholders
may request, for the purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions from
the application of) the Blue Sky laws of such jurisdictions as you designate,
will comply with such laws and will continue such qualifications, registrations
and exemptions in effect so long as reasonably required for the distribution of
the Common Shares. The Company shall not be required to qualify as a foreign
corporation or to file a general consent to 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 you 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, with your cooperation, will use its best efforts to
obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company will furnish
to the Underwriters: (i) as soon as practicable after the end of each fiscal
year, copies of the Annual Report of the Company containing the balance sheet of
the Company as of the close of such fiscal year and statements of income,
stockholders' equity and cash flows for the year then ended and the opinion
thereon of the Company's independent 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, 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 Common Stock.
(h) During the period of 90 days after the first date that any of the
Common Shares are released by you for sale to the public, without the prior
written consent of Montgomery Securities (which consent may be withheld at the
sole discretion of Montgomery Securities), the Company will not issue, offer,
sell, grant options to purchase or otherwise dispose of any of the Company's
equity securities or any other securities convertible into or exchangeable with
its Common Stock or other equity security, other than pursuant to (i) stock
options granted pursuant to the Company's 1995 Stock Incentive Plan (as
described in the Registration Statement and Prospectus), and (ii) the Company's
Stock Purchase Plan (as described in the Registration Statement and Prospectus).
(i) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain exemptions
from the application of) the Blue Sky laws of the State of California (and
thereby permit market making transactions and secondary trading in the Company's
Common Stock in California), will comply with such Blue Sky laws and will
continue such qualifications, registrations and exemptions in effect for a
period of five years after the date hereof.
(k) The Company will use its best efforts to cause the Common Stock to
continue to be listed for quotation as a national market system security on the
NASD Automated Quotation System, and to cause the Common Shares to be issued and
sold by the Company hereunder to be listed for quotation on such system.
You may, in your sole discretion, waive in writing the performance by
the Company of any one or more of the foregoing covenants or extend the time for
their performance.
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SECTION 7
PAYMENT OF EXPENSES
Whether or not the transactions contemplated hereunder are consummated
or this Agreement becomes effective or is terminated, the Company and, unless
otherwise paid by the Company, the Selling Stockholders agree to pay in such
proportions as they may agree upon among themselves all costs, fees and expenses
incurred in connection with the performance of their obligations hereunder and
in connection with the transactions contemplated hereby, including without
limiting the generality of the foregoing, (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 and the Company's
independent accountants, (v) all costs and expenses incurred in connection with
the preparation, printing, filing, shipping and distribution of the Registration
Statement, each Preliminary Prospectus and the Prospectus (including all
exhibits and financial statements) and all amendments and supplements provided
for herein, any registration statement filed pursuant to Rule 462(b) of the
Rules and Regulations related to the Common Shares, this Agreement, the
Agreement Among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire, the Underwriters' Power of Attorney and the Blue Sky memorandum,
(vi) all filing fees, reasonable 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 or Canadian Blue Sky
laws in an amount not to exceed $30,000, (vii) the filing fee of the National
Association of Securities Dealers, Inc., and (viii) all other fees, costs and
expenses referred to in Item 13 of the Registration Statement. The Underwriters
may deem the Company to be the primary obligor with respect to all costs, fees
and expenses to be paid by the Company and by the Selling Stockholders. Except
as provided in this Section 7, Section 9 and Section 11 hereof, the Underwriters
shall pay all of their own expenses, including the fees and disbursements of
their counsel (excluding those relating to qualification, registration or
exemption under the Blue Sky laws and the Blue Sky memorandum referred to
above). This Section 7 shall not affect any agreements relating to the payment
of expenses between the Company and the Selling Stockholders.
The Selling Stockholders will pay (directly or by reimbursement) all
fees and expenses incident to the performance of their obligations under this
Agreement which are not otherwise specifically provided for herein, including
but not limited to (i) any fees and expenses of separate counsel for such
Selling Stockholders; (ii) any fees and expenses of the Agent; and (iii) all
expenses and taxes incident to the sale and delivery of the Common Shares to be
sold by such Selling Stockholders to the Underwriters hereunder.
SECTION 8
CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS
The obligations of the several Underwriters to purchase and pay for the
Firm Common Shares on the First Closing Date and the Optional Common Shares on
the Second Closing Date shall be subject to the accuracy of the representations
and warranties on the part of the Company and the Selling Stockholders herein
set forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Stockholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Stockholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m.(or, in the case of a registration statement filed pursuant to
Rule 462(b) of the Rules and Regulations relating to the Common Shares, not
later than 8:30 a.m. Washington D.C. time on the date following the date of
this Agreement), Washington, D.C. Time, on the date of this Agreement, or
at such later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and Regulations;
and prior to such Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company, the Selling
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Stockholders or you, shall be contemplated by the Commission; and any
request of the Commission for inclusion of additional information in the
Registration Statement, or otherwise, shall have been complied with to your
satisfaction.
(b) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i) there
shall not have been any change in the capital stock of the Company or any of its
subsidiaries (other than pursuant to the grant of shares of Common Stock to
employees of the Company as described in the Registration Statement and
Prospectus) or any material change in the indebtedness (other than in the
ordinary course of business) of the Company or any of its subsidiaries, (ii)
except as set forth or contemplated by the Registration Statement or the
Prospectus, no material verbal or written agreement or other transaction shall
have been entered into by the Company or any of its subsidiaries, which is not
in the ordinary course of business, (iii) no loss or damage (whether or not
insured) to the property of the Company or any of its subsidiaries shall have
been sustained which materially and adversely affects the condition (financial
or otherwise), business, results of operations or prospects of the Company and
its subsidiaries, (iv) no legal or governmental action, suit or proceeding
affecting the Company or any of its subsidiaries which is material to the
Company and its subsidiaries or which adversely affects or may adversely affect
the transactions contemplated by this Agreement shall have been instituted or
threatened and (v) there shall not have been any material adverse change in the
condition (financial or otherwise), business, management, results of operations
or prospects of the Company and its subsidiaries which makes it impractical or
inadvisable in the judgment of the Underwriters to proceed with the public
offering or purchase the Common Shares as contemplated hereby.
(c) There shall have been furnished to you on each Closing Date, in
form and substance satisfactory to you, except as otherwise expressly provided
below:
(i) An opinion of McDermott, Will & Emery, counsel for the
Company and the Selling Stockholders, addressed to the Underwriters and dated
the First Closing Date, or the Second Closing Date, as the case may be, to the
effect that:
(1) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, is
duly qualified to do business as a foreign corporation and is in
good standing in all other jurisdictions where the ownership or
leasing of properties or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to so
qualify would not have a material adverse effect on the Company and
its subsidiaries taken as a whole, and has full corporate power and
authority to own its properties and conduct its business as
described in the Registration Statement;
(2) The authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus; all necessary and proper corporate proceedings have
been taken in order to authorize validly such authorized Common
Stock and Class B Common Stock; all outstanding shares of Common
Stock (including the Firm Common Shares and any Optional Common
Shares) and Class B Common Stock have been duly and validly issued,
are fully paid and nonassessable, were not issued in violation of
or subject to any preemptive rights or, to the best of such
counsel's knowledge, other rights to subscribe for or purchase any
securities, and such shares conform to the description thereof
contained in the Prospectus; without limiting the foregoing, there
are no preemptive or, to the best of such counsel's knowledge,
other rights to subscribe for or purchase any of the Common Shares
to be sold by the Company hereunder;
(3) All of the issued and outstanding shares of the Company's
subsidiaries have been duly and validly authorized and issued, are
fully paid and nonassessable and, except as set forth in the
Registration Statement, are held of record by the Company free and
clear of all liens, encumbrances, equities, claims, security
interests, voting trusts or other defects of title whatsoever;
(4) The certificates evidencing the Common Shares to be
delivered hereunder are in due and proper form under Delaware law,
and when duly countersigned by the Company's transfer agent and
registrar, and delivered to you or upon your order against payment
of the agreed consideration therefor in accordance with the
provisions of this Agreement, the Common Shares represented thereby
will be duly authorized and validly issued, fully paid and
nonassessable, will not have been issued in violation of or subject
to any
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preemptive rights or, to the best of such counsel's
knowledge, other rights to subscribe for or purchase securities,
and such shares will conform in all respects to the description
thereof contained in the Prospectus;
(5) Except as disclosed in or specifically contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no
outstanding options, warrants or other rights calling for the
issuance of, and no commitments, plans or arrangements to issue,
any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the Company;
(6) (a) The Registration Statement has become effective under
the Act, and, to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated by the Commission; any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) of
the Rules and Regulations has been made in the manner and within
the time period required by such Rule 424(b);
(b) The Registration Statement, the Prospectus and each
amendment or supplement thereto (except for the financial
statements and schedules and financial and statistical data
included therein as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of
the Act and the Rules and Regulations.
(c) To the best of such counsel's knowledge, there are
no franchises, leases, contracts, agreements or documents of a
character required to be disclosed in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement
which are not disclosed or filed, as required; and
(d) To the best of such counsel's knowledge, there are
no legal or governmental actions, suits or proceedings pending or
threatened against the Company which are required to be described
in the Prospectus which are not described as required.
(7) The Company has full corporate right, power and authority
to enter into this Agreement and to sell and deliver the Common
Shares to be sold by it to the several Underwriters; this Agreement
has been duly and validly authorized by all necessary corporate
action by the Company, has been duly and validly executed and
delivered by and on behalf of the Company, and is a valid and
binding agreement of the Company in accordance with its terms,
except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and except as to
those provisions relating to indemnity or contribution for
liabilities arising under the Act as to which no opinion need be
expressed; and, to the best of such counsel's knowledge, no
approval, authorization, order, consent, registration, filing,
qualification, license or permit of or with any court, regulatory,
administrative or other governmental body is required for the
execution and delivery of this Agreement by the Company or the
consummation of the transactions contemplated by this Agreement,
except such as have been obtained and are in full force and effect
under the Act and such as may be required under applicable Blue Sky
laws in connection with the purchase and distribution of the Common
Shares by the Underwriters and the clearance of such offering with
the NASD;
(8) The execution and performance of this Agreement and the
consummation of the transactions herein contemplated will not
conflict with, result in the breach of, or constitute, either by
itself or upon notice or the passage of time or both, a default
under, any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument known to such
counsel to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or any of its or
their property may be bound or affected which is material to the
Company and its subsidiaries, or violate any of the provisions of
the certificate of incorporation or bylaws, or other organizational
documents, of the Company or any of its subsidiaries or, so far as
is known to such counsel, violate any statute, judgment, decree,
order, rule or regulation of any court or governmental body having
jurisdiction over the Company or any of its subsidiaries or any of
its or their property;
-13-
(9) Neither the Company nor any subsidiary is in violation of
its certificate of incorporation or bylaws, or other organizational
documents, or to the best of such counsel's knowledge, in breach of
or default with respect to any provision of any agreement,
mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument known to such counsel to which the
Company or any such subsidiary is a party or by which it or any of
its properties may be bound or affected, except where such default
would not materially adversely affect the Company and its
subsidiaries; and, to the best of such counsel's knowledge, the
Company and its subsidiaries are in compliance with all laws,
rules, regulations, judgments, decrees, orders and statutes of any
court or jurisdiction to which they are subject, except where
noncompliance would not materially adversely affect the Company and
its subsidiaries;
(10) To the best of such counsel's knowledge, no holders of
securities of the Company have rights which have not been waived to
the registration of shares of Common Stock or other securities,
because of the filing of the Registration Statement by the Company
or the offering contemplated hereby;
(11) To the best of such counsel's knowledge, this Agreement and
the Stockholders Agreement have been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders; the
Agent has been duly and validly authorized to act as the custodian
of the Common Shares to be sold by each such Selling Stockholder;
and the performance of this Agreement and the Stockholders
Agreement and the consummation of the transactions herein
contemplated by the Selling Stockholders will not result in a
breach of, or constitute a default under, any indenture, mortgage,
deed of trust, trust (constructive or other), loan agreement,
lease, franchise, license or other agreement or instrument to which
any of the Selling Stockholders is a party or by which any of the
Selling Stockholders or any of their properties may be bound, or
violate any statute, judgment, decree, order, rule or regulation
known to such counsel of any court or governmental body having
jurisdiction over any of the Selling Stockholders or any of their
properties; and to the best of such counsel's knowledge, no
approval, authorization, order or consent of any court, regulatory
body, administrative agency or other governmental body is required
for the execution and delivery of this Agreement or the
Stockholders Agreement or the consummation by the Selling
Stockholders of the transactions contemplated by this Agreement,
except such as have been obtained and are in full force and effect
under the Act and such as may be required under the rules of the
NASD and applicable Blue Sky laws;
(12) To the best of such counsel's knowledge, the Selling
Stockholders have full right, power and authority to enter into
this Agreement and the Stockholders Agreement and to sell, transfer
and deliver the Common Shares to be sold on such Closing Date by
such Selling Stockholders hereunder and upon payment for and
delivery of the Common Shares as contemplated hereunder, the
Underwriters (whom counsel may assume to be bona fide purchasers)
will be the owner of the Common Shares free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests,
voting trusts, or other defects of title whatsoever;
(13) To the best of such counsel's knowledge, this Agreement and
the Stockholders Agreement are valid and binding agreements of each
of the Selling Stockholders in accordance with their terms except
as enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and except with respect to
those provisions relating to indemnities or contributions for
liabilities under the Act, as to which no opinion need be
expressed; and
(14) No transfer taxes are required to be paid in connection
with the sale and delivery of the Common Shares to the Underwriters
hereunder.
In rendering such opinion, such counsel may rely, as to matters
of fact, on certificates of the Selling Stockholders and of officers of the
Company and of governmental officials, as to the matters set forth in paragraphs
(12), (13) and (14), on opinions of other counsel retained by the Selling
Stockholders, and, as to matters of local law, on opinions of local counsel in
which case their opinion is to state that they are so doing and that the
Underwriters are justified in relying on such opinions or certificates and
copies of said opinions or certificates are to be attached to the opinion. Such
counsel shall also
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include a statement to the effect that nothing has come to such counsel's
attention that would lead such counsel to believe that either at the effective
date of the Registration Statement or at the applicable Closing Date the
Registration Statement or the Prospectus, or any such amendment or supplement,
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading;
(ii) Such opinion or opinions of Wilson, Sonsini, Goodrich & Rosati,
P.C., counsel for the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the incorporation
of the Company, the sufficiency of all corporate proceedings and other
legal matters relating to this Agreement, the validity of the Common
Shares, the Registration Statement and the Prospectus and other related
matters as you may reasonably require, and the Company and the Selling
Stockholders shall have furnished to such counsel such documents and shall
have exhibited to them such papers and records as they may reasonably
request for the purpose of enabling them to pass upon such matters. In
connection with such opinions, such counsel may rely on representations or
certificates of officers of the Company and governmental officials.
(iii) A certificate of the Company executed by the Chairman of the
Board and President and the chief financial or accounting officer of the
Company, dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) The representations and warranties of the Company set forth
in Section 2 of this Agreement are true and correct as of the date of
this Agreement and as of the First Closing Date or the Second Closing
Date, as the case may be, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied on or prior to such Closing Date;
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus
filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the best of the
knowledge of the respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated under the Act;
(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus; in
his opinion and to the best of his knowledge, the Registration
Statement and the Prospectus and any amendments or supplements thereto
contain all statements required to be stated therein regarding the
Company and its subsidiaries; and neither the Registration Statement
nor the Prospectus nor any amendment or supplement thereto includes
any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading;
(4) Since the initial date on which the Registration Statement
was filed, no agreement, written or oral, transaction or event has
occurred which should have been set forth in an amendment to the
Registration Statement or in a supplement to or amendment of any
prospectus which has not been disclosed in such a supplement or
amendment;
(5) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been
any material adverse change or a development involving a material
adverse change in the condition (financial or otherwise), business,
properties, results of operations, management or prospects of the
Company and its subsidiaries; and no legal or governmental action,
suit or proceeding is pending or threatened against the Company or any
of its subsidiaries which is material to the Company and its
subsidiaries, whether or not arising from transactions in the ordinary
course of business, or which may adversely affect the transactions
contemplated by this Agreement; since such dates neither the Company
nor any of its subsidiaries has entered into any verbal or written
agreement or other transaction which is not in the ordinary course of
business or incurred any material liability or obligation, direct,
contingent or indirect, made any change in its capital stock, made any
material change in its short-term debt or funded debt or repurchased
or otherwise acquired any of the Company's capital stock; and the
Company
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has not declared or paid any dividend, or made any other distribution,
upon its outstanding capital stock payable to stockholders of record
on a date prior to the First Closing Date or Second Closing Date; and
(6) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, the Company and its
subsidiaries have not sustained a material loss or damage by strike,
fire, flood, windstorm, accident or other calamity (whether or not
insured).
(iv) On the First Closing Date or the Second Closing Date, as the case
may be, a certificate, dated such Closing Date and addressed to you, signed
by or on behalf of each of the Selling Stockholders to the effect that the
representations and warranties of such Selling Stockholder in this
Agreement are true and correct, as if made at and as of the First Closing
Date or the Second Closing Date, as the case may be, and such Selling
Stockholder has complied with all the agreements and satisfied all the
conditions on his part to be performed or satisfied prior to the First
Closing Date or the Second Closing Date, as the case may be.
(v) On the date before this Agreement is executed and also on the First
Closing Date and the Second Closing Date, a letter addressed to you from
Arthur Andersen, LLP, independent accountants, the first one to be dated
the day before the date of this Agreement, the second one to be dated the
First Closing Date and the third one (in the event of a Second Closing) to
be dated the Second Closing Date, in form and substance reasonably
satisfactory to you.
(vi) On or before the First Closing Date, letters from each of the
Selling Stockholders and each director and executive officer of the
Company, in form and substance satisfactory to you, confirming that for a
period of 90 days after the first date that any of the Common Shares are
released by you for sale to the public, such person will not directly or
indirectly sell or offer to sell or otherwise dispose of any shares of
Common Stock or Class B Common Stock or any right to acquire any such
shares without the prior written consent of Montgomery Securities, which
consent may be withheld at the sole discretion of Montgomery Securities.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Wilson, Sonsini, Goodrich & Rosati, P.C., counsel for the
Underwriters. The Company shall furnish you with such manually signed or
conformed copies of such opinions, certificates, letters and documents as you
request. Any certificate signed by any officer of the Company and delivered to
the Underwriters or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the
statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you to the
Company and the Selling Stockholders without liability on the part of any
Underwriter or the Company or the Selling Stockholders except for the expenses
to be paid or reimbursed by the Company and by the Selling Stockholders pursuant
to Sections 7 and 9 hereof and except to the extent provided in Section 11
hereof.
SECTION 9
REIMBURSEMENT OF UNDERWRITERS' EXPENSES
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to Section 8, or if the sale to the Underwriters of
the Common Shares at the First Closing is not consummated because of any
refusal, inability or failure on the part of the Company or the Selling
Stockholders to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse you and the other Underwriters upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by you and them in connection with the proposed purchase and the sale of the
Common Shares, including but not limited to fees and disbursements of counsel,
printing expenses, travel expenses, postage, telegraph charges and telephone
charges relating directly to the offering contemplated by the Prospectus. Any
such termination shall be without liability of any party to any other party
except that the provisions of this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.
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SECTION 10
EFFECTIVENESS OF REGISTRATION STATEMENT
You, the Company and the Selling Stockholders will use your, its and
their best efforts to cause the Registration Statement to become effective, to
prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement and, if such stop order be issued, to obtain as soon as
possible the lifting thereof.
SECTION 11
INDEMNIFICATION
(a) The Company and each of the Insider Selling Stockholders, jointly
and severally, agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act
against any losses, claims, damages, liabilities or expenses, joint or several,
to which such Underwriter or such controlling person may become subject, under
the Act, the Securities Exchange Act of 1934, as amended (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 losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be stated therein
or necessary to make the statements in any of them not misleading, or arise out
of or are based in whole or in part on any inaccuracy in the representations
and warranties of the Company or the Insider Selling Stockholders contained
herein or any failure of the Company or the Insider Selling Stockholders to
perform their respective obligations hereunder or under law; and will
reimburse each Underwriter and each such controlling person for any legal and
other expenses 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 neither the Company nor the Insider Selling
Stockholders will be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 4 hereof. The Company
and the Insider Selling Stockholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to their
respective amounts of such liability for which they each shall be responsible.
In addition to their other obligations under this Section 11(a), the Company
and the Insider Selling Stockholders agree that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged
statement or omission, or any inaccuracy in the representations and warranties
of the Company or the Insider Selling Stockholders herein or failure to perform
their obligations hereunder, all as described in this Section 11(a), they will
reimburse each Underwriter on a quarterly basis for all reasonable legal or
other expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the Company's or the Insider Selling Stockholders' obligation to reimburse each
Underwriter for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To
the extent that any such interim reimbursement payment is so held to have been
improper, each Underwriter shall promptly return it to the Company and the
Insider Selling Stockholders together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by Bank
of America NT&SA, San Francisco, California (the "Prime Rate"). Any such
interim reimbursement payments which are not made to an Underwriter within 30
days of a request for reimbursement, shall bear interest at the Prime Rate from
the date of such request. This indemnity agreement will be in addition to any
liability which the Company or the Insider Selling Stockholders may otherwise
have.
(b) Each of the Selling Stockholders, jointly and severally, agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act,
-17-
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
Selling Stockholder), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state in any of them a material
fact required to be stated therein or necessary to make the statements in any
of them not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Selling Stockholders
contained herein or any failure of the Selling Stockholders to perform their
respective obligations hereunder or under law; and will reimburse each
Underwriter and each such controlling person for any legal and other expenses
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 Selling Stockholders (other than the
Insider Selling Stockholders) will only be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with the information about such Selling Stockholder
furnished to the Company for use therein. In addition to their other
obligations, under this Section 11(b), the Selling Stockholders agree that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, or any inaccuracy in the
representations and warranties of the Selling Stockholders herein or failure to
perform their obligations hereunder, all as described in this Section 11(b),
they will reimburse each Underwriter on a quarterly basis for all reasonable
legal or other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Selling Stockholders' obligation to reimburse each
Underwriter for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To
the extent that any such interim reimbursement payment is so held to have been
improper, each Underwriter shall promptly return it to the Selling Stockholders
together with interest, compounded daily, determined on the basis of the Prime
Rate. Any such interim reimbursement payments which are not made to an
Underwriter within 30 days of a request for reimbursement, shall bear interest
at the Prime Rate from the date of such request. This indemnity agreement will
be in addition to any liability which the Selling Stockholders may otherwise
have.
(c) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement, the Selling Stockholders and each person, if any, who
controls the Company or any Selling Stockholder within the meaning of the Act,
against any losses, claims, damages, liabilities or expenses to which the
Company, or any such director, officer, Selling Stockholder or controlling
person may become subject, under the 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 losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise
out of or are 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 the information furnished to the Company pursuant to Section 4
hereof; and will reimburse the Company, or any such director, officer, Selling
Stockholder or controlling person for any legal and other expense reasonably
incurred by the Company, or any such director, officer, Selling Stockholder or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. In addition to its other obligations under this Section 11(c), each
Underwriter severally agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 11(c) which relates to information furnished to the
Company pursuant to Section 4 hereof, it will reimburse the Company (and, to
the extent applicable, each officer, director, controlling person or Selling
Stockholder) on a quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, controlling person or Selling Stockholder)
for such expenses and the possibility that such payments might later be held
-18-
to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Company (and, to the extent applicable, each officer, director,
controlling person or Selling Stockholder) shall promptly return it to the
Underwriters together with interest, compounded daily, determined on the basis
of the Prime Rate. Any such interim reimbursement payments which are not made
to the Company within 30 days of a request for reimbursement, shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(d) Promptly after receipt by an indemnified party under this Section
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, 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 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 may wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
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 its 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 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 such counsel in connection with the
assumption of legal defenses 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,
approved by the Underwriters in the case of paragraph (a), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel reasonably 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.
(e) If the indemnification provided for in this Section 11 is required
by its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b),
(c) or (d) in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Stockholders and the Underwriters from the offering of the
Common Shares 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, the Selling Stockholders and the Underwriters 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 respective relative benefits received by the Company, the
Selling Stockholders and the Underwriters shall be deemed to be in the same
proportion, in the case of the Company and the Selling Stockholders as the
total price paid to the Company and to the Selling Stockholders, respectively,
for the Common Shares sold by them to the Underwriters (net of underwriting
commissions but before deducting expenses), and in the case of the Underwriters
as the underwriting commissions received by them bears to the total of such
amounts paid to the Company and to the Selling Stockholders and received by the
Underwriters as underwriting commissions. The relative fault of the Company,
the Selling Stockholders and the Underwriters shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation and/or warranty relates
to information supplied by the Company, the Selling Stockholders or the
Underwriters 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 subparagraph (d) of this Section 11, any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
-19-
The provisions set forth in subparagraph (d) of this Section 11 with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this subparagraph (e); provided, however, that
no additional notice shall be required with respect to any action for which
notice has been given under subparagraph (d) for purposes of indemnification.
The Company, the Selling Stockholders and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 11 were
determined solely 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 paragraph.
Notwithstanding the provisions of this Section 11, no Underwriter shall be
required to contribute any amount in excess of the amount of the total
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 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 11 are several in proportion to their
respective underwriting commitments and not joint.
(f) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 11(a), 11(b) and
11(c) hereof, including the amounts of any requested reimbursement payments and
the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 11(a), 11(b) and
11(c) hereof and would not resolve the ultimate propriety or enforceability of
the obligation to reimburse expenses which is created by the provisions of such
Sections 11(a), 11(b) and 11(c) hereof.
(g) The Company and each of the Underwriters agrees with each of the
Insider Selling Stockholders that any claim of such Underwriter against such
Insider Selling Stockholder for indemnification, reimbursement or advancement
of expenses pursuant to Section 11(a) hereof or breach of any representation or
warranty in Section 2 hereof shall first be sought by such Underwriter to be
satisfied in full by the Company and, subject to the limitation on the
aggregate liability of the Insider Selling Stockholders set forth in Section
11(h), shall be satisfied by the Insider Selling Stockholders only to the
extent that such claim has not been satisfied in full by the Company within the
sixty (60) day period following the date requested for payment in accordance
with the terms of this Agreement.
(h) In no event shall the aggregate liability of any Selling
Stockholder under this Agreement for indemnification, contribution,
reimbursement of expenses and breach of any representation or warranty of such
Selling Stockholder or the Company exceed the proceeds received by such Selling
Stockholder with respect to the Common Shares sold to the Underwriters
hereunder, provided, however, that with respect to the Insider Selling
Stockholder listed on Schedule D hereto, the aggregate liability of such
Insider Selling Stockholder under this Agreement for indemnification,
contribution or reimbursement of expenses pursuant to Section 11(a) hereof and
breach of any representation or warranty of such Insider Selling Stockholder in
Section 2 hereof shall not exceed fifty percent (50%) of the proceeds received
by such Insider Selling Stockholder with respect to the Common Shares sold to
the Underwriters hereunder.
(i) The Company and the Selling Stockholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to their respective amounts of such liability for which they each
shall be responsible.
(j) With respect to the Voting Trust Agreement dated February 24,
1994, as amended (the "Voting Trust"), the Trustees (as defined in the Voting
Trust), on behalf of themselves and each of the Holders (as defined in the
Voting Trust), agree with the Underwriters that in the event the Voting Trust
is amended, terminated or modified in a way that adversely affects the ability
of the Underwriters to enforce their rights against the Voting Trust as an
Insider Selling Stockholder or Selling Stockholder hereunder, then the
Underwriters shall be entitled to proceed against the Holders (as defined in
the Voting Trust) with respect to such rights pro rata based on the relative
interest which each such Holder has in the Voting Trust as of the date hereof.
Notwithstanding the foregoing, the Trustees, the Holders and the Voting Trust
(each as defined in the Voting Trust) may agree, as among themselves and
without limiting the rights of the Underwriters under this Agreement, as to
their respective amounts of such liability through which they shall each be
responsible.
-20-
SECTION 12
DEFAULT OF UNDERWRITERS
It shall be a condition to this Agreement and the obligation of the
Company and the Selling Stockholders to sell and deliver the Common Shares
hereunder, and of each Underwriter to purchase the Common Shares in the manner
as described herein, that, except as hereinafter in this paragraph provided,
each of the Underwriters shall purchase and pay for all the Common Shares
agreed to be purchased by such Underwriter hereunder upon tender to the
Underwriters of all such shares in accordance with the terms hereof. If any
Underwriter or Underwriters default in their obligations to purchase Common
Shares hereunder on either the First or Second Closing Date and the aggregate
number of Common Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase on such Closing Date does not exceed 10% of the
total number of Common Shares which the Underwriters are obligated to purchase
on such Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Common Shares which such defaulting Underwriters agreed but failed to
purchase on such Closing Date. If any Underwriter or Underwriters so default
and the aggregate number of Common Shares with respect to which such default
occurs is more than the above percentage and arrangements satisfactory to the
Underwriters and the Company for the purchase of such Common Shares by other
persons ore not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Company or the Selling Stockholders except for the expenses to be paid by
the Company and the Selling Stockholders pursuant to Section 7 hereof and
except to the extent provided in Section 11 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties,
the Underwriters or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days
in order that the necessary changes in the Registration Statement, Prospectus
and any other documents, as well as any other arrangements, may be effected.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve
a defaulting Underwriter from liability for its default.
SECTION 13
EFFECTIVE DATE
This Agreement shall become effective immediately as to Sections 7, 9,
11, 14 and 16 and, as to all other provisions, (i) if at the time of execution
of this Agreement the Registration Statement has not become effective, at 2:00
P.M., California time, on the first full business day following the
effectiveness of the Registration Statement, or (ii) if at the time of
execution of this Agreement the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the
Company or by release of any of the Common Shares for sale to the public. For
the purposes of this Section 13, the Common Shares shall be deemed to have been
so released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising Underwriters that the Common Shares are released for public offering,
or (ii) offering the Common Shares for sale to securities dealers, whichever
may occur first.
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SECTION 14
TERMINATION
Without limiting the right to terminate this Agreement pursuant to any
other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Stockholders or by you by notice to the Company and the Selling
Stockholders at any time prior to the time this Agreement shall become
effective as to all its provisions, and any such termination shall be without
liability on the part of the Company or the Selling Stockholders to any
Underwriter (except for the expenses to be paid or reimbursed by the Company
and the Selling Stockholders pursuant to Sections 7 and 9 hereof and except to
the extent provided in Section 11 hereof) or of any Underwriter to the Company
or the Selling Stockholders (except to the extent provided in Section 11
hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on either such
Exchange or in the over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or California
authorities, (ii) if an outbreak of major hostilities or other national or
international calamity or any substantial change in political, financial or
economic conditions shall have occurred or shall have accelerated or escalated
to such an extent, as, in the judgment of the Underwriters, to affect adversely
the marketability of the Common Shares, (iii) if any adverse event shall have
occurred or shall exist which makes untrue or incorrect in any material respect
any statement or information contained in the Registration Statement or
Prospectus or which is not reflected in the Registration Statement or
Prospectus but should be reflected therein in order to make the statements or
information contained therein not misleading in any material respect, or (iv)
if there shall be any action, suit or proceeding pending or threatened, or
there shall have been any development or prospective development involving
particularly the business or properties or securities of the Company or any of
its subsidiaries or the transactions contemplated by this Agreement, which, in
the reasonable judgment of the Underwriters, may materially and adversely
affect the Company's business or earnings and makes it impracticable or
inadvisable to offer or sell the Common Shares. Any termination pursuant to
this subsection (b) shall be without liability on the part of any Underwriter
to the Company or the Selling Stockholders or on the part of the Company or the
Selling Stockholders to any Underwriter (except for expenses to be paid or
reimbursed by the Company and the Selling Stockholders pursuant to Sections 7
and 9 hereof and except to the extent provided in Section 11 hereof).
(c) This Agreement shall also terminate at 5:00 P.M., California Time,
on the tenth full business day after the Registration Statement shall have
become effective if the initial public offering price of the Common Shares
shall not then as yet have been determined as provided in Section 5 hereof.
Any termination pursuant to this subsection (c) shall be without liability on
the part of any Underwriter to the Company or the Selling Stockholders or on
the part of the Company or the Selling Stockholders to any Underwriter (except
for expenses to be paid or reimbursed by the Company and the Selling
Stockholders pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof).
SECTION 15
FAILURE OF THE SELLING STOCKHOLDERS TO SELL AND DELIVER
If one or more of the Selling Stockholders shall fail to sell and
deliver to the Underwriters the Common Shares to be sold and delivered by such
Selling Stockholders at the First Closing Date under the terms of this
Agreement, then the Underwriters may at their option, by written notice from
you to the Company and the Selling Stockholders, either (i) terminate this
Agreement without any liability on the part of any Underwriter or, except as
provided in Sections 7, 9 and 11 hereof, the Company or the Selling
Stockholders, or (ii) purchase the shares which the Company and other Selling
Stockholders have agreed to sell and deliver in accordance with the terms
hereof. In the event of a failure by one or more of the Selling Stockholders
to sell and deliver as referred to in this Section, either you or the Company
shall have the right to postpone the Closing Date for a
-22-
period not exceeding seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected.
SECTION 16
REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY
The respective indemnities, agreements, representations, warranties and
other statements of the Company, of its officers, of the Selling Stockholders
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 Stockholders,
as the case may be, and will survive delivery of and payment for the Common
Shares sold hereunder and any termination of this Agreement.
SECTION 17
NOTICES
All communications hereunder shall be in writing and, if sent to the
Underwriters shall be mailed, delivered or telegraphed and confirmed to you at
600 Montgomery Street, San Francisco, California 94111, Attention: J. Sanford
Miller, with a copy to Wilson, Sonsini, Goodrich & Rosati, P.C., 650 Page Mill
Road, Palo Alto, California 94304, Attention: Barry E. Taylor; and if sent to
the Company or the Selling Stockholders shall be mailed, delivered or
telegraphed and confirmed to the Company at 101 Kendall Point Drive, Oswego,
Illinois, 60543, Attention: Gary F. Seamans, with a copy to McDermott, Will and
Emery, 227 West Monroe Street, Chicago, Illinois, 60606, Attention: William J.
Quinlan, Jr. The Company, the Selling Stockholders or you may change the
address for receipt of communications hereunder by giving notice to the others.
SECTION 18
SUCCESSORS
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 12
hereof, and to the benefit of the officers and directors and controlling
persons referred to in Section 11, and in each case their respective
successors, personal representatives and assigns, and no other person will have
any right or obligation hereunder. No such assignment shall relieve any party
of its obligations hereunder. The term "successors" shall not include any
purchaser of the Common Shares as such from any of the Underwriters merely by
reason of such purchase.
SECTION 19
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.
-23-
SECTION 20
APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with the
internal laws (and not the laws pertaining to conflicts of laws) of the State of
California.
SECTION 21
GENERAL
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 several counterparts, each one of
which shall be an original, and all of which shall constitute one and the same
document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company, the Selling Stockholders and
you.
Any person executing and delivering this Agreement as Attorney-in-fact
for the Selling Stockholders represents by so doing that he has been duly
appointed as Attorney-in-fact by such Selling Stockholder pursuant to a validly
existing and binding Power of Attorney which authorizes such Attorney-in-fact
to take such action. Without limiting the foregoing, such Attorney-in-fact by
his execution hereof represents that he has been duly appointed as
Attorney-in-fact pursuant to a validly existing and binding Power of Attorney
which authorizes such Attorney-in-fact to act on behalf of the Holders (as
defined in the Voting Trust) as contemplated by Section 11(j) hereof and on
behalf of the grantor or grantors of any Selling Stockholder that is a
revocable trust as contemplated by Section 3(c) hereof. Any action taken under
this Agreement by any of the Attorneys-in-fact will be binding on all the
Selling Stockholders.
-24-
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon
it will become a binding agreement among the Company, the Selling Stockholders
and the several Underwriters including you, all in accordance with its terms.
Very truly yours,
WESTELL TECHNOLOGIES, INC.
By:
--------------------------------
Title:
-----------------------------
SELLING STOCKHOLDERS
By:
--------------------------------
(Attorney-in-fact)
By:
--------------------------------
(Attorney-in-fact)
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
MONTGOMERY SECURITIES
COWEN & COMPANY
PUNK, ZIEGEL & KNOELL
By: MONTGOMERY SECURITIES
By:
-----------------------
Partner
-25-
SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
- ------------------------------------------------------------------- ------------------------------------------------------
Montgomery Securities. . . . . . . . . . . . . . . . . . . . . . . .
Cowen & Company. . . . . . . . . . . . . . . . . . . . . . . . . . .
Punk, Ziegel & Knoell. . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ---------------
2,540,000
===============
A-1
SCHEDULE B
Number of
Optional
Number of Firm Common Shares
Common Shares to be Sold
to be Sold by Selling by Selling
Name of Selling Stockholder Stockholders Stockholders
- ------------------------------------------------------------------- ---------------------- -------------------
Stefan D. Abrams, as Trustee of the Stefan D. Abrams
1996 Charitable Remainder Trust . . . . . . . . . . . . . . . . . . 25,000 10,000
Stephen J. Hawrysz . . . . . . . . . . . . . . . . . . . . . . . . . 22,000 1,819
Curtis L. Benton, as Trustee of the Curtis L. Benton
1991 Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,832 40,916
Curtis H. Benton, as Trustee of the Curtis H. Benton
Trust U/A Benton Family 1994 Trust. . . . . . . . . . . . . . . . . 7,830 3,915
Lorinda L. Benton, as Trustee of the Lorinda L. Benton
Trust U/A Benton Family 1994 Trust. . . . . . . . . . . . . . . . . 7,830 3,915
Michael A. Brunner . . . . . . . . . . . . . . . . . . . . . . . . . 12,180 6,090
Robert D. Faw. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,050 6,525
Robert H. Gaynor, Jr.. . . . . . . . . . . . . . . . . . . . . . . . 3,926 -0-
Robert Gaynor, Jr., as Trustee of the Steven
Robert Gaynor Trust. . . . . . . . . . . . . . . . . . . . . . . . . 1,566 -0-
Ronald Koval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 -0-
Michael F. Lathrope. . . . . . . . . . . . . . . . . . . . . . . . . 67,628 33,814
J. William Nelson. . . . . . . . . . . . . . . . . . . . . . . . . . 32,886 16,443
Gary F. Seamans, as Trustee of the James W. Nelson
Trust U/A Nelson Family 1994 Trust. . . . . . . . . . . . . . . . . 6,525 3,262
Gary F. Seamans, as Trustee of the Michael J. Nelson
Trust U/A Nelson Family 1994 Trust. . . . . . . . . . . . . . . . . 6,525 3,262
William V. Rodey, Jr.. . . . . . . . . . . . . . . . . . . . . . . . 4,504 -0-
Gary F. Seamans, as Trustee of the Gary F.
Seamans 1991 Trust . . . . . . . . . . . . . . . . . . . . . . . . . 162,798 81,399
Melvin J. Simon, as Trustee of the Shawn F. Seamans
1993 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,100 13,050
Ormand J. Wade . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,962 -0-
B-1
Number of
Optional
Number of Firm Common Shares
Common Shares to be Sold
to be Sold by Selling by Selling
Name of Selling Stockholder Stockholders Stockholders
- --------------------------------------------------------------------------------- --------------------- -------------
Robert C. Penny III and Melvin J. Simon, as Voting Trustees under the 191,328 -0-
Electronic Information Technologies, Inc. Voting Trust Agreement dated
February 23, 1994, as amended . . . . . . . . . . . . . . . . . . . . . . . . . . .
Melvin J. Simon, as Trustee under the Trust Agreement dated October 19, 65,372 1,590
1984 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Robert C. Penny III, as Trustee under the Trust Agreement dated 44,768 -0-
October 31, 1980 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Florence R. Penny, Barbara J. Pruitt and Marlene D. Foskett as Trustees 5,350 -0-
of the Robert C. Penny Trust No. 2 dated December 30, 1974. . . . . . . . . . . . .
Natalie K. Simon, as Trustee of the Sheri A. Simon Gift Trust Agreement 13,050 -0-
dated December 20, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Natalie K. Simon, as Trustee of the Stacy L. Simon Gift Trust Agreement 13,050 -0-
dated December 20, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Melvin J. Simon, as Trustee of the Trust for Robert C. Penny III under 43,540 -0-
terms of Florence R. Penny Children's Trust . . . . . . . . . . . . . . . . . . . .
-------- -------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . 875,000 226,000
======== =======
*In addition, the Company will sell up to 155,000 Optional Common Shares.
B-2
SCHEDULE C
INSIDER SELLING STOCKHOLDERS
Curtis L. Benton 1991 Trust
Robert D. Faw
Michael F. Lathrope
J. William Nelson
Robert C. Penny Trust No. 2 dated December 30, 1974
Melvin J. Simon, as Trustee under the Trust Agreement dated October 19, 1984
Robert C. Penny III, as Trustee under the Trust Agreement dated October 31, 1980
Trust for Robert C. Penny III under terms of Florence R. Penny Children's Trust
Electronic Information Technologies, Inc. Voting Trust Agreement dated
February 23, 1994, as amended
Gary F. Seamans 1991 Trust
Stephen J. Hawrysz
C-1
SCHEDULE D
INSIDER SELLING STOCKHOLDER LIMITED PURSUANT TO SECTION 11(h)
Electronic Information Technologies, Inc.
Voting Trust Agreement dated February 23, 1994, as amended
D-1