<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 6, 1999
REGISTRATION NO. 333-87497
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GRIC COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 334410 77-0368092
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
</TABLE>
GRIC COMMUNICATIONS, INC.
1421 MCCARTHY BOULEVARD
MILPITAS, CALIFORNIA 95035
(408) 955-1920
(Address and telephone number of Registrant's principal executive offices)
JOSEPH M. ZAELIT
SENIOR VICE PRESIDENT, FINANCE & ADMINISTRATION
AND CHIEF FINANCIAL OFFICER
GRIC COMMUNICATIONS, INC.
1421 MCCARTHY BOULEVARD
MILPITAS, CALIFORNIA 95035
(408) 955-1920
(Name, address and telephone number of agent for service)
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COPIES TO:
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DAVID W. HEALY, ESQ. KENNETH LAMB, ESQ.
HORACE L. NASH, ESQ. RICHARD A. STRONG, ESQ.
WILLIAM R. SCHREIBER, ESQ. STANLEY SZE, ESQ.
THOMAS J. HALL, ESQ. TILDA CHO, ESQ.
JOSHUA N. SUN, ESQ. JOHN Z. CHEN, ESQ.
H. DANIEL KIM, ESQ. GIBSON, DUNN & CRUTCHER LLP
FENWICK & WEST LLP ONE MONTGOMERY STREET
TWO PALO ALTO SQUARE SAN FRANCISCO, CALIFORNIA 94104
PALO ALTO, CALIFORNIA 94306 (415) 393-8200
(650) 494-0600
</TABLE>
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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, 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 this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, 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 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
EXPLANATORY NOTE
The primary purpose of this Amendment No. 3 is to add an exhibit to the
Registration Statement. No changes have been made to the text of Part I of the
Registration Statement.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table lists the costs and expenses to be paid by the Registrant in
connection with the sale of the shares of common stock being registered under
this registration statement. All amounts are estimates except for the Securities
and Exchange Commission registration fee, the NASD filing fee and the Nasdaq
National Market filing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 17,648
NASD filing fee............................................. 6,848
Nasdaq National Market filing fee........................... 95,000
Legal fees and expenses..................................... 550,000
Accounting fees and expenses................................ 700,000
Printing and engraving expenses............................. 250,000
Road show expenses.......................................... 130,000
Blue sky fees and expenses.................................. 10,000
Transfer agent and registrar fees and expenses.............. 5,000
Miscellaneous............................................... 35,504
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Total................................................. $1,800,000
</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, indemnity 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").
As permitted by the Delaware General Corporation Law, the Registrant's First
Amended and Restated Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability:
- for any breach of the director's duty of loyalty to the Registrant or its
stockholders;
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the Delaware General Corporation Law (regarding
unlawful dividends and stock purchases); or
- for any transaction from which the director derived an improper personal
benefit.
As permitted by the Delaware General Corporation Law, the Registrant's First
Amended and Restated Bylaws also provide that:
- the Registrant is required to indemnify its directors and officers to the
fullest extent permitted by the Delaware General Corporation Law, subject to
limited exceptions;
- the Registrant may indemnify its agents as set forth in the Delaware General
Corporation Law, unless otherwise required by law, our certificate of
incorporation or agreements;
- the Registrant is required to advance expenses, as incurred, to its
directors and officers in connection with a legal proceeding to the fullest
extent permitted by the Delaware General Corporation Law, subject to limited
exceptions;
- the rights conferred in the First Amended and Restated Bylaws are not
exclusive; and
- the Registrant may not retroactively amend the First Amended and Restated
Bylaws provisions relating to indemnity.
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<PAGE>
The Registrant intends to enter into Indemnification Agreements with each of its
current directors and officers to give such directors and officers additional
contractual assurances regarding the scope of the indemnification set forth in
the Registrant's First Amended and Restated Certificate of Incorporation and to
provide additional procedural protections. At present, there is no pending
litigation or proceeding involving a director, officer or employee of the
Registrant regarding which indemnification is sought, nor is the Registrant
aware of any threatened litigation that may result in claims for
indemnification.
Reference is also made to Section 7 of the Underwriting Agreement, which
provides for the indemnification of officers, directors and controlling persons
of the Registrant against certain liabilities. The indemnification provision in
the Registrant's Certificate of Incorporation, Bylaws and the Indemnity
Agreements entered into between the Registrant and each of its directors and
officers may be sufficiently broad to permit indemnification of the Registrant's
directors and officers for liabilities arising under the Securities Act.
The Registrant maintains directors' and officers' liability insurance and
expects to obtain a rider to such coverage for securities matters.
See also "Undertakings" in Item 17.
Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:
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EXHIBIT DOCUMENT NUMBER
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Underwriting Agreement...................................... 1.01
Registrant's First Amended and Restated Bylaws.............. 3.02
Registrant's First Amended and Restated Certificate of
Incorporation............................................. 3.04
Fourth Amended and Restated Registration Rights Agreement
dated April 16, 1999...................................... 4.02
Form of Indemnification Agreement........................... 10.01
</TABLE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The Registrant sold the following securities in the past three years.
1. As of September 30, 1999, the Registrant has issued 422,675 shares of our
common stock for an aggregate purchase price of $394,450 to employees,
directors and consultants pursuant to option exercises under its stock
option plans.
2. In July 1997, the Registrant sold 25,000 shares of common stock to Stanley
J. Meresman for an aggregate purchase price of $17,500.
3. Between December 1997 and June 1999, we issued 5,460,745 shares of Series D
Preferred Stock to a group of investors for an aggregate purchase price of
$38,225,398.
4. In August 1998, the Registrant issued warrants to purchase an aggregate of
10,000 shares of Series D Preferred Stock to Phoenix Leasing Corporation in
connection with an equipment financing.
5. In September 1998, the Registrant issued warrants to purchase an aggregate
of 60,267 shares of Series D Preferred Stock to a group of investors in
connection with a bridge loan financing. The number of shares that may be
acquired upon exercise of this warrant is currently 96,427.
6. In September 1998, in connection with a bridge financing, the Registrant
issued convertible promissory notes aggregating $2,700,000 to a group of
investors. In January 1999, the convertible notes and all related interest
were converted into 400,017 shares of Series D Preferred Stock, which are
included in the aggregate number of shares referred to in paragraph 3 above.
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<PAGE>
7. In November 1998, the Registrant issued a warrant to purchase 16,071 shares
of Series D Preferred Stock to Silicon Valley Bank. The number of shares
that may be acquired upon exercise of this warrant was later adjusted to
17,724.
8. In November 1998, the Registrant issued a warrant to purchase 92,857 shares
of common stock to America Online, Inc. in connection with a strategic
alliance. The number of shares which may be acquired upon exercise of this
warrant was later adjusted to 102,699.
9. In December 1998, the Registrant issued a warrant to purchase 7,142 shares
of Series D Preferred Stock to Silicon Valley Bank. The number of shares
that may be acquired upon exercise of this warrant was later adjusted to
1,785.
10. Between January 1999 and March 1999 we issued warrants to purchase an
aggregate of 126,779 shares of Series D Preferred Stock to a group of
investors in connection with a bridge loan financing.
11. Between January 1999 and March 1999, in connection with a bridge loan
financing, we issued convertible promissory notes aggregating $12,750,000 to
a group of investors. In April 1999, the convertible notes and all related
interest were converted into 1,846,468 shares of Series D Preferred Stock,
which are included in the aggregate number of shares referred to in
paragraph 3 above.
12. In November 1999, we issued 600,240 shares of Series E Preferred Stock to
Nokia Holdings, Inc. for an aggregate purchase price of $6.0 million.
All sales of common stock made pursuant to the exercise of stock options were
made in reliance on Rule 701 under the Securities Act or on Section 4(2) of the
Securities Act.
All other sales were made in reliance on Section 4(2) of the Securities Act
and/or Regulation D promulgated under the Securities Act. These sales were made
without general solicitation or advertising. Each purchaser was a sophisticated
investor with access to all relevant information necessary to evaluate the
investment and represented to the Registrant that the shares were being acquired
for investment.
ITEM 16. EXHIBITS.
(a) The following exhibits are filed with this registration statement:
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<CAPTION>
EXHIBIT EXHIBIT
NUMBER TITLE
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1.01 Form of Underwriting Agreement.**
3.01 The Registrant's Certificate of Incorporation.*
3.02 The Registrant's First Amended and Restated Bylaws.*
3.03 The Registrant's First Amended and Restated Certificate of
Incorporation.*
3.04 The Registrant's Second Amended and Restated Certificate of
Incorporation.*
4.01 Form of specimen certificate for the Registrant's common
stock.*
4.02 Fifth Amended and Restated Registration Rights Agreement,
dated November 12, 1999, among Registrant and the security
holders listed in the agreement.*
5.01 Opinion of Fenwick & West LLP regarding the legality of the
shares of common stock being registered.*
10.01 Form of Indemnification Agreement between the Registrant and
each of its directors and executive officers.*
10.02 Employee Agreement effective March 1, 1994 between Aimnet
Corporation and Dr. Hong Chen.*
</TABLE>
II-3
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<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
NUMBER TITLE
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10.03 Employee Agreement effective March 1, 1994 between Aimnet
Corporation and Lynn Y. Liu.*
10.04 Offer letter dated August 21, 1996 by the Registrant to
Christophe U. Culine.*
10.05 Offer letter dated June 8, 1998 by the Registrant to David
L. Teichmann.*
10.06 Offer letter dated October 15, 1998 by the Registrant to
Phillip M. Sakakihara.*
10.07 Offer letter dated January 15, 1999 by the Registrant to
Joseph M. Zaelit.*
10.08 Offer letter dated May 11, 1999 by the Registrant to Barron
B. Cox.*
10.09 Offer letter dated July 28, 1999 by the Registrant to
Kristin L. Steinmetz.*
10.10 Offer letter dated July 22, 1999 by the Registrant to Roger
L. Peirce.*
10.11 Aimnet Corporation 1995 Stock Option Plan.*
10.12 GRIC Communications, Inc. (formerly Aimquest Corporation)
1997 Stock Option Plan.*
10.13 The Registrant's 1999 Equity Incentive Plan.*
10.14 The Registrant's 1999 Employee Stock Purchase Plan.*
10.15 Restricted Stock Purchase dated July 1997 between Aimquest
Corporation and Stanley J. Meresman.*
10.16 Warrant to purchase common stock of the Registrant issued to
America Online, Inc. dated as of November 12, 1998.*
10.17 Warrant to purchase Series D Preferred Stock of the
Registrant issued to Silicon Valley Bank dated as of
December 31, 1998.*
10.18 Warrant to purchase Series D Preferred Stock of the
Registrant issued to Silicon Valley Bank dated as of
November 5, 1998.*
10.19 Warrant to purchase Series D Preferred Stock of the
Registrant issued to Phoenix Leasing Incorporated dated as
of August 10, 1998.*
10.20 Warrant to purchase Series D Preferred Stock of the
Registrant issued to Robert A. Kingsbook dated as of
August 10, 1998.*
10.21 Loan and Security Agreement dated November 5, 1998 between
the Registrant and Silicon Valley Bank, together with
Intellectual Property Agreement dated November 5, 1998.*
10.22 Senior Loan and Security Agreement dated August 10, 1998
between the Registrant and Phoenix Leasing Incorporated,
together with a form of Senior Secured Promissory Note.*
10.23 Lease dated January 6, 1998 among the Registrant,
John Arrillaga Survivor's Trust and Richard T. Peery
Separate Property Trust.*
10.24 Agreement dated August 3, 1999 between the Registrant and
Singapore Telecommunications Ltd.*
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).*
23.02 Consent of Independent Auditors.*
24.01 Power of attorney.*
27.01 Financial Data Schedule.*
</TABLE>
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* Previously filed
** Included with this Amendment No. 3 to the Registration Statement
(b) The following financial statement was previously filed with this
registration statement:
Schedule II--Valuation and Qualifying Accounts
Other financial statement schedules are omitted because the information called
for is not required or is shown either in the financial statements or the notes
thereto.
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<PAGE>
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 provisions described under Item 14 above, 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, 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 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 undersigned 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.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 3 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Milpitas, State of California, on the 6th day of December, 1999.
<TABLE>
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GRIC COMMUNICATIONS, INC.
By: * DR. HONG CHEN
----------------------------------------
Dr. Hong Chen
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 3 to the Registration Statement has been signed on December 6,
1999 by the following persons in the following capacities:
<TABLE>
<CAPTION>
SIGNATURE TITLE
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<S> <C>
PRINCIPAL EXECUTIVE OFFICER:
* DR. HONG CHEN
------------------------------------------- President, Chief Executive Officer and
Dr. Hong Chen Director
PRINCIPAL FINANCIAL OFFICER:
*JOSEPH M. ZAELIT
------------------------------------------- Senior Vice President, Finance and
Joseph M. Zaelit Administration and Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
* KIM S. SILVERMAN
------------------------------------------- Corporate Controller
Kim S. Silverman
</TABLE>
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SIGNATURE TITLE
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ADDITIONAL DIRECTORS:
* ROGER L. PEIRCE
------------------------------------------- Chairman
Roger L. Peirce
* LYNN Y. LIU
------------------------------------------- Director
Lynn Y. Liu
* DR. TA-LIN HSU
------------------------------------------- Director
Dr. Ta-Lin Hsu
* DR. YEN-SON (PAUL) HUANG
------------------------------------------- Director
Dr. Yen-Son (Paul) Huang
* KHENG NAM LEE
------------------------------------------- Director
Kheng Nam Lee
* JOZEF LERNOUT
------------------------------------------- Director
Jozef Lernout
* STANLEY J. MERESMAN
------------------------------------------- Director
Stanley J. Meresman
</TABLE>
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*By: /s/ DAVID L. TEICHMANN
--------------------------------------
David L. Teichmann,
AS ATTORNEY-IN-FACT
</TABLE>
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<PAGE>
EXHIBIT INDEX
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<CAPTION>
EXHIBIT EXHIBIT
NUMBER TITLE
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<C> <S>
1.01 Form of Underwriting Agreement.
</TABLE>
<PAGE>
Exhibit 1.01
5,290,000 Shares
GRIC COMMUNICATIONS, INC.
Common Stock
UNDERWRITING AGREEMENT
December ___, 1999
CIBC World Markets Corp.
U.S. Bancorp Piper Jaffray
Volpe Brown Whelan & Co.
c/o CIBC World Markets Corp.
2420 Sand Hill Road, Suite 300
Menlo Park, California 94025
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
GRIC Communications, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions contained herein, to sell to you
and the other underwriters named on Schedule I to this Agreement (the
"Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of 4,600,000 shares (the "Firm Shares") of the
Company's Common Stock, $0.001 par value (the "Common Stock"). The respective
amounts of the Firm Shares to be purchased by each of the several Underwriters
are set forth opposite their names on Schedule I hereto. In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional 690,000 shares (the "Option Shares") of Common Stock from it for the
purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are together called the "Shares."
1. SALE AND PURCHASE OF THE SHARES.
On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:
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<PAGE>
(a) The Company agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at a price of $_____ per share (the "Initial Price"), the number
of Firm Shares set forth opposite the name of such Underwriter under the
column "Number of Firm Shares to be Purchased from the Company" on Schedule
I to this Agreement, subject to adjustment in accordance with Section 10
hereof.
(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares
at the Initial Price. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage (adjusted by the Representatives
to eliminate fractions) of the total number of Option Shares to be
purchased by the Underwriters as such Underwriter is purchasing of the Firm
Shares. Such option may be exercised only to cover over-allotments in the
sales of the Firm Shares by the Underwriters and may be exercised in whole
or in part at any time on or before 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date (as defined below), and
from time to time thereafter within 30 days after the date of this
Agreement, in each case upon written, facsimile or telegraphic notice, or
verbal or telephonic notice confirmed by written, facsimile or telegraphic
notice, by the Representatives to the Company no later than 12:00 noon, New
York City time, on the business day before the Firm Shares Closing Date or
at least two business days before the Option Shares Closing Date (as
defined below), as the case may be, setting forth the number of Option
Shares to be purchased and the time and date (if other than the Firm Shares
Closing Date) of such purchase.
2. DELIVERY AND PAYMENT. Delivery by the Company of the Firm Shares
to the Representatives for the respective accounts of the Underwriters, and
payment of the purchase price by certified or official bank check or checks
payable in New York Clearing House (same day) funds drawn to the order of the
Company for the shares purchased from the Company, against delivery of the
respective certificates therefor to the Representatives, shall take place at the
offices of CIBC World Markets Corp., 2420 Sand Hill Road, Suite 300, Menlo Park,
California 94025, at 7:00 a.m., San Francisco time, on the third full business
day following the first day that shares are traded, or at such time on such
other date, not later than 10 business days after the date of this Agreement, as
shall be agreed upon by the Company and the Representatives (such time and date
of delivery and payment are called the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares is exercised
in whole or in part on one or more occasions, delivery by the Company of the
Option Shares to the Representatives for the respective accounts of the
Underwriters and payment of the purchase price thereof in immediately available
funds by wire transfer or by certified or official bank check or checks payable
in New York Clearing House (same day) funds to the Company shall take place at
the offices of CIBC World Markets Corp. specified above at the time and on the
date (which may be the same date as, but in no event shall be earlier than, the
Firm Shares
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<PAGE>
Closing Date) specified in the notice referred to in Section 1(b) (such time
and date of delivery and payment are called the "Option Shares Closing
Date"). The Firm Shares Closing Date and the Option Shares Closing Date are
called, individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of exercise of the option as described in
Section l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The
Company has prepared and filed in conformity in all material respects with
the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the published rules and regulations thereunder (the "Rules")
adopted by the Securities and Exchange Commission (the "Commission") a
Registration Statement (as hereinafter defined) on Form S-1 (No. 333-87497),
including a preliminary prospectus relating to the Shares, and such
amendments thereof as may have been required to the date of this Agreement.
Copies of such Registration Statement (including all amendments thereof) and
of the related Preliminary Prospectus (as hereinafter defined) have
heretofore been delivered by the Company to you. The term "Preliminary
Prospectus" means any preliminary prospectus (as described in Rule 430 of the
Rules) included at any time as a part of the Registration Statement or filed
with the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules. The term "Registration Statement" as
used in this Agreement means the initial registration statement (including
all exhibits and financial schedules), as amended at the time and on the date
it becomes effective (the "Effective Date") including the information (if
any) deemed to be part thereof at the time of effectiveness pursuant to Rule
430A of the Rules and as thereafter amended by any post-effective amendments.
If the Company has filed an abbreviated registration statement to register
additional Shares pursuant to Rule 462(b) under the Rules (the "462(b)
Registration Statement"), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration Statement.
The term "Prospectus" as used in this Agreement means the prospectus in the
form included in the Registration Statement at the time of effectiveness or,
if Rule 430A of the Rules is relied on, the term Prospectus shall also
include the final prospectus filed with the Commission pursuant to Rule
424(b) of the Rules.
The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
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<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement complied, and
on the date of the Prospectus, the date any post-effective amendment to the
Registration Statement becomes effective, the date any supplement or
amendment to the Prospectus is filed with the Commission and each Closing
Date, the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material respects, with
the applicable provisions of the Securities Act and the Rules. The
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or 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 and the other dates
referred to above neither the Registration Statement nor the Prospectus,
nor any amendment thereof or supplement thereto, will contain any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. When any related preliminary prospectus was first
filed with the Commission (whether filed as part of the Registration
Statement or any amendment thereto or pursuant to Rule 424(a) of the Rules)
and when any amendment thereof or supplement thereto was first filed with
the Commission, such preliminary prospectus as amended or supplemented
complied in all material respects with the applicable provisions of the
Securities Act and the Rules and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. Notwithstanding the foregoing, the Company makes no
representations or warranties with respect 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 by the Representatives on behalf of the several Underwriters for
use in the Registration Statement or the Prospectus. With respect to the
preceding sntence, the Company acknowledges that the only information
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus are
(i) the concession and reallowance figures appearing under the caption
"Underwriting" and (ii) the paragraph relating to stabilization on the
inside front cover page of the Prospectus and the stabilization information
contained under the caption "Underwriting" in the Prospectus.
(b) Based upon the oral advice of the Commission, the Registration
Statement is effective under the Securities Act and no stop order
preventing or suspending the effectiveness of the Registration Statement or
suspending or preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are threatened under
the Securities Act. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) of the Rules has been
-4-
<PAGE>
or will be made in the manner and within the time period required by such
Rule 424(b).
(c) The financial statements of the Company (including all notes and
schedules thereto) included in the Registration Statement and Prospectus
present fairly the financial position, the results of operations, the
statements of cash flows and the statements of stockholders' equity and
the other information purported to be shown therein of the Company at the
respective dates and for the respective periods to which they apply; and
such financial statements and related schedules and notes have been
prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved, and all adjustments
necessary for a fair presentation of the results for such periods have been
made. The summary and selected financial data included in the Prospectus
present fairly the information shown therein as at the respective dates and
for the respective periods specified and the summary and selected financial
data have been presented on a basis consistent with the consolidated
financial statements so set forth in the Prospectus and other financial
information.
(d) Ernst & Young LLP, whose reports are filed with the Commission as
a part of the Registration Statement, are and, during the periods covered
by their reports, were independent public accountants as required by the
Securities Act and the Rules.
(e) The Company and each of its Subsidiaries (as hereinafter defined)
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware or of such other jurisdiction in
which each Subsidiary is organized. The Company and each such subsidiary
or other entity controlled directly or indirectly by the Company
(collectively, "Subsidiaries") is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted by it or location of the assets or
properties owned, leased or licensed by it requires such qualification,
except for such jurisdictions where the failure to so qualify would not
have a material adverse effect on the assets or properties, business,
results of operations or financial condition of the Company (a "Material
Adverse Effect"). The Company and each of its Subsidiaries has all
requisite corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and from
all governmental or regulatory bodies or any other person or entity
(collectively, the "Permits"), to own, lease and license its assets and
properties and conduct its business, all of which are valid and in full
force and effect, as described in the Registration Statement and the
Prospectus, except where the lack of such Permits, individually or in the
aggregate, would not have a Material Adverse Effect. The Company and each
of its Subsidiaries has fulfilled and performed in all material respects
all of its material obligations with respect to such Permits and no event
has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be
required by
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<PAGE>
the NASD or under the Securities Act and state and foreign Blue Sky laws,
no other Permits are required to enter into, deliver and perform this
Agreement and to issue and sell the Shares.
(f) Except as disclosed in the Prospectus, the Company and each of
its Subsidiaries owns or possesses adequate and enforceable rights to use
all trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how and other similar
rights and proprietary knowledge (collectively, "Intangibles") described in
the Prospectus as being owned by it necessary for the conduct of its
business, except when the failure to own or possess such rights would not
have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any notice of, or is not aware of, any
infringement of or conflict with asserted rights of others with respect to
any Intangibles.
(g) The Company and each of its Subsidiaries has good and marketable
title in fee simple to all items of real property and good and marketable
title to all personal property described in the Prospectuses as being owned
by it, and any real property and buildings described in the Prospectuses as
being held under lease by the Company and each of its Subsidiaries is held
by it under valid, existing and enforceable leases, free and clear of all
liens, encumbrances, claims, security interests and defects, except such as
are described in the Registration Statement and the Prospectus or would not
have a Material Adverse Effect.
(h) There are no litigation or governmental proceedings to which the
Company or its Subsidiaries is subject or which is pending or, to the
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries, which, individually or in the aggregate, might have a
Material Adverse Effect, affect the consummation of this Agreement or which
is required to be disclosed in the Registration Statement and the
Prospectus that is not so disclosed.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as described
therein, (a) there has not been any material adverse change with regard to
the assets or properties, business, results of operations or financial
condition of the Company; (b) neither the Company nor its Subsidiaries have
sustained any loss or interference with their respective assets, businesses
or properties (whether owned or leased) from fire, explosion, earthquake,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or any court or legislative or other governmental action,
order or decree which would have a Material Adverse Effect; and (c) since
the date of the latest balance sheet included in the Registration Statement
and the Prospectus, except as reflected therein, neither the Company nor
its Subsidiaries have (A) issued any securities or incurred any liability
or obligation, direct or contingent, for borrowed money, except securities
issued to employees, directors, consultants and other service providers in
the ordinary course of business and such liabilities or obligations
incurred
-6-
<PAGE>
in the ordinary course of business, (B) entered into any transaction not
in the ordinary course of business or (C) declared or paid any dividend or
made any distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire any
shares of its stock.
(j) There is no document, contract or other agreement of a character
required to be described in the Registration Statement or Prospectus or to
be filed as an exhibit to the Registration Statement which is not described
or filed as required by the Securities Act or Rules. Each description of a
contract, document or other agreement in the Registration Statement and the
Prospectus accurately reflects as required or in all material respects the
terms of the underlying document, contract or agreement. Each agreement
described in the Registration Statement and Prospectus or listed in the
Exhibits to the Registration Statement is in full force and effect and is
valid and enforceable by and against the Company or the Subsidiary, as the
case may be, in accordance with its terms. Neither the Company nor any of
its Subsidiaries, if such Subsidiary is a party, nor to the Company's
knowledge, any other party is in default in the observance or performance
of any term or obligation to be performed by it under any such agreement,
and no event has occurred which with notice or lapse of time or both would
constitute such a default, in any such case which default or event,
individually or in the aggregate, would have a Material Adverse Effect. No
default exists, and no event has occurred which with notice or lapse of
time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company or any of its
Subsidiaries, if any such Subsidiary is a party thereto, of any other
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which their respective properties or business may be bound or
affected which default or event, individually or in the aggregate, would
have a Material Adverse Effect.
(k) Neither the Company nor any of its Subsidiaries is in violation
of any term or provision of its charter or by-laws or of any franchise,
license, permit, judgment, decree, order, statute, rule or regulation,
where the consequences of such violation, individually or in the aggregate,
would have a Material Adverse Effect.
(l) Neither the execution and delivery of this Agreement or the
performance pursuant to this Agreement by the Company nor the consummation
of any of the transactions contemplated hereby, including, without
limitation, the issuance and sale by the Company of the Shares, will give
rise to a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or provision
of, or constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or any of its
Subsidiaries pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which
-7-
<PAGE>
either the Company or any of its Subsidiaries or any of their properties
or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or
any of its Subsidiaries, except for such consents or waivers which have
already been obtained and are in full force and effect, or except as would
not have a Material Adverse Effect, or violate any provision of the
Certificate of Incorporation or By-laws of the Company or any of its
Subsidiaries.
(m) The Company has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the issued
and outstanding shares of Common Stock have been duly and validly issued
and are fully paid and nonassessable. There are no statutory preemptive or
other similar rights to subscribe for or to purchase or acquire any shares
of Common Stock of the Company or its Subsidiaries or any such rights
pursuant to its Certificate of Incorporation or By-laws or any agreement or
instrument to or by which the Company or any of its Subsidiaries is a party
or bound. The Shares, when issued and sold pursuant to this Agreement,
will be duly and validly issued, fully paid and nonassessable and none of
them will be issued in violation of any preemptive or other similar right.
Except as disclosed in the Registration Statement and the Prospectus, there
is no outstanding option, warrant or other right calling for the issuance
of, and there is no commitment, plan or arrangement to issue, any share of
stock of the Company or its Subsidiaries or any security convertible into,
or exercisable or exchangeable for, such stock. The Common Stock and the
Shares conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus. All
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued, and are fully paid and nonassessable and are
owned directly by the Company or by another wholly-owned Subsidiary free
and clear of any security interests, liens, encumbrances, equities or
claims, other than those described in the Prospectus.
(n) Except as described in the Prospectus, no holder of any security
of the Company has the right to have any security owned by such holder
included in the Registration Statement or to demand registration of any
security owned by such holder during the period ending 180 days after the
date of this Agreement. Each director, officer and holder of one percent
(1%) or more of the outstanding capital stock of the Company has delivered
to the Representatives his or her enforceable written lock-up agreement in
the form attached to this Agreement ("Lock-Up Agreement").
(o) All necessary corporate action has been duly and validly taken by
the Company to authorize the execution and delivery of, and performance
under, this Agreement and the issuance and sale of the Shares by the
Company. This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes and will constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except (i)
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<PAGE>
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles, and
(ii) to the extent that rights to indemnity or contribution under this
Agreement may be limited by Federal and State securities laws or the
public policy underlying such laws.
(p) Neither the Company nor any of its Subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a Material Adverse Effect. The
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or contractors which would have
a Material Adverse Effect. The Company is not aware of any threatened or
pending litigation between the Company or its Subsidiaries and any of its
executive officers and has knowledge that such officers will not remain in
the employment of the Company.
(q) No transaction has occurred between or among the Company and any
of its officers or directors or five percent shareholders or any affiliate
or affiliates of any such officer or director or five percent shareholders
that is required to be described in and is not described in the
Registration Statement and the Prospectus.
(r) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of any of the Shares.
(s) The Company and its Subsidiaries have filed all Federal, state,
local and foreign tax returns which are required to be filed through the
date hereof, or has received extensions thereof, and has paid all taxes
shown on such returns and all assessments received by it to the extent that
the same are material and have become due. To the Company's knowledge,
there are no tax audits or investigations pending, nor are there any
material proposed additional tax assessments against the Company or any of
its Subsidiaries.
(t) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market System, subject to official Notice of Issuance. A
registration statement has been filed on Form 8-A pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
registration statement complies in all material respects with the Exchange
Act.
(u) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its
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<PAGE>
Subsidiaries. The Company and each of its Subsidiaries 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 accordance with generally
accepted accounting principles and to maintain asset accountability, (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 the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(v) The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged
or propose to engage after giving effect to the transactions described in
the Prospectus; all policies of insurance and fidelity or surety bonds
insuring the Company or any of its Subsidiaries or the Company's or its
Subsidiaries' respective businesses, assets, employees, officers and
directors are in full force and effect; the Company and each of its
Subsidiaries are in compliance with the terms of such policies and
instruments in all respects; and neither the Company nor any of its
Subsidiaries has any 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 respective business at a cost that would not have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has been
denied any insurance coverage which it has sought or for which it has
applied.
(w) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws) has been obtained or made and
is in full force and effect.
(x) There are no affiliations with the NASD among the Company's
officers, directors or, to the best of the knowledge of the Company, any
five percent or greater securityholder of the Company, except as set forth
in the Registration Statement or otherwise disclosed in writing to the
Representatives.
(y) (i) To the best of its knowledge, both the Company and each of 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 Law") which are applicable
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<PAGE>
to its business; (ii) neither the Company nor its Subsidiaries has received
any notice from any governmental authority or third party of an asserted
claim under Environmental Laws; (iii) to the best of its knowledge, each of
the Company and its Subsidiaries has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to
conduct its business and is in compliance with all terms and conditions of
any such permit, license or approval; (iv) to the Company's best knowledge,
no facts currently exist that will require the Company or its Subsidiaries
to make future material capital expenditures to comply with Environmental
Laws; and (v) no property which is or has been owned, leased or occupied
by the Company or its Subsidiaries has been designated as a Superfund site
pursuant to the Comprehensive Environmental Response, Compensation of
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.) or
otherwise designated as a contaminated site under applicable state or local
law. Neither the Company nor any of its Subsidiaries has been named as a
"potentially responsible party" under the Comprehensive Environmental
Response, Compensation of Liability Act of 1980, as amended.
(z) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of proceeds thereof as described in
the Prospectus, will not be required to file as an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(aa) The Company, its Subsidiaries or, to the Company's knowledge, any
other person associated with or acting on behalf of the Company or its
Subsidiaries including, without limitation, any director, officer, agent or
employee of the Company or its Subsidiaries has not, directly or
indirectly, while acting on behalf of the Company or its Subsidiaries (i)
used any corporate funds for unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity; (ii) made any
unlawful payment to foreign or domestic government officials or employees
or to foreign or domestic political parties or campaigns from corporate
funds; (iii) violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (iv) made any other unlawful payment.
(bb) The Company has reviewed its operations and that of its
Subsidiaries to evaluate the extent to which the business or operations of
the Company or any of its Subsidiaries will be affected by the Year 2000
Problem (that is, any significant risk the computer hardware or software
applications used by the Company and its Subsidiaries will not, in the case
of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000); as a result of such review, the Company has no
reason to believe, and does not believe, that (A) there are any issues
related to the Company's preparedness to address the Year 2000 Problem that
are of a character required to be described or referred to in the
Registration Statement or Prospectus which have not been accurately
described in the Registration Statement or Prospectus and (B) the Year
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<PAGE>
2000 Problem will have a Material Adverse Effect, or result in any material
loss or interference with the business or operations of the Company and its
Subsidiaries, taken as a whole.
(cc) The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's general
or specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (3)
access to assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become effective
shall have been received by the Representatives and the Prospectus shall
have been timely filed with the Commission in accordance with Section 6(a)
of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Commission and the Representatives.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 5(d)
shall be true and correct when made and on and as of each Closing Date as
if made on such date. The Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by them at or before such Closing
Date.
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<PAGE>
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that (i)
the signers of such certificate have carefully examined the Registration
Statement, the Prospectus and this Agreement and that the representations
and warranties of the Company in this Agreement are true and correct on and
as of such Closing Date with the same effect as if made on such Closing
Date and the Company has performed all covenants and agreements and
satisfied all conditions contained in this Agreement required to be
performed or satisfied by it at or prior to such Closing Date, and (ii) no
stop order suspending the effectiveness of the Registration Statement has
been issued and to the best of their knowledge, no proceedings for that
purpose have been instituted or are pending under the Securities Act.
(e) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from Ernst &
Young LLP addressed to the Representatives and dated, respectively, the
date of this Agreement and each such Closing Date, in form and substance
reasonably satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Securities Act and the
Rules, that the response to Item 10 of the Registration Statement is
correct insofar as it relates to them and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in
the Registration Statement and the Prospectus and reported on by them
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules;
(ii) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings "Summary
Consolidated Financial Data" and "Selected Financial Data," carrying
out certain procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter, a reading of the minutes of the meetings of the
shareholders and directors of the Company, and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company as to transactions and events
subsequent to the date of the latest audited financial statements,
except as disclosed in the Registration Statement and the Prospectus,
nothing came to their attention which caused them to believe that:
(A) the amounts in "Summary Consolidated Financial Data,"
and "Selected Financial Data" included in the Registration
Statement and the Prospectus do not agree with the corresponding
amounts in the
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<PAGE>
audited and unaudited financial statements from which such
amounts were derived; or
(B) with respect to the Company, there were, at a specified
date not more than five business days prior to the date of the
letter, any increases in the current liabilities and long-term
liabilities of the Company or any decreases in net income or in
working capital or the shareholders' equity in the Company, as
compared with the amounts shown on the Company's audited balance
sheet as of September 30, 1999 included in the Registration
Statement;
(iii) they have performed certain other procedures as may be
permitted under Generally Acceptable Auditing Standards as a result of
which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth in the Registration
Statement and the Prospectus and reasonably specified by the
Representatives agrees with the accounting records of the Company; and
(iv) based upon the procedures set forth in clauses (ii) and
(iii) above and a reading of the amounts included in the Registration
Statement under the headings "Summary Consolidated Financial Data" and
"Selected Financial Data" included in the Registration Statement and
Prospectus and a reading of the financial statements from which
certain of such data were derived, nothing has come to their attention
that gives them reason to believe that the "Summary Consolidated
Financial Data" and "Selected Financial Data" included in the
Registration Statement and Prospectus do not comply as to the form in
all material respects with the applicable accounting requirements of
the Securities Act and the Rules or that the information set forth
therein is not fairly stated in relation to the financial statements
included in the Registration Statement or Prospectus from which
certain of such data were derived are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement and Prospectus.
References to the Registration Statement and the Prospectus in
this paragraph (e) are to such documents as amended and supplemented
at the date of the letter.
(f) The Representatives shall have received on each Closing Date from
Fenwick & West LLP, counsel for the Company, an opinion, addressed to the
Representatives, dated such Closing Date, and stating in effect that:
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<PAGE>
(i) 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 State of Delaware or of such other jurisdiction
in which each such Subsidiary is organized. Each of the Company and
its Subsidiaries is duly qualified and in good standing as a foreign
corporation in each jurisdiction in the United States in which the
character or location of its assets or properties (owned, leased or
licensed) or the nature of its businesses makes such qualification
necessary, except for such jurisdictions where the failure to so
qualify, individually or in the aggregate, would not have a Material
Adverse Effect.
(ii) Each of the Company and its Subsidiaries has all requisite
corporate power and authority to own, lease and license its assets and
properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus and with
respect to the Company to enter into, deliver and perform under this
Agreement and to issue and sell the Shares other than those required
under the Securities Act and state and foreign Blue Sky laws.
(iii) The Company has authorized and issued capital stock as set
forth in the Registration Statement and the Prospectus under the
caption "Capitalization"; the certificates evidencing the Shares are
in due and proper legal form and have been duly authorized for
issuance by the Company; all of the outstanding shares of Common Stock
of the Company have been duly and validly authorized and issued and
are fully paid and nonassessable and none of them was issued in
violation of any preemptive or other similar right granted by
applicable statutes or set forth in the Company's Certificate of
Incorporation or Bylaws or any agreement that was filed as an Exhibit
to the Registration Statement. The Shares when issued and sold
pursuant to this Agreement will be duly and validly issued,
outstanding, fully paid and nonassessable and none of them will have
been issued in violation of any preemptive or other similar right
granted by applicable statutes or set forth in the Company's
Certificate of Incorporation or Bylaws or any agreement that was filed
as an Exhibit to the Registration Statement. To such counsel's
knowledge, except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and no commitment, plan or arrangement to
issue, any share of stock of the Company or any security convertible
into, exercisable for, or exchangeable for stock of the Company. The
Common Stock and the Shares conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus. The issued and outstanding shares of capital stock of
each of the Company's Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and are owned by the
Company or by another wholly owned subsidiary of the Company, free and
clear of any perfected security
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<PAGE>
interest, any other security interests, liens, encumbrances, equities
or claims, other than those contained in the Registration Statement
and the Propectus.
(iv) Each of the Lock-Up Agreements executed by the Company's
securityholders, directors and officers has been duly and validly
delivered by such persons and constitutes the legal, valid and binding
obligation of each such person enforceable against each such person in
accordance with its terms, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
(v) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and this Agreement constitutes the legal,
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms except (i) as such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and by
general equitable principles, and (ii) to the extent that rights to
indemnity or contribution under this Agreement may be limited by
Federal and State securities laws or the public policy underlying such
laws.
(vi) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with notice
or lapse of time, or both, would constitute a default) under, or
require consent or waiver under, or result in the execution or
imposition of any lien, charge, claim, security interest or
encumbrance upon any properties or assets of the Company or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed
trust, note or other agreement or instrument which is filed as an
exhibit to the Registration Statement and to which the Company or any
of its Subsidiaries is a party or by which either the Company or any
of its Subsidiaries or any of their properties or businesses are
bound, or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation of which such counsel is aware (except the
securities or Blue Sky laws of the various states and the underwriting
compensation rules of the NASD, as to which we express no opinion),
and except as would not have a Material Adverse Effect, or violate any
provision of the charter or by-laws of the Company or any of its
Subsidiaries.
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(vii) To such counsel's knowledge, no default exists, and no
event has occurred which with notice or lapse of time, or both, would
constitute a default, in the due performance and observance of any
term, covenant or condition by the Company or any of its Subsidiaries
of any indenture, mortgage, deed of trust, note or any other agreement
or instrument which is filed as an exhibit to the Registration
Statement and 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 assets or properties or businesses may be bound or
affected, where the consequences of such default, individually or in
the aggregate, would have a Material Adverse Effect.
(viii) To such counsel's knowledge, the Company and its
Subsidiaries are not in violation of any term or provision of their
respective charter or by-laws or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation, individually or in the aggregate,
would have a Material Adverse Effect.
(ix) No consent, approval, authorization or order of any court
or governmental agency or regulatory body is required for the
execution, delivery or performance of this Agreement by the Company or
the consummation of the transactions contemplated hereby or thereby,
except such as have been obtained under the Securities Act and such as
may be required by the NASD or under state securities or Blue Sky laws
in connection with the purchase and distribution of the Shares by the
several Underwriters and the rules of the NASD governing underwriters
compensation.
(x) Other than as described in the Prospectus, to such
counsel's knowledge, there is no litigation or governmental or other
proceeding or investigation, before any court or before or by any
public body or board pending or threatened against, or involving the
assets, properties or businesses of, the Company or any of its
Subsidiaries which would have a Material Adverse Effect.
(xi) To such counsel's knowledge, the Company is not involved
in any pending litigation nor is the Company threatened with any
litigation relating to the infringement or violation of any patents,
trade secrets, trademarks, service marks or other proprietary
information or materials, of others, and there are no infringements by
others of any of the Company's patents, trade secrets, trademarks,
service marks or other proprietary information or materials which in
the judgment of such counsel could affect materially the use thereof
by the Company.
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(xii) The statements in the Prospectus under the captions
"Description of Capital Stock," "Shares Eligible for Future Sale,"
"Management-Employment Agreements," "Management-Employee Benefit
Plans," "Management-Offer Letters and Severance and Change of Control
Agreements," and "Related Party Transactions," insofar as such
statements constitute a summary of documents referred to therein or
matters of law, are fair summaries in all material respects and
accurately present in all material respects the information called
for with respect to such documents and matters.
(xiii) The Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto (except
for the financial statements and schedules and other financial and
statistical data included therein, as to which such counsel expresses
no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules.
(xiv) The Registration Statement is effective under the
Securities Act, and to such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement has been
issued and to such counsel's knowledge no proceedings for that purpose
have been instituted or are threatened, pending or contemplated. Any
required filing of the Prospectus and any supplement thereto pursuant
to Rule 424(b) under the Securities Act has been made in the manner
and within the time period required by such Rule 424(b).
(xv) The Shares have been approved for listing on the Nasdaq
National Market.
(xvi) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus under
the caption "Description of Capital Stock."
(xii) The Company is not required to register as an "investment
company" as such term is defined in the Investment Company Act of
1940, as amended.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of officers of the Company and public officials
and on the opinions of other counsel satisfactory to the Representatives as to
matters which are governed by laws other than the laws of the State of
California, the General Corporation Law of the State of Delaware and the Federal
laws of the United States; provided that such counsel shall state that in their
opinion the Underwriters and they are justified in relying on such other
opinions. Copies of such certificates and other opinions shall be furnished to
the Representatives and counsel for the Underwriters.
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In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except as
specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to believe
that the Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and other
financial and statistical data, as to which such counsel need express no belief)
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus as amended or supplemented (except with
respect to the financial statements, notes and schedules thereto and other
financial and statistical data, as to which such counsel need make no statement)
on the date thereof contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(g) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives, and their
counsel and the Underwriters shall have received from Gibson, Dunn &
Crutcher LLP a favorable opinion, addressed to the Representatives and
dated such Closing Date, with respect to the Shares, the Registration
Statement and the Prospectus, and such other related matters, as the
Representatives may reasonably request, and the Company shall have
furnished to Gibson, Dunn & Crutcher LLP such documents as they may
reasonably request for the purpose of enabling them to pass upon such
matters.
(h) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section 4(n).
(i) The Company shall have furnished or caused to be furnished to the
Representatives such further certificates or documents as the
Representatives shall have reasonably requested.
6. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, and any amendments thereto, to become effective as
promptly as possible. The Company shall prepare the Prospectus in a
form approved by the
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Representatives and file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the Commission's close of
business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Securities Act.
(ii) The Company shall promptly advise the Representatives in
writing (i) when any amendment to the Registration Statement shall
have become effective, (ii) of any request by the Commission for any
post-effective amendment of the Registration Statement or the
Prospectus or for any additional information, (iii) of the prevention
or suspension of the use of any preliminary prospectus or the
Prospectus or of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (iv)
of 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 the initiation or threatening of any proceeding for
such purpose. The Company shall not file any amendment of the
Registration Statement or supplement to the Prospectus unless the
Company has furnished the Representatives a copy for its review prior
to filing (with sufficient time for the Representatives to review such
proposed amendment or supplement) and shall not file any such proposed
amendment or supplement to which the Representatives reasonably
object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Securities Act and the Rules,
any event occurs as a result of which the Prospectus as then amended
or supplemented would include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company
promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (ii) of this Section 6(a), an amendment
or supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
(iv) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not
later than 45 days after the end of the 12-month period beginning at
the end of the fiscal quarter of the Company during which the
Effective Date occurs (or 90 days if such 12-month period coincides
with the Company's fiscal year), an earning statement (which need not
be audited) of the Company, covering such
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12-month period, which shall satisfy the provisions of Section 11(a)
of the Securities Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and amendments
thereof) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and all amendments thereof and,
so long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and any amendments thereof
and supplements thereto as the Representatives may reasonably request.
(vi) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and sale
in connection with the offering under the laws of such jurisdictions
as the Representatives may designate and shall maintain such
qualifications in effect so long as required for the distribution of
the Shares; PROVIDED, HOWEVER, that the Company shall not be required
in connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction.
(vii) Without the prior written consent of CIBC World Markets
Corp., for a period of 180 days after the date of this Agreement, the
Company and each of its individual directors, executive officers and
holders of five percent or more of the Company's securities, shall not
issue, sell or register with the Commission (other than on Form S-8 or
on any successor form), or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any securities
convertible into, exercisable for or exchangeable for equity
securities of the Company), except for the issuance of the Shares
pursuant to the Registration Statement and the issuance of shares
pursuant to the Company's existing stock option plan, employee
purchase plan or bonus plan as described in the Registration Statement
and the Prospectus and subject to the terms and exceptions set forth
in the Lock-up Agreement and except for shares issued by the Company
in any acquisition transaction, provided the holders of such shares
agree not to sell until 180 days past IPO, and except to service
providers in ordinary course of business, provided they agree to be
locked up for 180 days past IPO. In the event that during this
period, (i) any shares are issued pursuant to the Company's existing
stock option plan or bonus plan that are exercisable during such 180
day period or (ii) any registration is effected on Form S-8 or on any
successor form relating to shares that are exercisable during such 180
period, the Company shall obtain the written agreement of such grantee
or purchaser or holder of such registered
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securities that, for a period of 180 days after the date of this
Agreement, such person will not, without the prior written consent of
CIBC World Markets Corp., offer for sale, sell, distribute, grant any
option for the sale of, or otherwise dispose of, directly or
indirectly, or exercise any registration rights with respect to, any
shares of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common Stock) owned
by such person.
(viii) On or before completion of this offering, the Company
shall make all filings required under applicable securities laws and
by the Nasdaq National Market (including any required registration
under the Exchange Act).
(ix) The Company will apply the net proceeds from the offering
of the Shares substantially in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities or Blue
Sky laws of the various jurisdictions referred to in Section 6(a)(vi),
including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Representatives and to the Underwriters of
copies of each preliminary prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by
this Section to be so furnished, as may be reasonably requested for use in
connection with the offering and sale of the Shares by the Underwriters or
by dealers to whom Shares may be sold; (v) the filing fees of the NASD in
connection with its review of the terms of the public offering and
reasonable fees and disbursements of counsel for the Underwriters in
connection with such review; (vi) inclusion of the Shares for quotation on
the Nasdaq National Market; and (vii) all transfer taxes, if any, with
respect to the sale and delivery of the Shares by the Company to the
Underwriters. Subject to the provisions of Section 9, theUnderwriters
agree to pay, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the performance of the
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<PAGE>
obligations of the Underwriters under this Agreement not payable by the
Company pursuant to the preceding sentence, including, without limitation,
the fees and disbursements of counsel for the Underwriters.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages and liabilities,
joint or several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they, or
any of them, may become subject under the Securities Act, the Exchange Act
or other Federal or state law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment thereof or supplement thereto,
or in any Blue Sky application or other information or other documents
executed by the Company filed in any state or other jurisdiction to qualify
any or all of the Shares under the securities laws thereof (any such
application, document or information being hereinafter referred to as a
"Blue Sky Application") or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) in
whole or in part upon any breach of the representations and warranties set
forth in Section 4 hereof, or (iii) in whole or in part upon any failure of
the Company to perform any of its obligations hereunder or under law;
PROVIDED, HOWEVER, that such indemnity shall not inure to the benefit of
any Underwriter (or any person controlling such Underwriter) on account of
any losses, claims, damages or liabilities arising from the sale of the
Shares to any person by such Underwriter if such untrue statement or
omission or alleged untrue statement or omission was made in such
preliminary prospectus, the Registration Statement or the Prospectus, or
such amendment or supplement thereto, or in any Blue Sky Application in
reliance upon and in conformity with information furnished in writing to
the Company by the Representatives on behalf of any Underwriter
specifically for use therein, or (ii) the indemnity agreement contained in
this paragraph (a)(i) with respect to any Preliminary Prospectus shall not
inure to the benefit of any Underwriter for whom the person asserting any
such losses, claims, damages, liabilities or expenses purchased the Stock
which is the subject thereof (or to the benefit of any person controlling
such Underwriter) if at or prior to the written confirmation of the sale of
such Stock a copy of the Prospectus (or the Prospectus as amended or
supplemented) was not sent or delivered to such person (excluding the
documents incorporated therein by reference) and the untrue statement or
omission of a material fact contained in such Preliminary Prospectus
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<PAGE>
was corrected in the Prospectus (or the Prospectus as amended or
supplemented). This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, each director of the Company, and each officer of
the Company who signs the Registration Statement, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only insofar
as such losses, claims, damages or liabilities arise out of or are based
upon any untrue statement or omission or alleged untrue statement or
omission which was made in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment thereof or supplement
thereto, contained in the (i) concession and reallowance figures appearing
under the caption "Underwriting" and (ii) the paragraph relating to
stabilization on the inside front cover page of the Prospectus and
stabilization information contained under the caption "Underwriting" in the
Prospectus; PROVIDED, HOWEVER, that the obligation of each Underwriter to
indemnify the Company (including any controlling person, director or
officer thereof) shall be limited to the net proceeds received by the
Company from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 7(a) or 7(b) shall be available to
any party who shall fail to give notice as provided in this Section 7(c) if
the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
that it may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and the approval by
the indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except as
provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ its
counsel in any such
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action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of cousel by such
indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have been advised by counsel that
there may be one or more legal defenses available to it which are different
from or in addition to those available to the indemnifying party (in which
case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not have employed counsel to assume the defense
of such action within a reasonable time after notice of the commencement
thereof, in each of which cases the fees and expenses of counsel shall be
at the expense of the indemnifying parties. An indemnifying party shall
not be liable for any settlement of any action, suit, proceeding or claim
effected without its written consent, which consent shall not be
unreasonably withheld or delayed.
8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7(a) or 7(b) is due in accordance with its terms but for any reason
is held to be unavailable to or insufficient to hold harmless an
indemnified party under Section 7(a) or 7(b), then each indemnifying party
shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses reasonably incurred
in connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claims asserted, but after deducting any contribution
received by any person entitled hereunder to contribution from any person
who may be liable for contribution) to which the indemnified party may be
subject in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand and the Underwriters on
the other from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result
of the indemnifying party not having received notice as provided in Section
7 hereof, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the
Company, on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts but before
deducting expenses) received by the Company, as set forth in the table on
the cover page of the Prospectus, bear to (y) the underwriting discounts
received by the Underwriters, as set forth in the table on the cover page
of the Prospectus. The relative fault of the Company or the Underwriters
shall be determined by refrence to, among other things, whether the untrue
or alleged untrue statement of a material fact related to information
supplied by the Company or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the Underwriters
were
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<PAGE>
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8, (i)
in no case shall any Underwriter (except as may be provided in the
Agreement Among Underwriters) be liable or responsible for any amount in
excess of the underwriting discount applicable to the Shares purchased by
such Underwriter hereunder; and (ii) the Company shall be liable and
responsible for any amount in excess of such underwriting discount;
PROVIDED, HOWEVER, that 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. For purposes of this Section 8, each person,
if any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of the Section 15 of the Securities
Act or Section 20(a) of the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject
in each case to clauses (i) and (ii) in the immediately preceding sentence
of this Section 8. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution may be made against
another party or parties under this Section, notify such party or parties
from whom contribution may be sought, but the omission so to notify such
party or parties from whom contribution may be sought shall not relieve the
party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its written consent. The
Underwriter's obligations to contribute pursuant to this Section 8 are
several in proportion to their respective underwriting commitments and not
joint.
9. TERMINATION. This Agreement may be terminated with respect to
the Shares to be purchased on a Closing Date by the Representatives by notifying
the Company at any time
(a) in the absolute discretion of the Representatives at or before
any Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with the
offering; (iii) if there shall be such a material adverse change in general
financial, political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as to make
it, in the judgment of the Representatives, inadvisable or impracticable to
market the Shares; (iv) if trading in the Shares has been suspended
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by the Commission or trading generally on the New York Stock Exchange,
Inc., on the American Stock Exchange, Inc. or the Nasdaq National Market
has been suspended or limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for
securities have been required, by said exchanges or by order of the
Commission, the National Association of Securities Dealers, Inc., or any
other governmental or regulatory authority; or (v) if a banking moratorium
has been declared by any state or Federal authority; or (vi) if, in the
judgment of the Representatives, there has occurred a Material Adverse
Effect, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as required
by this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that (y) if this Agreement
is terminated by the Representatives or the Underwriters because of any failure,
refusal or inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contemplation of performing their
obligations hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by it under this Agreement, without
some reason sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the Company
or to the other Underwriters for damages occasioned by its failure or refusal.
10. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase such
Shares on the terms herein set forth in proportion to their respective
obligations hereunder; provided, that in no event shall the maximum number
of Shares that any Underwriter has agreed to purchase pursuant to Section 1
be increased pursuant to this Section 10 by more than one-ninth of such
number of Shares without the written consent of such Underwriter, or
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<PAGE>
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to one additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares upon
the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
five business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(b),
7, 8 and 9. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
11. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(b), 7, 8
and 9 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC World Markets Corp., 2420 Sand
Hill Road, Suite 300, Menlo Park, California 94025 Attention:________________,
with a copy to Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles,
California 90071 Attention: Richard A. Strong, Esq., and (b) if to
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<PAGE>
the Company, to its agent for service as such agent's address appears on the
cover page of the Registration Statement with a copy to Fenwick & West LLP,
Two Palo Alto Square, Palo Alto, California 94306, attention: David Healy,
Esq.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among
us.
Very truly yours,
GRIC COMMUNICATIONS, INC.
By _____________________________
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
___________________________________
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By CIBC WORLD MARKETS CORP.
By
----------------------------
Title:
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<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of
Firm Shares to
Name Be Purchased
---- --------------
<S> <C>
CIBC World Markets Corp.
U.S. Bancorp Piper Jaffray
Volpe Brown Whelan & Co.
______________
Total
-------------------
-------------------
</TABLE>
