<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 1996.
REGISTRATION NO. 333-04309
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
OPTIKA IMAGING SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 7372 84-1345326
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
----------------
5755 MARK DABLING BOULEVARD, SUITE 100
COLORADO SPRINGS, COLORADO 80919
(719) 548-9800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
MARK K. RUPORT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
5755 MARK DABLING BOULEVARD, SUITE 100
COLORADO SPRINGS, COLORADO 80919
(719) 548-9800
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
WARREN T. LAZAROW, ESQ. DOUGLAS R. NEWKIRK, ESQ.
JEREMY W. MAKARECHIAN, ESQ. SACHNOFF & WEAVER, LTD.
BROBECK, PHLEGER & HARRISON LLP 30 SOUTH WACKER DRIVE, 29TH FLOOR
TWO EMBARCADERO PLACE, 2200 GENG ROAD CHICAGO, ILLINOIS 60606
PALO ALTO, CALIFORNIA 94303 (312) 207-1000
(415) 424-0160
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES
AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates
except the SEC registration fee, the NASD filing fee and the Nasdaq National
Market listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 12,650
NASD filing fee.................................................. 4,169
Nasdaq National Market listing fee............................... 21,675
Printing and engraving expenses.................................. 123,000
Legal fees and expenses.......................................... 400,000
Accounting fees and expenses..................................... 100,000
Blue sky filing fees and expenses................................ 5,000
Registrar and transfer agent fees................................ 5,000
Officers and directors liability insurance premiums.............. 323,950
Miscellaneous fees and expenses.................................. 4,556
----------
Total.......................................................... $1,000,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). The Registrant's Bylaws provide for
mandatory indemnification of its directors and officers and permissible
indemnification of employees and other agents to the maximum extent permitted
by the Delaware General Corporation Law. The Registrant's Amended and Restated
Certificate of Incorporation provides that, pursuant to Delaware law, its
directors shall not be liable for monetary damages for breach of the
directors' fiduciary duty as directors to the Registrant and its stockholders.
This provision in the Certificate of Incorporation does not eliminate the
directors' fiduciary duty, and in appropriate circumstances equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Registrant for
acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for actions leading to improper personal benefit to
the director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws. The Registrant will
enter into Indemnification Agreements with its officers and directors, a form
of which is attached as Exhibit 10.1 hereto and incorporated herein by
reference. The Indemnification Agreements provide the Registrant's officers
and directors with further indemnification to the maximum extent permitted by
the Delaware General Corporation Law. Reference is also made to Section 7 of
the Underwriting Agreement contained in Exhibit 1.1 hereto, indemnifying
officers and directors of the Registrant against certain liabilities, and
Section 7 of the Amended and Restated Registration Agreement contained in
Exhibit 4.3 hereto, indemnifying certain of the Registrant's stockholders,
including controlling stockholders, and the officers and directors, against
certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The Registrant has issued and sold the following securities within the past
three (3) years (which have been adjusted to reflect the Company's four-for-
one forward stock split effected on November 22, 1994):
II-1
<PAGE>
1. From July 1990 through June 30, 1996, the Registrant granted options
to purchase 1,981,370 shares of Common Stock (net of expired, exercised and
cancelled options) to various service providers to the Registrant under its
1994 Stock Option/Stock Issuance Plan and related predecessor plans with
exercise prices ranging from $.75 per share to $7.50 per share, including
outstanding options assumed by the Company in an acquisition, held by three
individuals.
2. On January 31, 1994, the Registrant issued 272,400 shares of its
Common Stock to a group of five individuals in exchange for all of the
outstanding capital stock of TEAMWorks Technologies, Inc., a Massachusetts
corporation.
3. On December 17, 1993, the Registrant issued and sold 501,440 shares of
Series B Preferred Stock to Frontenac VI Limited Partnership for aggregate
consideration of $1,999,993.
4. On March 18, 1994, the Registrant issued and sold 250,720 shares of
Series B Preferred Stock to JMI Equity Fund, L.P., for aggregate
consideration of $999,997.
5. On November 1, 1995, the Registrant issued warrants to purchase 95,000
shares of its Common Stock to two individuals in settlement of litigation.
6. On November 22, 1995, the Registrant issued and sold 294,118 shares of
Series C Preferred Stock to Frontenac VI Limited Partnership and 147,069
shares of Series C Preferred Stock to JMI Equity Fund, L.P. for aggregate
consideration of $1,500,002.
7. On November 30, 1995, the Registrant issued 166,485 shares of its
Common Stock in exchange for substantially all of the assets of IPRS Asia
(S) Pte Ltd., a Singapore corporation, and Intuit Development Ltd., a Hong
Kong corporation.
8. In July 1996, the Registrant's predecessor California corporation will
be reincorporated in Delaware by way of a merger with and into a Delaware
corporation, pursuant to which one share of the Common Stock of the
Delaware corporation will be issued for each share of the Common Stock of
the California corporation, and one share of Preferred Stock of the
Delaware corporation will be issued for each share of Preferred Stock of
the California corporation, each share of the Preferred Stock of the
Delaware corporation being of the same series and having identical rights,
preferences and privileges as the share of Preferred Stock of the
California corporation which it replaces.
The issuances of the above securities were deemed exempt from registration
under the Securities Act in reliance upon Section 4(2) of the Securities Act
as transactions by an issuer not involving any public offering. In addition,
certain issuances described in Item 15(1) were deemed to be exempt from
registration under the Securities Act in reliance upon Rule 701 promulgated
under the Securities Act. The recipients of securities in each such
transaction represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the share
certificates issued in such transactions. All recipients had adequate access,
through their relationships with the Registrant, to information about the
Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.*
2.1 Form of Agreement and Plan of Merger of Optika Imaging Systems, Inc.,
a California corporation, and the Registrant.**
2.2 Agreement and Plan of Reorganization, dated January 31, 1994, by and
between the Registrant, TEAMWorks and certain other parties named
therein.**
2.3 Asset Purchase Agreement, dated November 13, 1995, by and among the
Registrant, Optika Asia, Inc., IPRS Asia (S) Pte Ltd., and other
entities named therein.**
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.1 Certificate of Incorporation of the Registrant.**
3.2 Form of First Amended and Restated Certificate of Incorporation of the
Registrant.**
3.3 Form of Second Amended and Restated Certificate of Incorporation of
the Registrant.**
3.4 Bylaws of the Registrant.**
4.1 Specimen Common Stock certificate.**
4.2 Amended and Restated Shareholders' Agreement, dated November 22, 1995,
by and among the Registrant and the entities named therein.**
4.3 Amended and Restated Registration Agreement, dated November 22, 1995,
by and among the Registrant and the entities named therein, including
the First Amendment thereto.**
4.4 Form of Warrant to purchase Common Stock dated November 1, 1995.**
5.1 Opinion of Brobeck, Phleger & Harrison LLP.**
10.1 Form of Indemnification Agreement between the Registrant and each of
its directors and officers.**
10.2 The Registrant's 1994 Stock Option/Stock Issuance Plan, as restated
and amended.**
10.3 The Registrant's 1996 Management Incentive Compensation Plan.**
10.4 The Registrant's Employee Stock Purchase Plan.**
10.5 Loan and Security Agreement, dated June 16, 1995, by and between the
Registrant and Silicon Valley Bank, including Amendments No. 1 and 2
thereto.**
10.6 Office Lease Agreement, dated December 1, 1992, by and between the
Registrant and Lincoln National, regarding the space located at 5755
Mark Dabling Boulevard, Colorado Springs, Colorado, and the First
Amendment thereto, dated February 8, 1994.**
10.7 Employment Agreement by and between the Registrant and Mr. Mark K.
Ruport, effective February 18, 1995.**
10.8 Employment Agreement by and between the Registrant and Mr. Steven M.
Johnson, effective May 15, 1996.**
10.9 Employment Agreement by and between the Registrant and Mr. Marc Fey,
effective May 4, 1994.**
10.10 Form of Business Solutions Partner (Reseller) Agreement.**
10.11 Form of FilePower Suite Software License Agreement.**
10.12 Technology Transfer Agreement, dated February 20, 1992, by and between
the Registrant, Mr. Paul Carter and Mr. Malcolm Thomson.**
10.13 Commitment Letter for Line of Credit with Silicon Valley Bank.**
11.1 Statement re: Computation of Pro Forma Net Income (Loss) per Common
Share (Unaudited)**
21.1 Subsidiaries of the Registrant.**
23.1 Consent of Price Waterhouse LLP, Independent Accountants.**
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
24.1 Power of Attorney.**
24.2 Power of Attorney for Robert L. Gett.**
24.7 Financial Data Schedule.**
</TABLE>
- --------
* Filed herewith.
** Previously filed.
II-3
<PAGE>
(b) Financial Statement Schedules
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware General Corporation Law, the Certificate
of Incorporation or the Bylaws of the Registrant, Indemnification Agreements
entered into between the Registrant and its officers and directors, the
Underwriting Agreement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered hereunder, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The Registrant hereby undertakes that:
(1) for purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 2 TO REGISTRATION STATEMENT TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF COLORADO SPRINGS, STATE OF COLORADO, ON THIS 8TH DAY OF JULY, 1996.
Optika Imaging Systems, Inc.
BY: /s/ Steven M. Johnson
---------------------------------
STEVEN M. JOHNSON
VICE PRESIDENT--FINANCE, CHIEF FINANCIAL OFFICER
AND SECRETARY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 2 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Mark K. Ruport* President, Chief July 8, 1996
- ------------------------------------- Executive Officer
MARK K. RUPORT and Chairman of the
Board of Directors
(Principal
Executive Officer
/s/ Steven M. Johnson Vice President-- July 8, 1996
- ------------------------------------- Finance, Chief
STEVEN M. JOHNSON Financial Officer
and Secretary
(Principal
Financial and
Accounting Officer)
/s/ Paul Carter* Director July 8, 1996
- -------------------------------------
PAUL CARTER
/s/ Malcolm D. Thomson* Director July 8, 1996
- -------------------------------------
MALCOLM D. THOMSON
/s/ Richard A. Bass* Director July 8, 1996
- -------------------------------------
RICHARD A. BASS
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ James E. Crawford III* Director July 8, 1996
- -------------------------------------
JAMES E. CRAWFORD III
/s/ Harry S. Gruner* Director July 8, 1996
- -------------------------------------
HARRY S. GRUNER
/s/ Graham O. King* Director July 8, 1996
- -------------------------------------
GRAHAM O. KING
/s/ Robert L. Gett* Director July 8, 1996
- -------------------------------------
ROBERT L. GETT
/s/ Steven M. Johnson
*By: ________________________________
STEVEN M. JOHNSON
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
2,900,000 Shares/1/
OPTIKA IMAGING SYSTEMS, INC.
Common Stock
UNDERWRITING AGREEMENT
July __, 1996
Volpe, Welty & Company
Piper Jaffray Inc.
Needham & Co., Inc.
As Representatives of the several Underwriters
c/o Volpe, Welty & Company
One Maritime Plaza, 11th Floor
San Francisco, California 94111
Dear Sirs and Madams:
Optika Imaging Systems, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell 2,200,000 shares of its authorized but unissued
Common Stock, $.0001 par value (the "COMMON STOCK"), and the stockholders of the
Company named in Schedule II hereto (collectively, the "SELLING
SECURITYHOLDERS") propose to sell an aggregate of 700,000 shares of Common Stock
of the Company (the "FIRM SHARES"). The Company and certain of the Selling
Securityholders propose to grant to the Underwriters (as defined below) an
option to purchase up to 419,000 and 16,000 additional shares of Common Stock,
respectively (the "OPTIONAL SHARES" and, with the Firm Shares, collectively, the
"SHARES"). The Common Stock is more fully described in the Registration
Statement and the Prospectus hereinafter mentioned.
The Company and the Selling Securityholders severally hereby confirm the
agreements made with respect to the purchase of the shares by the several
underwriters, for whom you are acting, named in Schedule I hereto (collectively,
the "UNDERWRITERS," which term shall also include any underwriter purchasing
Stock pursuant to Section hereof). You represent and warrant that you have
been authorized by each of the other Underwriters to enter into this Agreement
on its behalf and to act for it in the manner herein provided.
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the several Underwriters as of the date hereof
and as of each Closing Date (as defined below) that:
- --------
/1/ Plus an option to purchase from the Company up to 435,000 additional shares
to cover over-allotments.
<PAGE>
(a) The Company has filed with the Securities and Exchange Commission
(the "COMMISSION") a registration statement on Form S-1 (No. 333-04309)
including the related preliminary prospectus, for the registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT") of the Shares. Copies
of such registration statement and of each amendment thereto, if any, including
the related preliminary prospectus (meeting the requirements of Rule 430A of the
rules and regulations of the Commission promulgated pursuant to the Securities
Act (the "RULES AND REGULATIONS")) heretofore filed by the Company with the
Commission have been delivered to you.
The term Registration Statement as used in this agreement shall mean such
registration statement, including all exhibits and financial statements, all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations with respect to the shares (a "RULE 462(b) REGISTRATION STATEMENT"),
and, in the event of any amendment thereto after the effective date of such
registration statement (the "EFFECTIVE DATE"), shall also mean (from and after
the effectiveness of such amendment) such registration statement as so amended
(including any Rule 462(b) registration statement). The term Prospectus as used
in this Agreement shall mean the prospectus relating to the Shares first filed
with the Commission pursuant to Rule 424(b) and Rule 430A (or if no such filing
is required, as included in the Registration Statement) and, in the event of any
supplement or amendment to such prospectus after the Effective Date, shall also
mean (from and after the filing with the Commission of such supplement or the
effectiveness of such amendment) such prospectus as so supplemented or amended.
The term Preliminary Prospectus as used in this Agreement shall mean each
preliminary prospectus included in such registration statement prior to the time
it becomes effective.
The Registration Statement has been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Securities Act.
(b) Each of the Company and its subsidiaries has been duly organized and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has full corporate power and authority to own
or lease its properties and conduct its business as described in the
Registration Statement and the Prospectus and as being conducted, and is duly
qualified as a foreign corporation and in good standing in each jurisdiction in
which the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary (except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, such an effect being referred to
as a "MATERIAL ADVERSE EFFECT").
(c) The only subsidiaries (as defined in the Rules and Regulations) of
the Company are listed in Exhibit 21.1 to the Registration Statement. The
Company owns all of the outstanding capital stock of its subsidiaries free and
clear of all claims, liens, charges and encumbrances, except as described in the
Prospectus and except for any claims, liens, charges or encumbrances that would
not have a Material Adverse Effect. The Company and each of its subsidiaries are
in possession of and operating in compliance with all material authorizations,
licenses, permits, consents, certificates and orders material to the conduct of
their respective businesses as described in the Prospectus, all of which are
valid and in full force and effect, except as would not have a Material Adverse
Effect.
-2-
<PAGE>
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any materially
adverse change in the business, properties, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, other than as set
forth in the Registration Statement and the Prospectus, and since such dates,
except in the ordinary course of business, neither the Company nor any of its
subsidiaries has entered into any material transaction not referred to in the
Registration Statement and the Prospectus.
(e) The Registration Statement and the Prospectus comply, and on the
Closing Date (as hereinafter defined) and any later date on which Optional
Shares are to be purchased, the Prospectus will comply, in all material
respects, with the provisions of the Securities Act and the Rules and
Regulations of the Commission thereunder; on the Effective Date, the
Registration Statement did not contain any untrue statement of a material fact
and did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and, on the
Effective Date the Prospectus did not and, on the Closing Date and any later
date on which Optional Shares are to be purchased, will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that none of the
representations and warranties in this subparagraph (iii) shall apply to
statements in, or omissions from, the Registration Statement or the Prospectus
made in reliance upon and in conformity with information herein or otherwise
furnished in writing to the Company by or on behalf of the Underwriters,
directly or through the Representatives, for use in the Registration Statement
or the Prospectus.
(f) The Company has authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus. The issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and were not issued in violation of or
subject to any preemptive rights or other rights that were not waived to
subscribe for or purchase securities. 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 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 any outstanding 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 (other than such rights as shall terminate upon completion of the
offering contemplated hereby). The Company's stock option, stock bonus and other
stock plans or arrangements (the "OPTION PLANS"), and the options or other
rights granted and exercised thereunder, set forth in the Prospectus conform in
all material respects to the descriptions thereof in the Prospectus.
(g) The Shares are duly authorized, are (or, in the case of Shares to be
sold by the Company, will be, when issued and sold to the Underwriters as
provided herein) validly issued, fully paid and nonassessable and the Shares to
be sold by the Company will be sold free and clear of any preemptive right, co-
sale right, registration right, right of first refusal or other similar right to
subscribe for or purchase securities of the Company (other than such rights as
shall terminate immediately prior to the closing of the offering contemplated
hereby) and conform in all material respects to the description thereof in the
Prospectus. No further approval or authority of the stockholders or the Board
of Directors of the Company will be required under the Company's Certificate of
Incorporation or Delaware law for the
-3-
<PAGE>
transfer and sale of the Shares to be sold by the Selling Securityholders or the
issuance and sale of the Shares to be sold by the Company as contemplated
herein.
(h) The Shares will be authorized for listing on The Nasdaq National
Market, subject to official notice of issuance, which notice the Company has
provided as of the date of this Agreement.
(i) The Shares to be sold by the Company will be sold free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable interest,
and will conform to the description thereof contained in the Prospectus. No
preemptive right, exists with respect to the issuance and sale of the Shares by
the Company pursuant to this Agreement. No stockholder of the Company has any
right which has not been waived, or complied with, to require the Company to
register the sale of any shares owned by such stockholder under the Securities
Act in the public offering contemplated by this Agreement.
(j) The Company has the corporate 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 enforceable in accordance with its
terms, except as enforceability may be limited by general equitable principles
(whether considered at law or in equity), bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally and except as to those provisions relating to indemnity or
contribution for liabilities arising under federal and state securities laws.
The execution and delivery of, and performance under, this Agreement by the
Company and the consummation of the transactions contemplated hereby (i) will
not violate any provisions of the Certificate of Incorporation, Bylaws or other
organizational documents of the Company or any of its subsidiaries and (ii) will
not conflict with, result in a material breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a material
default under (A) any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument filed as an Exhibit to the
Registration Statement 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 their
respective properties may be bound or affected, or (B) any Colorado or Delaware
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, except for conflicts, breaches or violations which would not,
individually or in the aggregate, give rise to a Material Adverse Effect. No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body of the United States or the
states of Colorado or Delaware that has not already been obtained 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
Securities 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 NASD.
(k) The consolidated financial statements and schedules of the Company
and the related notes thereto included in the Registration Statement and the
Prospectus present fairly on a consolidated basis 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 cash flows 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
throughout the periods specified, as certified by the independent accountants
named in subsection 10(f). 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
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Consolidated Financial Information" fairly present the information set forth
therein on the basis stated in the Registration Statement.
(l) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The representations and warranties given by the Company and its
officers to its independent public accountants for the purpose of supporting the
letters referred to in Section are true and correct.
(m) Neither the Company nor any of its subsidiaries is (i) in violation
or default of any provision of its Certificate of Incorporation, Bylaws or other
organizational documents or (ii) 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, except such breaches
or defaults which would not give rise to a Material Adverse Effect; and there
does not exist any state of facts which, with notice or lapse of time or both
would constitute such a breach or default on the part of the Company and its
subsidiaries, taken as a whole.
(n) 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 Securities Act or by the Rules and Regulations which have not
been described or filed as required.
(o) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the knowledge of the
Company, threatened to which the Company or any of its subsidiaries is or, to
the knowledge of the Company, is threatened to be made a party or of which
property owned or leased by the Company or any of its subsidiaries is or, to the
knowledge of the Company, is threatened to be made the subject, which actions,
suits or proceedings could, individually or in the aggregate, prevent or
adversely affect the transactions contemplated by this Agreement or result in a
Material Adverse Effect; and no labor disturbance by the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the Company,
is imminent which could have a Material Adverse Effect. 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. Except as disclosed in the
Prospectus, there are no material legal or governmental actions, suits or
proceedings pending or, to the Company's knowledge, threatened against any
executive officers or directors of the Company.
(p) The Company or the applicable subsidiary owns 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 to the Company and its subsidiaries, taken as a whole, and do not
materially adversely affect the use made of such property by the Company or its
subsidiaries. The Company or the applicable subsidiary holds its leased
properties under valid and binding leases. Except as disclosed in the
Prospectus, and except where
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the failure to do so would not give rise to a Material Adverse Effect, the
Company owns or leases all such properties as are necessary to its operations as
now conducted or as proposed to be conducted.
(q) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) 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, (ii) the Company and its
subsidiaries have not paid or declared any dividends or other distributions with
respect to their respective capital stock and the Company and its subsidiaries
are not in default in the payment of principal or interest on any outstanding
debt obligations, (iii) there has not been any change in the capital stock of
the Company or its subsidiaries (other than upon the sale of the Shares
hereunder or upon the exercise of any options or warrants disclosed in the
Prospectus) and (iv) there has not been any material increase in the short- or
long-term debt of the Company and its subsidiaries.
(r) The Company and its subsidiaries are conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which they are conducting business, except where the failure to be so in
compliance would not have a Material Adverse Effect.
(s) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns, and all such tax returns are
complete and correct in all material respects, and the Company and its
subsidiaries have not failed to pay any taxes which were payable pursuant to
said returns or any assessments with respect thereto. The Company has no
knowledge of any tax deficiency which has been or is likely to be threatened or
asserted against the Company or its subsidiaries.
(t) The Company has not distributed, and will not distribute prior to
the later to occur of (i) completion of the distribution of the Shares or (ii)
the expiration of any time period within which a dealer is required under the
Securities Act or the Securities Exchange Act of 1934, as amended (the"EXCHANGE
ACT") to deliver a prospectus relating to the Shares, any offering material in
connection with the offering and sale of the Shares other than the Prospectus,
the Registration Statement and any other materials permitted by the Securities
Act and consented to by the Underwriters; provided, however, that nothing
contained herein is intended to prohibit the Company from making required or
permitted filings with the Commission pursuant to the Exchange Act.
(u) Each of the Company and its subsidiaries maintains insurance of the
types and in the amounts generally deemed adequate for their business, all of
which insurance is in full force and effect. The Company has not been refused
any insurance coverage sought or applied for, and the Company has no reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would give rise to a
Material Adverse Effect.
(v) Neither the Company nor any of its subsidiaries nor, to the best of
the Company's or the Selling Securityholders' knowledge, any of the employees or
agents of the Company or 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 foreign, 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 or
any jurisdiction thereof.
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<PAGE>
(w) 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 Shares.
(x) The Company has complied with all provisions of (S) 512.075 of the
Florida Statutes relating to issuers doing business with the government of Cuba.
(y) Except as specifically disclosed in the Prospectus, the Company and
its subsidiaries have sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals and governmental authorizations to conduct their
businesses as now conducted; the expiration of any trademarks, trade names,
patent rights, copyrights, licenses, approvals or governmental authorizations
would not have a Material Adverse Effect; except as set forth in the Prospectus,
the Company has no knowledge of any infringement by the Company or its
subsidiaries of trademark, trade name rights, patent rights, copyrights,
licenses, trade secret or other similar rights of others; and except as set
forth in the Prospectus, no claims have been made or are threatened against the
Company or its subsidiaries regarding trademark, trade name, patent, copyright,
license, trade secret or other infringement which could have a Material Adverse
Effect.
(z) Except as disclosed in the Prospectus, (i) the Company and its
subsidiaries are in compliance in all material respects with all rules, laws and
regulation relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("ENVIRONMENTAL LAWS")
which are applicable to their business, except for such non-compliance as does
not give rise to a Material Adverse Effect, (ii) neither the Company nor any of
its subsidiaries has received any notice from any governmental authority or
third party of an asserted claim under Environmental Laws and (iii) to the
knowledge of the Company, no property which is or has been owned, leased or
occupied by the Company or any of its subsidiaries has been designated as a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. (S) 9601, et
seq.), or otherwise designated as a contaminated site under applicable state or
local law.
(aa) The Company is not an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended (the "1940 ACT").
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SECURITYHOLDERS.
Each of the Selling Securityholders, severally and not jointly, represents
and warrants to the several Underwriters as of the date hereof and as of each
Closing Date hereinafter mentioned that, as to himself or herself only:
(a) Such Selling Securityholder owns the Shares to be sold by such
Selling Securityholder hereunder, free and clear of all liens, encumbrances,
equities, security interests and claims whatsoever, with full right and
authority to deliver the same hereunder, subject, in the case of each Selling
Securityholder, to restrictions imposed by securities laws and the rights of
Boston EquiServe, as Custodian (the "CUSTODIAN"), and, assuming the Underwriters
are acquiring the Shares in good faith and without notice of any adverse claim,
upon the delivery of and payment for such Shares hereunder, the several
Underwriters will acquire the Shares free of any adverse claim arising in
respect of such Selling Securityholder.
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<PAGE>
(b) Certificates in negotiable form for the Shares to be sold by such
Selling Securityholder have been placed in custody under a Custody Agreement for
delivery under this Agreement with the Custodian.
(c) Each of Malcolm Thompson and Paul Carter (collectively, the
"Founders") has reviewed the Registration Statement and Prospectus and, although
neither of such Founders has independently verified the accuracy or completeness
of all the information contained therein, nothing has come to the actual
attention of either of such Founders that would lead such Founders to believe
that (i) on the Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading and (ii) on the Effective Date, the Prospectus contained and, on the
Closing Date and any later date on which Optional Shares are to be purchased
will contain, any untrue statement of a material fact or omitted or will omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(d) All representations and warranties of such Selling Securityholder in
the Custody Agreement are true and correct in all respects and do not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the information, in the light
of the circumstances under which they were made, not misleading. The
Registration Statement and Prospectus, insofar as they relate to such Selling
Securityholder, do not and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the information, in the light of the circumstances under which
they were made, not misleading. The sale of the Shares by such Selling
Securityholder pursuant hereto is not prompted by such Selling Securityholder's
knowledge of any material information concerning the Company or any subsidiary
which is not set forth in the Prospectus.
(e) Such Selling Securityholder has full power and authority to enter
into this Agreement and the Custody Agreement and perform the transactions
contemplated hereby and thereby. This Agreement and the Custody Agreement have
been duly authorized, executed and delivered by or on behalf of such Selling
Securityholder and the form of such Custody Agreement has been delivered to you.
(f) The making and performance of this Agreement and the Custody
Agreement and the consummation of the transactions contemplated hereby and
thereby will not result in a breach or violation by such Selling Securityholder
of any of the terms or provisions of, or constitute a default by such Selling
Securityholder 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 Securityholder is a party or by
which such Selling Securityholder 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 Securityholder or any of
its properties, except for breaches, violations or defaults which would not,
individually or in the aggregate, materially impair the Selling Securityholders
power and authority to comply with its obligations under this Agreement.
(g) Such Selling Securityholder has not taken and will not take,
directly or indirectly, any action designed to or that 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 Shares.
SECTION 3. PURCHASE OF THE SHARES BY THE UNDERWRITERS.
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<PAGE>
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
2,200,000 of the Firm Shares to the several Underwriters, each Selling
Securityholder agrees to sell to the several Underwriters the number of the Firm
Shares set forth in Schedule II opposite the name of such Selling
Securityholder, and each of the Underwriters agrees to purchase from the Company
and the Selling Securityholders the respective aggregate number of Firm Shares
set forth opposite its name in Schedule I. The price at which such Firm Shares
shall be sold by the Company and the Selling Securityholders and purchased by
the several Underwriters shall be $___ per share. The obligation of each
Underwriter to the Company and each of the Selling Securityholders shall be to
purchase from the Company and the Selling Securityholders that number of Firm
Shares which represents the same proportion of the total number of Firm Shares
to be sold by each of the Company and the Selling Securityholders pursuant to
this Agreement as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto represents of the total number of shares of the
Firm Shares to be purchased by all Underwriters pursuant to this Agreement, as
adjusted by you in such manner as you deem advisable to avoid fractional shares.
In making this Agreement, each Underwriter is contracting severally and not
jointly; except as provided in paragraphs (b) and (c) of this Section 3, the
agreement of each Underwriter is to purchase only the respective number of
shares of the Firm Shares specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 9 or 10 hereof) to purchase and
pay for the number of Shares agreed to be purchased by such Underwriter or
Underwriters, the Company or the Selling Securityholders shall immediately give
notice thereof to you, and the non-defaulting Underwriters shall have the right
within 24 hours after the receipt by you of such notice to purchase, or procure
one or more other Underwriters to purchase, in such proportions as may be agreed
upon between you and such purchasing Underwriter or Underwriters and upon the
terms herein set forth, all or any part of Shares which such defaulting
Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such shares
and portion, the number of Shares which each non-defaulting Underwriter is
otherwise obligated to purchase under this Agreement shall be automatically
increased on a pro rata basis to absorb the remaining shares and portion which
the defaulting Underwriter or Underwriters agreed to purchase; provided,
however, that the non-defaulting Underwriters shall not be obligated to purchase
the portion which the defaulting Underwriter or Underwriters agreed to purchase
if the aggregate number of such Shares exceeds 10% of the total number of Shares
which all Underwriters agreed to purchase hereunder. If the total number of
Shares which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company and the Selling Securityholders shall have the right, within 24 hours
next succeeding the 24-hour period above referred to, to make arrangements with
other underwriters or purchasers satisfactory to you for purchase of such Shares
and portion on the terms herein set forth. In any such case, either you or the
Company and the Selling Securityholders shall have the right to postpone the
Closing Date determined as provided in Section 5 hereof for not more than seven
business days after the date originally fixed as the Closing Date pursuant to
Section 5 in order that any necessary changes in the Registration Statement, the
Prospectus or any other documents or arrangements may be made. If neither the
non-defaulting Underwriters nor the Company and the Selling Securityholders
shall make arrangements within the 24-hour periods stated above for the purchase
of all of the Shares which the defaulting Underwriter or Underwriters agreed to
purchase hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company or the Selling
Securityholders to any non-defaulting Underwriter and without any liability on
the part of any non-defaulting Underwriter to the Company or the Selling
Securityholders.
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Nothing in this paragraph (b), and no action taken hereunder, shall relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
and the Selling Securityholders grant an option to the several Underwriters to
purchase, severally and not jointly, up to 419,000 and 16,000 Optional Shares
from the Company and the Selling Securityholders, in the respective amounts set
forth in column 3 on Schedule II, at the same price per share as the
Underwriters shall pay for the Firm Shares. Said option may be exercised only
to cover over-allotments in the sale of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time on or before the thirtieth day
after the date of this Agreement upon written or telegraphic notice by you to
the Company and the Selling Securityholders, setting forth the aggregate number
of Optional Shares as to which the several Underwriters are exercising the
option. Delivery of certificates for the Optional Shares, and payment therefor,
shall be made as provided in Section 5 hereof. The number of Optional Shares to
be purchased by each Underwriter shall be the same percentage of the total
number of Optional Shares to be purchased by the several Underwriters from each
Selling Securityholder as such Underwriter is purchasing of the Firm Shares, as
adjusted by you in such manner as you deem advisable to avoid fractional shares.
SECTION 4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of the
Shares to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information (insofar as such information relates to the
Underwriters) set forth in the last paragraph on the front cover page and under
the caption "Underwriting" in the Registration Statement, any Preliminary
Prospectus and the Prospectus relating to the Shares constitutes the only
information furnished by the Underwriters to the Company for inclusion in the
Registration Statement, any Preliminary Prospectus, and the Prospectus, and you
on behalf of the respective Underwriters represent and warrant to the Company
that the statements made therein are correct.
SECTION 5. DELIVERY OF AND PAYMENT FOR THE SHARES.
(a) Delivery of certificates for the Firm Shares and the Optional Shares
(if the option granted by Section 3(c) hereof shall have been exercised not
later than 8:00 A.M., Denver time, on the date two business days preceding the
Closing Date), and payment therefor, shall be made at the Denver, Colorado
office of Brobeck, Phleger & Harrison LLP, at 8:00 a.m., Denver time, on the
fourth business day after the date of this Agreement, or at such time on such
other day, not later than seven full business days after such fourth business
day, as shall be agreed upon in writing by the Company, the Selling
Securityholders and you. The date and hour of such delivery and payment (which
may be postponed as provided in Section 3(b) hereof) are herein called the
"CLOSING DATE."
(b) If the option granted by Section 3(c) hereof shall be exercised
after 8:00 a.m., Denver time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Optional Shares, and
payment therefor, shall be made at the Denver, Colorado office of Brobeck,
Phleger & Harrison LLP, at 8:00 a.m., Denver time, on the third business day
after the exercise of such option.
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(c) Payment for the shares purchased from the Company shall be made to
the Company or its order, and payment for the shares purchased from the Selling
Securityholders shall be made, in the discretion of the Underwriters, to them or
to the Custodian, for the account of the Selling Securityholders, in each case
by (i) one or more certified or official bank check or checks in next day funds
(and the Company and the Selling Securityholders agree not to deposit any such
check in the bank on which drawn until the day following the date of its
delivery to the Company or the Custodian, as the case may be) or (ii) federal
funds wire transfer. Such payment shall be made upon delivery of certificates
for the shares to you for the respective accounts of the several Underwriters
(including without limitation by "full-fast" electronic transfer by Depository
Trust Company) against receipt therefor signed by you. Certificates for the
shares to be delivered to you shall be registered in such name or names and
shall be in such denominations as you may request at least one business day
before the Closing Date, in the case of Firm Shares, and at least one business
day prior to the purchase thereof, in the case of the Optional Shares. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of agent of Volpe, Welty & Company's clearing
agent, Bear Sterns Securities Corp., on the business day prior to the Closing
Date or, in the case of the Optional Shares, by 3:00 p.m., New York time, on the
business day preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholders for shares to be purchased by any Underwriter
whose check shall not have been received by you on the Closing Date or any later
date on which Optional Shares are purchased for the account of such Underwriter.
Any such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.
SECTION 6. COVENANTS OF THE COMPANY AND THE SELLING SECURITYHOLDERS. Each
of the Company and the Selling Securityholders respectively covenants and agrees
as follows:
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A and
(ii) not file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished
with a copy or to which you shall have reasonably objected in writing or which
is not in compliance with the Securities Act or the Rules and Regulations.
(b) The Company will promptly notify each Underwriter in the event of
(i) the request by the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
shares for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company and
the Selling Securityholders will make every reasonable effort to prevent the
issuance of such a stop order and, if such an order shall at any time be issued,
to obtain the withdrawal thereof at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you a
signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each post-
effective amendment, if any, to the Registration Statement (together with, in
each case, all exhibits thereto unless previously furnished to you) and will
also deliver to you, for distribution to the
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Underwriters, a sufficient number of additional conformed copies of each of the
foregoing (but without exhibits) so that one copy of each may be distributed to
each Underwriter, (ii) as promptly as possible deliver to you and send to the
several Underwriters, at such office or offices as you may designate, as many
copies of the Prospectus as you may reasonably request, and (iii) thereafter
from time to time during the period in which a prospectus is required by law to
be delivered by an Underwriter or dealer, likewise send to the Underwriters as
many additional copies of the Prospectus and as many copies of any supplement to
the Prospectus and of any amended prospectus, filed by the Company with the
Commission, as you may reasonably request for the purposes contemplated by the
Securities Act.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the reasonable opinion
of counsel for the Company or of counsel for the Underwriters, to supplement or
amend the Prospectus in order to make the Prospectus not misleading in the light
of the circumstances existing at the time it is delivered to a purchaser of the
shares, the Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus so that the Prospectus as
so supplemented or amended will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time such
Prospectus is delivered to such purchaser, not misleading. If, after the initial
public offering of the shares by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the shares may be sold by the
several Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the shares in accordance with the
applicable provisions of the Securities Act and the applicable Rules and
Regulations for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the shares for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, in
keeping such qualifications in good standing under said securities or blue sky
laws; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. The Company will, from time
to time, prepare and file such statements, reports, and other documents as are
or may be required to continue such qualifications in effect for so long a
period as you may reasonably request for distribution of the shares.
(g) During a period of two years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to stockholders of
the Company and of all information, documents and reports filed with the
Commission (including the Report on Form SR required by Rule 463 of the
Commission under the
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Securities Act); provided, however, that the Company shall not be required to
furnish any information deemed confidential by the Company.
(h) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the Effective Date, the Company
will make generally available to its security holders an earnings statement in
accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.
(i) The Company agrees to pay all costs and expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all costs and reasonable expenses incident to
(i) the preparation, printing and filing with the Commission and the National
Association of Securities Dealers, Inc. ("NASD") of the Registration Statement,
any Preliminary Prospectus and the Prospectus, (ii) the furnishing to the
Underwriters and the persons designated by them of copies in reasonable
quantities of any Preliminary Prospectus and of the several documents required
by paragraph (c) of this Section 6 to be so furnished, (iii) the printing of
this Agreement and related documents delivered to the Underwriters, (iv) the
preparation, printing and filing of all supplements and amendments to the
Prospectus referred to in paragraph (d) of this Section 6, (v) the furnishing to
you and the Underwriters of the reports and information referred to in paragraph
(g) of this Section 6 and (vi) the printing and issuance of stock certificates,
including the transfer agent's fees. The Selling Securityholders will pay any
transfer taxes incident to the transfer to the Underwriters of the Shares being
sold by the Selling Securityholders.
(j) The Company agrees to reimburse you, for the account of the several
Underwriters, for blue sky fees and related disbursements (including counsel
fees not to exceed $5,000 and disbursements and cost of printing memoranda for
the Underwriters) paid by or for the account of the Underwriters or their
counsel in qualifying the shares under state securities or blue sky laws.
(k) The provisions of paragraphs (i) and (j) of this Section are
intended to relieve the Underwriters from the payment of the expenses and costs
which the Company and the Selling Securityholders hereby agree to pay and shall
not affect any agreement which the Company and the Selling Securityholders may
make, or may have made, for the sharing of any such expenses and costs.
(l) Each Selling Securityholder specifically agrees that the Shares
represented by the certificates so held in custody for such Selling
Securityholder are subject to the interests of the several Underwriters and the
Company, that the arrangements made by such Selling Securityholder for such
custody, including the Power of Attorney provided for in such Custody Agreement,
are to that extent irrevocable, and that the obligations of such Selling
Securityholder shall not be terminated by any act of such Selling Securityholder
or by operation of law, whether by the death or incapacity of such Selling
Securityholder (or, in the case of a Selling Securityholder that is not an
individual, the dissolution or liquidation of such Selling Securityholder) or
the occurrence of any other event; if any such death, incapacity, dissolution,
liquidation or other such event should occur before the delivery of such shares
of the shares hereunder, certificates for the Shares shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such death, incapacity, dissolution, liquidation or other event had not
occurred, regardless of whether the Custodian shall have received notice of
such death, incapacity, dissolution, liquidation or other event.
(m) The Company and each of the Selling Securityholders hereby agrees
that, without the prior written consent of Volpe, Welty & Company, the Company
or such Selling Securityholder, as the case may be, will not, for a period of
180 days following the date of the Prospectus (the "LOCK-UP PERIOD"),
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(i) offer, sell, contract to sell, make any short sale (including without
limitation short against the box), pledge, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any options to acquire shares of
Common Stock or securities convertible into or exchangeable or exercisable for
or any other rights to purchase or acquire Common Stock (including without
limitation, Common Stock of the Company underlying currently outstanding options
or which may otherwise be deemed to be beneficially owned in accordance with the
Rules and Regulations) or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences or ownership of
Common Stock, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise; provided, however, that (A) bona fide gift transactions, (B)
distributions to the partners or stockholders of Selling Securityholders which
are partnerships or corporations, (C) transfers to one or more members of the
immediate family of a Selling Securityholder who is an individual or to a trust
the beneficiaries of which are exclusively such Selling Securityholder or member
of such Selling Securityholder's immediate family and (D) other transfers which
will not result in any change in beneficial ownership may be permitted if the
transferee enters into an agreement in substantially the same form as this
Section covering the remainder of the Lock-Up Period. The foregoing sentence
shall not apply to (A) the shares to be sold to the Underwriters pursuant to
this Agreement, (B) the issuance of shares of Common Stock by the Company upon
the exercise of options granted under the Option Plans of the Company or upon
the exercise of warrants, which options or warrants are outstanding as of the
date hereof, all as described in footnote 4 to the table under the caption
"Capitalization" in the Preliminary Prospectus (but shall apply to the offer,
sale, short sale (including without limitation short sale against the box),
pledge or other disposition of the Common Stock so issued), and (C) the grant of
options to purchase Common Stock under the Option Plans, provided that such
options, by their terms, shall not be exercisable during the Lock-Up Period.
(n) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your reasonable
opinion the market price for the shares has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding
to or commenting on such rumor, publication or event.
(o) The Company is familiar with the 1940 Act, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not and
will not be an "INVESTMENT COMPANY" or a company "CONTROLLED" by an "INVESTMENT
COMPANY" within the meaning of the 1940 Act and the rules and regulations
thereunder.
(p) The Company agrees to maintain directors' and officers' insurance in
amounts customary for the size and nature of the Company's business for a period
of two years from the date of this Agreement.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of this Section 7 and as
more fully set forth below, the Company and the Selling Securityholders agree
severally but not jointly to indemnify and hold harmless each Underwriter and
each person (including each partner or officer thereof) who controls any
Underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses,
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claims, damages, expenses or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or the common law or otherwise (including in settlement of any
litigation, if such settlement is effected with express written consent of the
Company), and the Company and the Selling Securityholders agree severally but
not jointly to reimburse each such Underwriter and controlling person for any
legal or other expenses (including, except as otherwise hereinafter provided,
reasonable fees and disbursements of counsel) incurred by the respective
indemnified parties in connection with defending against any such losses,
claims, damages, expenses or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any Rule
462(b) registration statement) or any post-effective amendment thereto
(including any Rule 462(b) registration statement), or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that (1) the indemnity agreements of the Company and the Selling Securityholders
contained in this paragraph (a) shall not apply to any such losses, claims,
damages, expenses or liabilities, if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of any Underwriter
for use in any Preliminary Prospectus or the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto, (2) the
indemnity agreements of the Company and the Selling Securityholders contained in
this paragraph (a) shall not apply to any such losses, claims, damages, expenses
or liabilities to the extent that it is determined by a court of competent
jurisdiction that such loss, claim, damage, liability or expense resulted
directly or indirectly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriters or its counsel through gross negligence
or willful misconduct, (3) the indemnity agreement contained in this paragraph
(a) with respect to any Preliminary Prospectus shall not inure to the benefit of
any Underwriter from whom the person asserting any such losses, claims, damages,
expenses or liabilities purchased the shares which is the subject thereof (or to
the benefit of any person controlling such Underwriter) if at or prior to the
written confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof, and (4) each Selling
Securityholder shall only be liable under this paragraph with respect to (A)
written information pertaining to such Selling Securityholder furnished by or on
behalf of such Selling Securityholder expressly for use in any Preliminary
Prospectus or the Registration Statement or the Prospectus or any such amendment
thereof or supplement thereto or (B) facts that would constitute a breach of any
representation or warranty of such Selling Securityholder set forth in Section 2
hereof. The indemnity agreements of the Company and the Selling Securityholders
contained in this paragraph (a) and the representations and warranties of the
Company and the Selling Securityholders contained in Section 2 hereof shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any indemnified party and shall survive the delivery of
and payment for the shares.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its officers who signs the Registration Statement on his own
behalf or pursuant to a power of attorney,
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each of its directors, each other Underwriter and each person (including each
partner or officer thereof) who controls the Company or any such other
Underwriter within the meaning of Section 15 of the Securities Act, and the
Selling Securityholders from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Securities Act, the Exchange Act, or
the common law or otherwise (including in settlement of any litigation, if such
settlement is effected with express written consent of the Representative) and
to reimburse each of them for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages, expenses or liabilities or in
connection with any investigation or inquiry of, or other proceeding which may
be brought against, the respective indemnified parties, in each case arising out
of or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (including the Prospectus
as part thereof and any Rule 462(b) registration statement) or any post-
effective amendment thereto (including any Rule 462(b) registration statement)
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment thereof or supplement thereto) or
the omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of such
indemnifying Underwriter for use in the Registration Statement or the Prospectus
or any such amendment thereof or supplement thereto. The indemnity agreement of
each Underwriter contained in this paragraph (b) shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any indemnified party and shall survive the delivery of and payment for the
shares.
(c) Each party indemnified under the provision of paragraphs (a) and (b)
of this Section 7 agrees that, upon the service of a summons or other initial
legal process upon it in any action or suit instituted against it or upon its
receipt of written notification of the commencement of any investigation or
inquiry of, or proceeding against, it in respect of which indemnity may be
sought on account of any indemnity agreement contained in such paragraphs, it
will promptly give written notice (the "NOTICE") of such service or notification
to the party or parties from whom indemnification may be sought hereunder. No
indemnification provided for in such paragraphs shall be available to any party
who shall fail so to give the Notice if the party to whom such Notice was not
given was unaware of the action, suit, investigation, inquiry or proceeding to
which the Notice would have related and was prejudiced by the failure to give
the Notice, but the omission so to notify such indemnifying party or parties of
any such service or notification shall not relieve such indemnifying party or
parties from any liability which it or they may have to the indemnified party
for contribution or otherwise than on account of such indemnity agreement. Any
indemnifying party shall be entitled at its own expense to participate in the
defense of any action, suit or proceeding against, or investigation or inquiry
of, an indemnified party. Any indemnifying party shall be entitled, if it so
elects within a reasonable time after receipt of the Notice by giving written
notice (the "NOTICE OF DEFENSE") to the indemnified party, to assume (alone or
in conjunction with any other indemnifying party or parties) the entire defense
of such action, suit, investigation, inquiry or proceeding, in which event such
defense shall be conducted, at the expense of the indemnifying party or parties,
by counsel chosen by such indemnifying party or parties and reasonably
satisfactory to the indemnified party or parties; provided, however, that (i) if
the indemnified party or parties reasonably determine that there may be a
conflict between the positions of the indemnifying party
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or parties and of the indemnified party or parties in conducting the defense of
such action, suit, investigation, inquiry or proceeding or that there may be
legal defenses available to such indemnified party or parties different from or
in addition to those available to the indemnifying party or parties, then
counsel for the indemnified party or parties shall be entitled to conduct the
defense to the extent reasonably determined by such counsel to be necessary to
protect the interests of the indemnified party or parties and (ii) in any event,
the indemnified party or parties shall be entitled to have counsel chosen by
such indemnified party or parties participate in, but not conduct, the defense.
If, within a reasonable time after receipt of the Notice, an indemnifying party
gives a Notice of Defense and the counsel chosen by the indemnifying party or
parties is reasonably satisfactory to the indemnified party or parties, the
indemnifying party or parties will not be liable under paragraphs (a) through
(c) of this Section 7 for any legal or other expenses subsequently incurred by
the indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear the legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the proviso to
the preceding sentence and (B) the indemnifying party or parties shall bear such
other expenses as it or they have authorized to be incurred by the indemnified
party or parties. If, within a reasonable time after receipt of the Notice, no
Notice of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under paragraph (a) or (b)
of this Section 7, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages, expenses or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the 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 each indemnifying party in
connection with the statements or omissions that resulted in such losses,
claims, damages, expenses or liabilities, or actions in respect thereof, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Selling Securityholders on the one hand and the
Underwriters on the other shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the shares received
by the Company and the Selling Securityholders and the total underwriting
discount received by the Underwriters, as set forth in the table on the cover
page of the Prospectus, bear to the aggregate public offering price of the
shares. Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d). The
amount paid by an indemnified party as a result of the losses, claims, damages,
expenses or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the
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provisions of this paragraph (d), no Underwriter shall be required to contribute
any amount in excess of the underwriting discount applicable to the shares
purchased by such Underwriter and no Selling Securityholder shall be required to
contribute any amount in excess of the amount set forth in Section 7(f). No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this paragraph (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
(e) Neither the Company nor the Selling Securityholders on the one hand,
or the Underwriters on the other will, without the prior written consent of the
other party, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter, the Company or such Selling Securityholder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of such
Underwriter, the Company or such Selling Securityholder and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding.
(f) The liability of each Selling Securityholder under such Selling
Securityholder's representations and warranties contained in paragraph (a) of
Section 2 hereof and under the indemnity and reimbursement agreements contained
in the provisions of this Section 7 and Section 8 hereof shall be limited to an
amount equal to the initial public offering price (net of underwriting discounts
AND commissions) of the shares sold by such Selling Securityholder to the
Underwriters. The Company and the Selling Securityholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which they each
shall be responsible.
SECTION 8. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement (and subject, in the case of a
Selling Securityholder, to the provisions of paragraph (f) of Section 7), the
Company hereby agrees to reimburse on a monthly basis the Underwriters for all
reasonable legal and other expenses incurred in connection with investigating or
defending any claim, action, investigation, inquiry or other proceeding arising
out of or based upon any statement or omission, or any alleged statement or
omission, described in paragraph (a) of Section 7 of this Agreement,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the obligations under this Section 8 and the possibility that
such payments might later be held to be improper; provided, however, that (i) to
the extent any such payment is ultimately held to be improper, the persons
receiving such payments shall promptly refund them 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),
and any such interim reimbursement payments which are not made within 30 days
after a request for reimbursement shall bear interest at the Prime Rate from the
date of such request and (ii)
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such persons shall provide to the Company, upon request, reasonable assurances
of their ability to effect any refund, when and if due.
SECTION 9. TERMINATION. This Agreement may be terminated by you at any
time prior to the Closing Date by giving written notice to the Company and the
Selling Securityholders in accordance with Section 10, or if after the date of
this Agreement trading in the Common Stock shall have been suspended, or if
there shall have occurred (i) the engagement in hostilities or an escalation of
major hostilities by the United States or the declaration of war or a national
emergency by the United States on or after the date hereof, (ii) any outbreak of
hostilities or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak, calamity,
crisis or change in economic or political conditions in the financial markets of
the United States or the Company's industry sector would, in the Underwriters'
reasonable judgment, make the offering or delivery of the shares impracticable,
(iii) suspension of trading in securities generally or a material adverse
decline in value of securities generally on the New York Stock Exchange, the
American Stock Exchange, or The Nasdaq Stock Market, or limitations on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such exchange or system, (iv) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order
of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 9, there shall be no liability of the Company or the Selling
Securityholders to the Underwriters and no liability of the Underwriters to the
Company or the Selling Securityholders; provided, however, that in the event of
any such termination the Company and the Selling Securityholders agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.
SECTION 10. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters to purchase and pay for the shares shall be subject to
the performance by the Company and by the Selling Securityholders of all their
respective obligations to be performed hereunder at or prior to the Closing Date
or any later date on which Optional Shares are to be purchased, as the case may
be, and to the following further conditions:
(a) The Registration Statement shall have become effective; and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the shares hereunder and
the validity and form of the certificates representing the shares, all corporate
proceedings and other legal matters incident to the foregoing, and the form of
the Registration Statement and of the Prospectus (except as to the financial
statements contained therein), shall have been approved at or prior to the
Closing Date by Sachnoff & Weaver, Ltd., counsel for the Underwriters.
(c) You shall have received from Brobeck, Phleger & Harrison LLP,
counsel for the Company and the Selling Securityholders, addressed to the
Underwriters and dated the Closing Date, covering the
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matters set forth in Annex A hereto and if Optional Shares are purchased at any
date after the Closing Date, additional opinions from each such counsel,
addressed to the Underwriters and dated such later date, confirming that the
statements expressed as of the Closing Date in such opinions remain valid as of
such later date.
(d) You shall be reasonably satisfied that (i) as of the Effective Date,
the statements made in the Registration Statement and the Prospectus were true
and correct, in all material respects, and neither the Registration Statement
nor the Prospectus omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, respectively, not
misleading, (ii) since the Effective Date, no event has occurred which should
have been set forth in a supplement or amendment to the Prospectus which has not
been set forth in such a supplement or amendment, (iii) since the respective
dates as of which information is given in the Registration Statement in the form
in which it originally became effective and the Prospectus contained therein,
there has not been any material adverse change in or affecting the business,
properties, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business, and, since such dates, except in the ordinary
course of business, neither the Company nor any of its subsidiaries has entered
into any material transaction not referred to in the Registration Statement in
the form in which it originally became effective and the Prospectus contained
therein, (iv) 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
knowledge of the respective signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the Securities Act, (v) neither
the Company nor any of its subsidiaries has incurred any material contingent
obligations which are not disclosed in the Registration Statement and the
Prospectus, (vi) there are not any pending or known threatened legal proceedings
to which the Company or any of its subsidiaries is a party or of which property
of the Company or any of its subsidiaries is the subject which are material and
which are not disclosed in the Registration Statement and the Prospectus, (vii)
there are not any franchises, contracts, leases or other documents which are
required to be filed as exhibits to the Registration Statement which have not
been filed as required, and (vii) the representations and warranties of the
Company herein are true and correct in all material respects as of the Closing
Date or any later date on which Optional Shares are to be purchased, as the case
may be.
(e) You shall have received on the Closing Date and on any later date on
which Optional Shares are purchased a certificate, dated the Closing Date or
such later date, as the case may be, and signed by the President and the Chief
Financial Officer of the Company, stating that the respective signers of said
certificate have carefully examined the Registration Statement in the form in
which it originally became effective and the Prospectus contained therein and
any supplements or amendments thereto, and that the statements included in
clauses (i) through (viii) of paragraph (d) of this Section 10 are true and
correct.
(f) You shall have received from Price Waterhouse LLP, a letter or
letters, addressed to the Underwriters and dated the Closing Date and any later
date on which Optional Shares are purchased, confirming that they are
independent public accountants with respect to the Company within the meaning of
the Securities Act and the applicable published Rules and Regulations and based
upon the procedures described in their letter delivered to you concurrently with
the execution of this Agreement (the "ORIGINAL LETTER"), but carried out to a
date not more than three business days prior to the Closing Date or such later
date on which Optional Shares are purchased (i) confirming, to the extent true,
that the statements and conclusions set forth in the Original Letter are
accurate as of the Closing Date or such later date, as
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the case may be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter which are necessary
to reflect any changes in the facts described in the Original Letter since the
date of the Original Letter or to reflect the availability of more recent
financial statements, data or information. The letters shall not disclose any
change in or affecting the business or properties of the Company or any of its
subsidiaries which, in your reasonable judgment, makes it impractical or
inadvisable to proceed with the public offering of the shares or the purchase of
the Optional Shares as contemplated by the Prospectus.
(g) You shall have received from Price Waterhouse LLP a copy of their
letter to the Company stating that their review of the Company's system of
internal accounting controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's financial
statements as at December 31, 1995, did not disclose any weakness in internal
controls that they considered to be material weaknesses.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the shares to be issued and sold by the
Company shall have been duly authorized for listing by The Nasdaq National
Market upon official notice of issuance.
(j) On or prior to the Closing Date, you shall have received from all
directors, officers, and those other Stockholders of the Company designated by
you, "lockup" agreements, in form and substance satisfactory to you.
All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Sachnoff & Weaver, Ltd., counsel for the Underwriters,
shall be reasonably satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 10 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Selling Securityholders. Any such termination shall be
without liability of the Company or the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders; provided, however, that (i) in the event of such
termination, the Company and the Selling Securityholders agree to indemnify and
hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all costs and expenses referred to in paragraphs
(i) and (j) of Section 6 hereof, and (ii) if this Agreement is terminated by you
because of any refusal, inability or failure on the part of the Company or the
Selling Securityholders to perform any agreement herein, to fulfill any of the
conditions herein, or to comply with any provision hereof other than by reason
of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the transactions contemplated hereby.
SECTION 11. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. The obligation of the Company and the Selling Securityholders
to deliver the shares shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
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<PAGE>
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 11 shall not be
fulfilled, this Agreement may be terminated by the Company and the Selling
Securityholders by giving notice to you. Any such termination shall be without
liability of the Company and the Selling Securityholders to the Underwriters
and without liability of the Underwriters to the Company or the Selling
Securityholders; provided, however, that in the event of any such termination
the Company and the Selling Securityholders jointly and severally agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.
SECTION 12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of the Company, the Selling Securityholders and the
several Underwriters and, with respect to the provisions of Section 7 hereof,
the several parties (in addition to the Company, the Selling Securityholders and
the several Underwriters) indemnified under the provisions of said Section 7,
and their respective personal representatives, successors and assigns. Nothing
in this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "SUCCESSORS AND
ASSIGNS" as herein used shall not include any purchaser, as such purchaser, of
any of the shares from any of the several Underwriters.
SECTION 13. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to Volpe, Welty &
Company, One Maritime Plaza, 11th Floor, San Francisco, California 94111,
Attention: Gil Mogavero, with a copy to Sachnoff & Weaver, Ltd., 30 South Wacker
Drive, Chicago, Illinois 60606, Attn: William N. Weaver, Jr.; and if to the
Company, shall be mailed, telegraphed or delivered to it at its office, 5155
Mark Dabling Boulevard, Suite 100, Colorado Springs, Colorado 80919, Attention:
President, with a copy to Brobeck, Phleger & Harrison LLP, Two Embarcadero
Place, 2200 Palo Alto, California 94303, Attn: Warren T. Lazarow; or Jeremy W.
Makarechian; and if to the Selling Securityholders, shall be mailed, telegraphed
or delivered to the Selling Securityholders in care of the Company at the
address set forth above. All notices given by telegraph shall be promptly
confirmed by letter.
SECTION 14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or the Selling Securityholders or their respective
directors, officers, representatives or other agents and (c) delivery and
payment for the shares under this Agreement; provided, however, that if this
Agreement is terminated prior to the Closing Date, the provisions of paragraphs
(l), (m) and (n) of Section 6 hereof shall be of no further force or effect.
SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability
of any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
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<PAGE>
SECTION 16. 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 17. 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 Securityholders and you.
Any person executing and delivering this Agreement as Attorney-in-fact for
the Selling Securityholders represents by so doing that he has been duly
appointed as Attorney-in-fact by such Selling Securityholder pursuant to a
validly existing and binding Power of Attorney which authorizes such Attorney-
in-fact to take such action. Any action taken under this Agreement by any of
the Attorneys-in-fact will be binding on all of the Selling Securityholders.
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 and the several Underwriters,
including you, all in accordance with its terms.
Very truly yours,
Optika Imaging Systems, Inc.
By: _________________________________
Name: _______________________________
Title: ______________________________
THE SELLING SECURITYHOLDERS
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.
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<PAGE>
VOLPE, WELTY & COMPANY
PIPER JAFFRAY INC.
NEEDHAM & CO., INC.
Acting for ourselves and as
Representatives of the several
Underwriters named in the
attached Schedule A
By:___________________________
Principal
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<PAGE>
SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES
TO BE
UNDERWRITERS PURCHASED
- -----------------------------------------------------------------
Volpe, Welty & Company ..........................
Piper Jaffray Inc. ..............................
Needham & Co., Inc. .............................
Total ................................... 2,900,000
==============
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<PAGE>
SCHEDULE II
SELLING SECURITYHOLDERS
NUMBER OF NUMBER OF
FIRM SHARES OPTIONAL SHARES
TO BE SOLD TO BE SOLD
NAME AND ADDRESS
OF SELLING SECURITYHOLDERS
Paul Carter .................. 143,506 8,000
Malcolm D. Thomson ........... 143,506 8,000
Harvey L. Jeane .............. 268,976 0
Linda E. Boguslav ............ 680 0
Eric Brown ................... 5,000 0
David Holzman ................ 27,240 0
Richard Holzman .............. 54,480 0
Kevin Ilsen .................. 8,172 0
Russsell Johnson ............. 13,960 0
James Schusler ............... 34,480 0
Total ..............
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ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF
BROBECK, PHLEGER & HARRISON LLP
COUNSEL FOR THE COMPANY
AND THE SELLING SECURITYHOLDERS
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, and to such counsel's knowledge,
is duly qualified as a foreign corporation and in good standing in each state of
the United States of America in which the nature of its business or its
ownership or leasing of property requires such qualification (except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole), and has corporate power and
authority to own, lease or operate its properties and conduct its business as
described in the Registration Statement; all the issued and outstanding capital
stock of each of the subsidiaries of the Company has been duly authorized and
validly issued and is fully paid and nonassessable, and is owned by the Company
free and clear of all liens, encumbrances and security interests, and to the
best of such counsel's knowledge, no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in such
subsidiaries are outstanding;
(ii) the authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof contained in
the Prospectus under "Description of Capital Stock"; all of the outstanding
shares of such capital stock (including the Firm Shares and the Optional Shares
issued, if any) have been duly authorized and validly issued and are fully paid
and nonassessable; any Optional Shares purchased after the Closing Date have
been duly authorized and, when issued and delivered to, and paid for by, the
Underwriters as provided in the Underwriting Agreement, will be validly issued,
fully paid, nonassessable and free of any preemptive rights set forth in the
Restated Certificate of Incorporation or Bylaws of the Company or, to the
knowledge of such counsel, similar preemptive rights in any other instrument
that have not been waived;
(iii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus is in effect and no proceedings for that purpose have been
instituted or are pending or contemplated by the Commission;
(iv) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained therein,
as to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and with the Rules
and Regulations;
(v) the information required to be set forth in the Registration
Statement in answer to Items 9, 10 (insofar as it relates to such counsel) and
11(c) of Form S-1 is to the best of such counsel's knowledge accurately and
adequately set forth therein in all material respects or no response is required
with respect to such Items, and the description of the Company's stock option
plan and the options granted and which may be granted thereunder and the options
granted otherwise than under such plans set forth in the
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Prospectus accurately and fairly presents the information required to be shown
with respect to said plans and options to the extent required by the Securities
Act and the Rules and Regulations;
(vi) such counsel do not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion of
such counsel are of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement, which are not described and filed as required;
(vii) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the Underwriting Agreement has been duly executed and delivered by
or on behalf of the Selling Securityholders and the Custody Agreement between
the Selling Securityholders and Boston EquiServe, as Custodian, and the Power of
Attorney referred to in such Custody Agreement have been duly executed and
delivered by the several Selling Securityholders;
(ix) the Company has all corporate power and authority necessary to
enter into the Underwriting Agreement and to sell and deliver the Shares to be
sold by it to the several Underwriters; the Underwriting Agreement is a valid
and binding agreement of the Company enforceable in accordance with its terms,
except as enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditor's rights generally and except as to those provisions relating to
indemnity or contribution for liabilities arising under federal and state
securities laws (as to which no opinion need be expressed);
(x) the Underwriting Agreement, the Custody Agreement and the Power of
Attorney are valid and binding agreements of each of the Selling Securityholders
enforceable 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 indemnity or contribution for
liabilities under the Securities Act, as to which no opinion need be expressed,
and each Selling Securityholder has full legal right and authority to enter into
the Underwriting Agreement, the Custody Agreement and the Power of Attorney and
to sell, transfer and deliver in the manner provided in the Underwriting
Agreement the Shares sold by such Selling Securityholder hereunder;
(xi) the issue and sale by the Company of the Shares sold by the
Company as contemplated by the Underwriting Agreement will not conflict with, or
result in a breach of, or constitute a default under the Restated Certificate of
Incorporation or Bylaws of the Company or the certificate of incorporation and
by-laws or other organizational documents of any of its subsidiaries or any
material agreement or instrument known to such counsel to which the Company or
any of its subsidiaries is a party or by which any of its properties may be
bound or any applicable law or regulation under federal law, Colorado law or the
Delaware General Corporate Law, or so far as is known to such counsel, any
order, writ, injunction or decree, of any jurisdiction, court or governmental
instrumentality;
(xii) the transfer and sale by the Selling Stockholders of the Shares to
be sold by the Selling Stockholders as contemplated by the Underwriting
Agreement, the Power of Attorney and the Custody Agreement will not conflict
with, result in a breach of, or constitute a default under any agreement or
instrument known to such counsel 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 any applicable law or regulation,
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or so far is known to such counsel, order, writ, injunction or decree of any
jurisdiction, court or governmental instrumentality body.
(xiii) all holders of securities of the Company having rights to the
registration of shares of Common Stock, or other securities, because of the
filing of the Registration Statement by the Company have either (a) participated
in the offering as a Selling Securityholder, (b) waived such rights or (c)
suffered an expiration of such rights by reason of lapse of time following
notification of the Company's intent to file the Registration Statement;
(xiv) upon delivery of the Shares by the Company and the Selling
Securityholders pursuant to this Agreement and payment therefore as contemplated
herein and assuming that the Underwriters purchase such Shares in good faith and
without actual or constructive knowledge of any liens or other interests in the
Shares, the Underwriters will acquire title to the Shares free and clear of any
lien, claim, securing interest or other encumbrance, restriction or transfer or
other defect in title;
(xv) to such counsel's knowledge, without independent inquiry, no
consent, approval, authorization or order of any federal, Delaware or Colorado
court or governmental agency or body is required for the consummation of the
transactions contemplated in the Underwriting Agreement, except such as have
been obtained under the Securities Act and such as may be required under state
securities or blue sky laws in connection with the purchase and distribution of
the Shares by the Underwriters and the clearance of the offering with the NASD;
and
(xvi) the Shares sold by the Selling Securityholders are listed and duly
admitted to trading on The Nasdaq National Market, and the shares issued and
sold by the Company will been duly authorized for listing by The Nasdaq National
Market upon official notice of issuance.
____________________________________
Counsel shall also confirm that based upon counsel's participation as
described below, counsel has no reason to believe that (except for financial
statements and schedules and other financial and statistical data included
therein as to which such counsel expresses no belief) the Registration
Statement, as of its effective date, did not comply as to form in all material
respects with the requirements of the Act or the rules and regulations
thereunder or contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that (except for financial statements and
schedules and other financial and statistical data included therein as to which
such counsel expresses no belief) the Prospectus or any amendment or supplement
thereto as of its respective date, and as of the Closing Date or the Option
Closing Date, as the case may be, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. In addition to rendering legal
advice and assistance to the Company in the course of the preparation of the
Registration Statement and the Prospectus, involving, among other things,
discussions and inquiries concerning certain legal matters and the review of
certain corporate records, documents and proceedings, counsel may state that it
also participated in conferences with certain officers and other representatives
of the Company, including its independent certified public accountants and with
the Underwriters and Underwriters' counsel at which the contents of the
Registration Statement and Prospectus, and related matters were discussed.
Counsel may state that it has not, however, independently checked or verified
the accuracy, completeness or
A-3
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fairness of the information contained in the Registration Statement and
Prospectus and other financial or statistical data contained therein.
In rendering its opinion with respect to Selling Securityholders, Brobeck,
Phleger & Harrison LLP may assume that all other laws which may be applicable to
any Selling Securityholder's sale of Shares hereunder, are identical in all
respects to the laws of the State of California and they rely upon a certificate
or certificates of each of the Selling Securityholders with respect to such
matters relating to the execution and delivery, authorizations and approvals and
other facts as shall be agreed upon by such counsel for the Underwriters.
Counsel rendering the foregoing opinion may rely as to questions of fact
upon certificates of officers of the Company and as to questions of law not
involving the laws of the United States or of the State of California, Colorado
or Delaware, upon opinions of local counsel satisfactory in form and scope to
counsel for the Underwriters. Copies of any certificates and opinions so relied
upon shall be delivered to the Representatives and to counsel for the
Underwriters and the foregoing opinion shall also state that counsel knows of no
reason the Underwriters are not entitled to rely upon the certificates and
opinions of such local counsel.
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