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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 25, 1997
RADIUS INC.
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
0-18690 68-0101300
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(Commission (IRS Employer
File Number) Identification No.)
215 Moffett Park Drive, Sunnyvale, CA 94089
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (408) 541-6100
<PAGE>
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS.
On August 25, 1997 and August 29, 1997, Radius Inc. (the "Company") sold
an aggregate of 875,000 and 121,875 shares, respectively, of the 1,741,127
shares of Splash Technology Holdings, Inc. ("Splash") Common Stock owned by the
Company. These shares were sold pursuant to an underwritten public offering
of an aggregate of 3,250,000 shares of Common Stock of Splash by Splash and
certain other stockholders of Splash.
The shares of Splash Common Stock were sold to the underwriters at a
price of $30.875 per share (including underwriting discount) for aggregate
net proceeds to the Company of $30.8 million. The Company used $21.9 million
of such proceeds to repay all outstanding indebtedness of the Company under
its term loan agreement with IBM Credit Corp. ("IBM Credit"), used $3.4
million of such proceeds to redeem all of the Company's outstanding Series A
Preferred Stock (all of which shares were held by IBM Credit) and used $5.5
million of such proceeds to repay principal outstanding of $6.8 million on
the working capital line of credit with IBM Credit.
After the completion of the sale of these shares of Splash Common Stock,
the Company continues to own 744,252 shares of Splash Common Stock.
ITEM 5: OTHER EVENTS
In connection with the repayment of its term loan agreement and the
redemption of the Company's Series A Preferred Stock with the proceeds of the
sale of the Splash Common Stock described above, the Company entered into an
amended working capital line of credit for $5.0 million that is secured by
the remaining shares of Splash Common Stock held by the Company.
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ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION.
Set forth below is the Company's Unaudited Pro Forma Consolidated Balance
Sheet at June 30, 1996 reflecting the sale of the Splash Stock.
The Unaudited Pro Forma Balance Sheet as of June 30, 1997 reflects (i)
the sale of 996,875 shares of Common Stock of Splash Technology Holdings,
Inc. at a sales price of $30.875 per share, which includes underwriting
discount (for total proceeds to the Company of $30.8 million), (ii) the
application of the proceeds from such sale to repay all of the outstanding
$21.9 million indebtedness to IBM Credit under a term loan agreement, (iii)
application of $3.4 million in proceeds to redeem all of the outstanding
shares of Series A Preferred Stock of the Company held by IBM Credit pursuant
to the terms of such Series A Preferred Stock, (iv) application of $4.9
million in proceeds to the principal outstanding on the working capital line
of credit with IBM Credit, and (v) the remaining $0.6 million of proceeds to
cash for working capital purposes.
The pro forma financial information does not purport to be indicative of
the results of operations that would actually have been reported had the
transactions underlying the pro forma adjustments actually been consummated
on such dates or of the results of operations that may be reported by the
Company in the future.
(c) EXHIBITS
10.01 Underwriting Agreement dated as of August 19, 1997 among Splash
Technology Holdings, Inc., Selling Stockholders named therein and
Alex. Brown & Sons Incorporated, Montgomery Securities and Piper
Jaffray Inc.
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RADIUS INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
JUNE 30, PRO FORMA TOTAL
1997 ADJUSTMENTS AS ADJUSTED
--------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Current Assets:
Cash $ 766 575 (A) $ 1,341
Accounts receivable, net 8,284 8,284
Inventories 3,642 3,642
Investment in Splash Technology Holdings, Inc. -
current portion 30,163 (11,206)(B) 18,957
Prepaid expenses and other current assets 366 366
--------- -------- ---------
Total current assets 43,221 (10,631) 32,590
Investment in Splash Technology Holdings, Inc. -
noncurrent portion 21,940 (21,940)(B) -
Property and equipment, net 335 335
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$ 65,496 $(32,571) $32,925
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--------- -------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 6,675 $ 6,675
Accrued payroll and related expenses 1,384 1,384
Accrued warranty costs 346 346
Other accrued liabilities 1,775 1,775
Accrued income taxes 2,115 2,115
Accrued restructuring and other charges 31 31
Short-term borrowings 4,841 (4,841)(A) -
Obligation under capital leases 472 472
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Total current liabilities 17,639 (4,841) 12,798
Long term borrowings 21,940 (21,940)(A) -
Commitments and contingencies
Convertible preferred stock 3,000 (3,000)(A) -
Shareholders' equity
Common stock 169,019 (225)(A) 168,794
Unrealized gain on available-for-sale securities 52,103 (33,146)(B) 18,957
Accumulated deficit (198,245) 30,581 (C) (167,664)
Accumulated translation adjustment 40 40
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Total shareholders' equity 22,917 (2,790) 20,127
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$ 65,496 (32,571) $ 32,925
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--------- -------- ---------
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
(in thousands)
--------------
(A) The application of the gain on the sale of shares of
Common Stock of Splash Technology Holdings, Inc.
is as follows:
Gain on the sale (see C below) $ 30,581
Redemption of convertible preferred stock (3,000)
Repayment of long term borrowings (21,940)
Repayment of short term borrowings (working capital
line of credit) (4,841)
Dividend paid in Common Stock (225)
--------
Cash remaining for working capital purposes $ 575
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--------
(B) Reflects the value of 570,139 shares of Splash
Common Stock or $19.0 million (based on a closing
price of $33.25 per share as of June 30, 1997 and
net of 174,113 shares subject to an option granted
to IBM Credit) owned by the Company after the
completion of the sale of an aggregate of
996,875 shares of Common Stock of Splash Technology
Holdings, Inc., on August 25 and August 29, 1997.
(C) Represents the gain on the sale of shares of Common Stock
of Splash Technology Holdings, Inc.
Cash paid to Radius Inc. $ 30,779
Series A Preferred Stock redemption fees and
accrued dividend (198)
--------
$ 30,581
--------
--------
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: September 5, 1997
RADIUS INC.
By: /s/ Henry V. Morgan
--------------------------------
Henry V. Morgan
Chief Financial Officer
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EXHIBIT 10.01
3,250,000 Shares
Splash Technology Holdings, Inc.
Common Stock
($0.001 Par Value)
UNDERWRITING AGREEMENT
----------------------
August 19, 1997
Alex. Brown & Sons Incorporated
Montgomery Securities
Piper Jaffray Inc.
As Representatives of the
Several Underwriters
c/o Alex. Brown & Sons Incorporated
1 South Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
Splash Technology Holdings, Inc., a Delaware corporation (the
"Company"), and certain stockholders of the Company (the "Selling
Stockholders") propose to sell to the several underwriters (the
"Underwriters") named in Schedule I hereto for whom you are acting as
representatives (the "Representatives") an aggregate of 3,250,000 shares of
the Company's Common Stock, $0.001 par value (the "Firm Shares") of which
1,340,500 shares will be sold by the Company and 1,909,500 shares will be
sold by the Selling Stockholders. The respective amounts of the Firm Shares
to be so purchased by the several Underwriters are set forth opposite their
names in Schedule I hereto and the respective amounts to be sold by the
Selling Stockholders are set forth opposite their names in Schedule II
hereto. The Company and the Selling Stockholders are sometimes referred to
herein collectively as the "Sellers." The Company and certain Selling
Stockholders also propose to sell at the Underwriters' option an aggregate of
up to 487,500 additional shares of the Company's Common Stock (the "Option
Shares") as set forth below.
As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this Agreement on
behalf of the several Underwriters, and (b) that the several Underwriters are
willing, acting severally and not jointly, to purchase the numbers of Firm
Shares set forth opposite their respective names in Schedule I, plus their
pro rata portion of the Option Shares if you elect to exercise the
over-allotment option in whole or in part for the accounts of the several
Underwriters. The Firm Shares and the Option
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Shares (to the extent the aforementioned option is exercised) are herein
collectively called the "Shares."
In consideration of the mutual agreements contained herein and of
the interest of the parties in the transactions contemplated hereby, the
parties hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters as follows:
(i) A registration statement on Form S-1 (File No. 333-32243)
with respect to the Shares has been carefully prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), and the Rules and Regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission. Copies of such registration statement,
including any amendments thereto, the preliminary prospectuses (meeting the
requirements of the Rules and Regulations) contained therein and the
exhibits, financial statements and schedules, as finally amended and revised,
have heretofore been delivered by the Company to you. Such registration
statement, together with any registration statement filed by the Company
pursuant to Rule 462(b) of the Act, herein referred to as the "Registration
Statement," which shall be deemed to include all information omitted
therefrom in reliance upon Rule 430A and contained in the Prospectus referred
to below, has become effective under the Act and no post-effective amendment
to the Registration Statement has been filed as of the date of this
Agreement. "Prospectus" means (a) the form of prospectus first filed with
the Commission pursuant to Rule 424(b) or (b) the last preliminary prospectus
included in the Registration Statement filed prior to the time it becomes
effective or filed pursuant to Rule 424(a) under the Act that is delivered by
the Company to the Underwriters for delivery to purchasers of the Shares,
together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary
prospectus included in the Registration Statement prior to the time it
becomes effective is herein referred to as a "Preliminary Prospectus."
(ii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement. Each of
Splash Technology, Inc. and Splash-Quintar Company (collectively, the "U.S.
Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement. The U.S. Subsidiaries, Splash Foreign Sales Corporation and
Splash Technology S.a.r.l. (collectively, the "Subsidiaries") are the only
subsidiaries, direct or indirect, of the Company. The Company and the U.S.
Subsidiaries are duly qualified to transact business in all jurisdictions in
which the conduct of their business requires such qualification and the
failure to be so qualified would have a material adverse effect upon the
Company. The outstanding shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company or another Subsidiary free and
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clear of all liens, encumbrances and equities and claims; and no options,
warrants or other rights to purchase, agreements or other obligations to
issue or other rights to convert any obligations into shares of capital stock
or ownership interests in the Subsidiaries are outstanding.
(iii) The outstanding shares of capital stock of the Company,
including all shares to be sold by the Selling Stockholders, have been duly
authorized and validly issued and are fully paid and non-assessable; the
Shares have been duly authorized and when issued and paid for as contemplated
herein will be validly issued, fully paid and non-assessable; and no
preemptive rights granted by the Company to any stockholders exist with
respect to any of the Shares or the issue and sale thereof. Neither the
filing of the Registration Statement nor the offering or sale of the Shares
as contemplated by this Agreement gives rise to any rights, other than those
that have been waived or satisfied, for or relating to the registration of
any shares of Common Stock.
(iv) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. All of the Shares
conform to the description thereof contained in the Registration Statement.
The form of certificates for the Shares conforms in all material respects to
the corporate law of the jurisdiction of the Company's incorporation.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Shares nor instituted proceedings for that purpose. The Registration
Statement contains, and the Prospectus and any amendments or supplements
thereto will contain, all statements which are required to be stated therein
by, and will conform to, the requirements of the Act and the Rules and
Regulations. The Registration Statement and any amendment thereto do not
contain, and will not contain, any untrue statement of a material fact and do
not omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and any amendments and supplements thereto do not contain, and
will not contain, any untrue statement of material fact; and do not omit, and
will not omit, to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to information contained in
or omitted from the Registration Statement or the Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Underwriter
through the Representatives, specifically for use in the preparation thereof.
(vi) The consolidated financial statements of the Company and
the Subsidiaries, together with related notes and schedules as set forth in
the Registration Statement, present fairly the financial position and the
results of operations and cash flows of the Company and the consolidated
Subsidiaries, at the indicated dates and for the indicated periods. Such
financial statements and related schedules have been prepared in accordance
with generally accepted accounting principles, consistently applied
throughout the periods involved, except as disclosed herein, and all
adjustments necessary for a fair presentation of results for such periods
have been made. The summary financial, statistical and pro forma data
included in the Registration Statement presents fairly the information shown
therein and such data has been
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compiled on a basis consistent with the financial statements presented
therein and the books and records of the Company. The pro forma financial
statements and other pro forma financial information included in the
Registration Statement and the Prospectus present fairly the information
shown therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements, have been
properly compiled on the pro forma bases described therein, and, in the
opinion of the Company, the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions or circumstances referred to therein.
(vii) Coopers & Lybrand L.L.P., who have certified certain of
the financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required by the
Act and the Rules and Regulations.
(viii) There is no action, suit, claim or proceeding pending
or, to the knowledge of the Company, threatened against the Company or any of
the Subsidiaries before any court or administrative agency or otherwise which
if determined adversely to the Company or any of its Subsidiaries might
result in any material adverse change in the earnings, business, management,
properties, assets, rights, operations or condition (financial or otherwise)
of the Company and the Subsidiaries taken as a whole or to prevent the
consummation of the transactions contemplated hereby, except as set forth in
the Registration Statement.
(ix) The Company and the Subsidiaries have good and marketable
title to all of the properties and assets reflected in the financial
statements (or as described in the Registration Statement) hereinabove
described, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except those reflected in such financial statements (or as described in
the Registration Statement) or those that do not materially affect the value
of such properties or assets of the Company and its Subsidiaries, taken as a
whole, and do not materially interfere with the use made and proposed to be
made of such properties and assets by the Company and its Subsidiaries, taken
as a whole. The Company and the Subsidiaries occupy their leased properties
under valid and binding leases conforming in all material respects to the
description thereof set forth in the Registration Statement.
(x) The Company and the Subsidiaries have filed all Federal,
State, local and foreign income tax returns that have been required to be
filed and have paid all taxes indicated by said returns and all assessments
received by them or any of them to the extent that such taxes have become
due. All tax liabilities have been adequately provided for in the financial
statements of the Company.
(xi) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented,
there has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the earnings, business,
management, properties, assets, rights, operations or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, whether or
not occurring in the ordinary course of business, and there has not been any
material transaction entered into by the Company or the Subsidiaries, other
than transactions in the ordinary course of
4
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business and changes and transactions described in the Registration
Statement, as it may be amended or supplemented. The Company and the
Subsidiaries have no material contingent obligations that are not disclosed
in the Registration Statement.
(xii) Neither the Company nor any of the Subsidiaries is or
with the giving of notice or lapse of time or both, will be, in violation of
or in default under its Charter or By-Laws or under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a party
or by which it, or any of its properties, is bound and which violation or
default is of material significance in respect of the business or financial
condition of the Company and the Subsidiaries taken as a whole. The
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any Subsidiary is a
party, or of the Charter or by-laws of the Company or, to its knowledge, any
order, rule or regulation applicable to the Company or any Subsidiary of any
court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Company, its Subsidiaries or
any of their activities or properties.
(xiii) Each approval, consent, order, authorization,
designation, declaration or filing 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 (except such additional steps as may be
required by the Commission, the National Association of Securities Dealers,
Inc. (the "NASD") or such additional steps as may be necessary to qualify the
Shares for public offering by the Underwriters under state securities or Blue
Sky laws) has been obtained or made and is in full force and effect.
(xiv) The Company and each of the Subsidiaries holds all
material licenses, certificates and permits from governmental authorities
which are necessary to the conduct of their businesses, except where the
failure to have such licenses, certificates and permits would not, singly or
in the aggregate, have a material adverse effect on the business or financial
condition of the Company and the Subsidiaries, taken as a whole.
(xv) The Company and each of the Subsidiaries owns or possess
licenses or other rights to use all patents, trademarks, service marks, trade
names, copyrights, mask work rights, technology know-how and other
intellectual property rights ("Intellectual Property") necessary to conduct
the business now conducted by the Company and its Subsidiaries, taken as a
whole as described in the Prospectus, and, except as disclosed in the
Prospectus, neither the Company nor any of its Subsidiaries has received any
notice of infringement of or conflict with (or knows of such infringement of
or conflict with) asserted rights of others with respect to the Intellectual
Property which, individually or in the aggregate, could reasonably be
expected to result in any material adverse effect upon the business or
financial condition of the Company and the Subsidiaries, taken as a whole;
and, except as disclosed in the Prospectus and to the knowledge of the
Company or any of its Subsidiaries, do not in the conduct of their business
as described in the Prospectus, infringe or conflict with any
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Intellectual Property of any third party, or any discovery, invention,
product or process which is the subject of a patent application filed by any
thirty party, known to the Company or any of the Subsidiaries.
(xvi) Neither the Company, nor to the Company's best knowledge,
any of its affiliates, has taken or may take, directly or indirectly, any
action designed 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 shares of Common Stock to facilitate the sale or resale
of the Shares. The Company acknowledges that the Underwriters may engage in
passive market making transactions in the Shares on The Nasdaq National
Market in accordance with Regulation M under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(xvii) Neither the Company nor any Subsidiary is an
"investment company" within the meaning of such term under the Investment
Company Act of 1940 and the rules and regulations of the Commission
thereunder.
(xviii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(xix) The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is adequate
for the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in similar
industries.
(xx) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any liability; the Company has not incurred
and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (i)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the code
is so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification.
(xxi) The Company has obtained the agreement of each executive
officer and Selling Stockholder not to sell, grant any option to sell or
otherwise dispose of, directly or indirectly, any shares of Common Stock or
securities convertible into, or exercisable
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or exchangeable for Common Stock or other rights to purchase Common Stock
until 90 days after the date of the Prospectus, subject to certain limited
exceptions agreed to by the Underwriters.
(b) Each of the Selling Stockholders severally represents and
warrants as follows:
(i) Such Selling Stockholder now has and at the Closing Date
and the Option Closing Date, as the case may be (as such dates are
hereinafter defined), will have good and marketable title to the Firm Shares
and the Option Shares, if any, to be sold by such Selling Stockholder, free
and clear of any liens, encumbrances, equities and claims (other than liens
with respect to the shares of Common Stock of the Company to be sold by
Radius Inc. pursuant to this Agreement held by IBM Credit Corporation ("IBM
Credit"), pursuant to that certain Amended and Restated Working Capital
Financing and Term Loan Agreement dated August 30, 1996, which IBM Credit has
consented to the sale of such shares under this Agreement) and full right,
power and authority to effect the sale and delivery of such Firm Shares and
Option Shares; and upon the delivery of, against payment for, such Firm
Shares and Option Shares pursuant to this Agreement, the Underwriters will
acquire good and marketable title thereto, free and clear of any liens,
encumbrances, equities and claims.
(ii) Such Selling Stockholder has full right, power and
authority to execute and deliver this Agreement, the Power of Attorney, and
the Custody Agreement referred to below and to perform its obligations under
such Agreements. The execution and delivery of this Agreement and the
consummation by such Selling Stockholder of the transactions herein
contemplated and the fulfillment by such Selling Stockholder of the terms
hereof will not require any consent, approval, authorization, or other order
of any court, regulatory body, administrative agency or other governmental
body (except as may be required under the Act, state securities laws or Blue
Sky laws) and will not result in a breach of any of the terms and provisions
of, or constitute a default under, organizational documents of such Selling
Stockholder, if not an individual, or any indenture, mortgage, deed of trust
or other agreement or instrument to which such Selling Stockholder is a
party, or of any order, rule or regulation applicable to such Selling
Stockholder of any court or of any regulatory body or administrative agency
or other governmental body having jurisdiction.
(iii) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Common Stock of the Company
and, other than as permitted by the Act, the Selling Stockholder will not
distribute any prospectus or other offering material in connection with the
offering of the Shares.
(iv) Without having undertaken to determine independently the
accuracy or completeness of the representations and warranties of the
Company contained herein, no Selling Stockholder who is an executive officer
of the Company has any reason to believe that the representations and
warranties of the Company contained in this Section 1 are not true and
correct.
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(v) Without having undertaken to determine independently the
accuracy or completeness of the information contained in the Registration
Statement, each Selling Stockholder is familiar with the Registration
Statement and has no knowledge of any material fact, condition or information
not disclosed in the Registration Statement which has adversely affected or
may adversely affect the business of the Company and its Subsidiaries, taken
as a whole; and the sale of the Firm Shares and the Option Shares by such
Selling Stockholder pursuant hereto is not prompted by any information
concerning the Company or any of the Subsidiaries which is not set forth in
the Registration Statement or the documents incorporated by reference
therein. The information pertaining to such Selling Stockholder under the
caption "Selling Stockholders" in the Prospectus is complete and accurate in
all material respects.
(vi) Each of the Selling Stockholders who is an executive
officer of the Company, severally and not jointly, represents, warrants and
agrees that each of them has reviewed the Registration Statement and
Prospectus and during the course of such review, no facts have come to such
Selling Stockholder's attention which leads such Selling Stockholder to
believe that the Registration Statement, at the time it became effective,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or that the Prospectus, as of the date of the Prospectus,
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Sellers
agree to sell to the Underwriters and each Underwriter agrees, severally and
not jointly, to purchase, at a price of $30.875 per share, the number of Firm
Shares set forth opposite the name of each Underwriter in Schedule I hereof,
subject to adjustments in accordance with Section 9 hereof.
(b) Certificates in negotiable form for the total number of the
Shares to be sold hereunder by the Selling Stockholders have been placed in
custody with BankBoston, N.A. as custodian (the "Custodian") pursuant to the
Custody Agreement executed by each Selling Stockholder for delivery of all
Firm Shares and any Option Shares to be sold hereunder by the Selling
Stockholders. Each of the Selling Stockholders specifically agrees that the
Firm Shares and any Option Shares represented by the certificates held in
custody for the Selling Stockholders under the Custody Agreement are subject
to the interests of the Underwriters hereunder, that the arrangements made by
the Selling Stockholders for such custody are to that extent irrevocable, and
that the obligations of the Selling Stockholders hereunder shall not be
terminable by any act or deed of the Selling Stockholders (or by any other
person, firm or corporation including the Company, the Custodian or the
Underwriters) or by operation of law (including the death of an individual
Selling Stockholder or the dissolution of a corporate Selling Stockholder) or
by the occurrence of any other event or events, except as set forth in the
Custody
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Agreement. If any such event should occur prior to the delivery of the
Underwriters of the Firm Shares or the Option Shares hereunder, certificates
for the Firm Shares or the Option Shares, as the case may be, shall be
delivered by the Custodian in accordance with the terms and conditions of
this Agreement as if such event has not occurred. The Custodian is
authorized to receive and acknowledge receipt of the proceeds of sale of the
Shares held by it against delivery of such Shares.
(c) Payment for the Firm Shares to be sold hereunder is to be made
in same day funds by wire transfer to the order of the Company for the shares
to be sold by it and to the order of BankBoston, N.A. "as Custodian" for the
shares to be sold by the Selling Stockholders, in each case against delivery
of certificates therefor to the Representatives for the several accounts of
the Underwriters. Such payment and delivery are to be made at the offices of
Alex. Brown & Sons Incorporated, 1 South Street, Baltimore, Maryland, at
10:00 a.m., Baltimore time, on the third or fourth business day after the
date of this Agreement in accordance with Rule 15c6(1) under the Exchange Act
or at such other time and date not later than five business days thereafter
as you and the Company shall agree upon, such time and date being herein
referred to as the "Closing Date." (As used herein, "business day" means a
day on which the New York Stock Exchange is open for trading and on which
banks in New York are open for business and are not permitted by law or
executive order to be closed.) The certificates for the Firm Shares will be
delivered in such denominations and in such registrations as the
Representatives requests in writing not later than the second full business
day prior to the Closing Date, and will be made available for inspection by
the Representatives at least one business day prior to the Closing Date.
(d) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth,
the Company and certain of the Selling Stockholders listed on Schedule II
hereto hereby grant an option to the several Underwriters to purchase the
Option Shares at the price per share as set forth in the first paragraph of
this Section 2. The maximum number of Option Shares to be sold by the Company
and such Selling Stockholders is set forth opposite their respective names on
Schedule II hereto. The option granted hereby may be exercised in whole or in
part by giving written notice (i) at any time before the Closing Date and
(ii) only once thereafter within 30 days after the date of this Agreement, by
you, as Representatives of the several Underwriters, to the Company, the
Attorney-in-fact, and the Custodian setting forth the number of Option Shares
as to which the Option Shares are to be registered and the time and date at
which such certificates are to be delivered. If the option granted hereby is
exercised in part, the respective number of Option Shares to be sold by the
Company and each of the Selling Stockholders listed Schedule II hereto shall
be determined on a pro rata basis in accordance with the percentages set
forth opposite their names on Schedule II hereto, adjusted by you in such
manner to avoid fractional shares. The time and date at which certificates
for Option Shares are to be delivered shall be determined by the
Representatives but shall not be earlier than three nor later than 10 full
business days after the exercise of such option, nor in any event prior to
the Closing Date (such time and date being herein referred to as the "Option
Closing Date"). If the date of exercise of the option is three or more days
before the Closing Date, the notice of exercise shall set the Closing Date as
the Option Closing Date. The number of Option Shares to be purchased by each
Underwriter shall be in the
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same proportion to the total number of Option Shares being purchased as the
number of Firm Shares being purchased by such Underwriters bears to the total
number of Firm Shares, adjusted by you in such manner as to avoid fractional
shares. The option with respect to the Option Shares granted hereunder may
be exercised only to cover over-allotments in the sale of the Firm Shares by
the Underwriters. You, as Representatives of the several Underwriters, may
cancel such option at any time prior to its expiration by giving written
notice of such cancellation to the Company and the Attorney-in-fact. To the
extent, if any, that the option is exercised, payment for the Option Shares
shall be made on the Option Closing Date in same day funds by wire transfer
to the order of the Company for the Option Shares to be sold by it and to the
order of "BankBoston, N.A., as Custodian" for the Option Shares to be sold by
the Selling Stockholders against delivery of certificates therefor at the
offices of Alex. Brown & Sons Incorporated, 1 South Street, Baltimore,
Maryland.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable
to do so. The Firm Shares are to be initially offered to the public at the
initial public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option
Shares are purchased pursuant to Section 2 hereof, the Underwriters will
offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives
for the Underwriters in the offering and sale of the Shares in accordance
with a Master Agreement Among Underwriters entered into by you and the
several other Underwriters.
4. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A
of the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a
form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A of the Rules and Regulations, and (B) not file any
amendment to the Registration Statement or supplement to the Prospectus of
which the Representatives shall not previously have been advised and
furnished with a copy or to which the Representatives shall have reasonably
objected in writing or which is not in compliance with the Rules and
Regulations.
(ii) The Company will advise the Representatives promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission,
(C) of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, and (D) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of
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any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use
of the Prospectus and to obtain as soon as possible the lifting thereof, if
issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in
writing and will make such applications, file such documents, and furnish
such information as may be reasonably required for that purpose, provided the
Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction where it is not
now so qualified or required to file such a consent. The Company will, from
time to time, prepare and file such statements, reports and other documents,
as are or may be required to continue such qualifications in effect for so
long a period as the Representatives may reasonably request for distribution
of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period when
delivery of a Prospectus is required under the Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may reasonably request. The Company will deliver to the
Representatives at or before the Closing Date, two signed copies of the
Registration Statement and all amendments thereto including all exhibits
filed therewith, and will deliver to the Representatives such number of
copies of the Registration Statement (including such number of copies of the
exhibits filed therewith that may reasonably be requested), and of all
amendments thereto, as the Representatives may reasonably request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of
the shares as contemplated in this Agreement and the Prospectus. If during
the period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, not misleading, or, if it is
necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in
the light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event no later
than 15 months after the effective date of the Registration Statement, an
earning statement (which need not be audited) in reasonable detail, covering
a period of at least 12 consecutive months beginning after the
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effective date of the Registration Statement, which earning statement shall
satisfy the requirements of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations and will advise you in writing when such statement has
been so made available.
(vii) The Company will, for a period of five years from the
Closing Date, deliver to the Representatives copies of annual reports and
copies of all other documents, reports and information furnished by the
Company to its stockholders or filed with any securities exchange pursuant to
the requirements of such exchange or with the Commission pursuant to the Act
or the Exchange Act. The Company will deliver to the Representatives similar
reports with respect to significant subsidiaries, as that term is defined in
the Rules and Regulations, which are not consolidated in the Company's
financial statements.
(viii) No offering, sale, short sale or other disposition of
any shares of Common Stock of the Company or other securities convertible
into or exchangeable or exercisable for shares of Common Stock or derivative
of Common Stock (or agreement for such) will be made for a period of 90 days
after the date of this Agreement, directly or indirectly, by the Company
otherwise than hereunder or with the prior written consent of Alex. Brown &
Sons Incorporated except that the Company may, without such consent, issue
shares upon exercise of options issued pursuant to the 1996 Stock Option Plan
or the 1996 Employee Stock Purchase Plan.
(ix) The Company will use its best efforts to list, subject to
notice of issuance, the Shares on the Nasdaq National Market.
(x) The Company has caused each executive officer and each
Selling Stockholder of the Company's outstanding capital stock to furnish to
you, on or prior to the date of this Agreement, a letter or letters, in form
and substance satisfactory to the Underwriters, pursuant to which each such
person shall agree not to offer, sell, sell short or otherwise dispose of any
shares of Common Stock of the Company or other capital stock of the Company,
or any other securities convertible, exchangeable or exercisable for Common
Shares or derivative of Common Shares owned by such person or request the
registration for the offer or sale of any of the foregoing (or as to which
such person has the right to direct the disposition of) for a period of 90
days after the date of this Agreement, directly or indirectly, except with
the prior written consent of Alex. Brown & Sons Incorporated ("Lockup
Agreements").
(xi) The Company shall apply the net proceeds of its sale of
the Shares substantially as set forth in the Prospectus and shall file such
reports with the Commission with respect to the sale of the Shares and the
application of the proceeds therefrom as may be required in accordance with
Rule 463 under the Act.
(xii) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Shares in such a manner
as would require the Company or any of the Subsidiaries to register as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act").
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(xiii) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock.
(xiv) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any securities of the Company.
(b) Each of the Selling Stockholders covenants and agrees with the
several Underwriters that:
(i) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company or other capital stock of the Company
or other securities convertible, exchangeable or exercisable for Common Stock
or derivative of Common Stock owned by the Selling Stockholder or request the
registration for the offer or sale of any of the foregoing (or as to which
the Selling Stockholder has the right to direct the disposition of) will be
made for a period of 90 days after the date of this Agreement, directly or
indirectly, by such Selling Stockholder otherwise than hereunder or with the
prior written consent of Alex. Brown & Sons Incorporated, except that Radius
Inc. may, without such consent, transfer shares of Common Stock it holds to
IBM Credit pursuant to Radius Inc.'s existing option arrangement with IBM
Credit covering up to 171,421 shares of Common Stock; provided, however, that
prior to any such transfer to IBM Credit pursuant to such option arrangement,
IBM Credit shall have entered into an agreement described in Section 1(xxi)
hereof.
(ii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act
of 1983 with respect to the transactions herein contemplated, each of the
Selling Stockholders agrees to deliver to you prior to or at the Closing Date
a properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(iii) Such Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the stabilization
or manipulation of the price of any securities of the Company.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Sellers under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company and the Selling Stockholders; the cost of printing and delivering to,
or as requested by, the Underwriters copies of the Registration Statement,
Preliminary Prospectuses, the Prospectus, this Agreement, the Underwriters'
Selling Memorandum, the Underwriters' Invitation Letter, the Blue Sky Survey
and any supplements or amendments thereto; the filing fees of the Commission;
the filing fees and expenses (including legal fees and disbursements)
incident to securing any required review by the National Association of
Securities Dealers, Inc.
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(the "NASD") of the terms of the sale of the Shares; the Listing Fee of the
Nasdaq National Market; and the expenses, including the fees and
disbursements of counsel for the Underwriters, incurred in connection with
the qualification of the Shares under State securities or Blue Sky laws. The
fees and expenses of Hutchins, Wheeler & Dittmar, counsel to Summit Ventures
IV, L.P., Summit Investors III, L.P. and Summit Subordinated Debt Fund, L.P.
(collectively, the "Summit Entities"), incurred in connection with this
offering, shall be borne by the Company. Any transfer taxes imposed on the
sale of the Shares to the several Underwriters will be paid by the Sellers
pro rata. The Company shall not, however, be required to pay for any of the
Underwriters expenses (other than those related to qualification under NASD
regulation and State securities or Blue Sky laws) except that, if this
Agreement shall not be consummated because the conditions in Section 6 hereof
are not satisfied, or because this Agreement is terminated by the
Representatives pursuant to subsections (b)(i), (iv), (vi) or (vii) of
Section 11 hereof, or by reason of any failure, refusal or inability on the
part of the Company or the Selling Stockholders to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on their part to be performed, unless such failure to satisfy said
condition or to comply with said terms be due to the default or omission of
any Underwriter, then the Company shall reimburse the several Underwriters
for reasonable out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred in connection with investigating, marketing and
proposing to market the Shares or in contemplation of performing their
obligations hereunder; but the Company and the Selling Stockholders shall not
in any event be liable to any of the several Underwriters for damages on
account of loss of anticipated profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the
Option Closing Date, as the case may be, of the representations and
warranties of the Company and the Selling Stockholders contained herein, and
to the performance by the Company and the Selling Stockholders of their
covenants and obligations hereunder and to the following additional
conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule
424 and Rule 430A of the Rules and Regulations shall have been made, and any
request of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to the
Representatives and complied with to their reasonable satisfaction. No stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued and no proceedings for that purpose
shall have been taken or, to the knowledge of the Company or the Selling
Stockholders, shall be contemplated by the Commission and no injunction,
restraining order, or order of any nature by a Federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance of the Shares.
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(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Wilson Sonsini
Goodrich & Rosati, P.C., counsel for the Company and the Selling Stockholders
(other than the Summit Entities and Radius Inc. (the Summit Entities and
Radius Inc. are herein collectively referred to as the "non-Company Selling
Stockholders")), dated the Closing Date or the Option Closing Date, as the
case may be, addressed to the Underwriters (and stating that it may be relied
upon by counsel to the Underwriters) to the effect that:
(i) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement; each of the U.S.
Subsidiaries has been duly organized and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation,
with corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement; the Company and the
U.S. Subsidiaries are duly qualified to transact business in all
jurisdictions in which the conduct of their business requires such
qualification, or in which the failure to qualify would have a materially
adverse effect upon the business of the Company and the U.S. Subsidiaries
taken as a whole; and the outstanding shares of capital stock of the U.S.
Subsidiaries have been duly authorized and validly issued and are fully paid
and non-assessable and are owned by the Company; and to the best of such
counsel's knowledge, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into any shares of capital stock or of ownership interests in the
U.S. Subsidiaries are outstanding.
(ii) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of the Company's Common Stock have been duly authorized;
the outstanding shares of the Company's Common Stock, including the shares to
be sold by the Selling Stockholders, have been duly authorized and validly
issued and are fully paid and non-assessable; all of the Shares conform to
the description thereof contained in the Prospectus; the certificates for the
Shares, assuming they are in the form filed with the Commission, are in due
and proper form; the shares of Common Stock, including the Option Shares, if
any, to be sold by the Company pursuant to this Agreement have been duly
authorized and upon the Closing of the offering and payment for the Shares as
contemplated by this Agreement such Shares will be validly issued, fully paid
and non-assessable; none of such shares will be issued in violation of any
preemptive right in the corporate charter or bylaws of the Company or to such
counsel's knowledge any contractual right of first refusal; and, to such
counsel's knowledge, the Shares will not be subject to any such preemptive
rights or right of first refusal.
(iii) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or
any securities convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares
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of such stock; and except as described in the Prospectus, to the knowledge of
such counsel, no holder of any securities of the Company or any other person
has the right, contractual or otherwise, which has not been satisfied or
effectively waived, to cause the Company to sell or otherwise issue to them,
or to permit them to underwrite the sale of, any of the Shares or the right
to have any Common Shares or other securities of the Company included in the
Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of any shares
of Common Stock or other securities of the Company.
(iv) The Registration Statement has become effective under the
Act and, to the best of the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Act.
(v) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects
with the requirements of the Act and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the
financial statements and schedules and other financial data included
therein).
(vi) The statements under the captions
"Management--Compensation Plans," "Certain Transactions," "Description of
Capital Stock" and "Shares Eligible for Future Sale" in the Prospectus, and
in the Registration Statement in Part II, Items 14 and 15, in each case
insofar as such statements constitute a summary of documents referred to
therein or matters of law, fairly present the information called for with
respect to such documents and matters and fairly summarize the matters
referred to therein.
(vii) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described
in the Registration Statement or the Prospectus which are not so filed or
described as required.
(viii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the
Subsidiaries except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Charter or by-laws of the Company, or to such
counsel's knowledge any agreement or instrument to which the Company or of
the U.S. Subsidiaries is a party or by which the Company or the U.S.
Subsidiaries may be bound.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery
of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD or as required by
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State securities and Blue Sky laws as to which such counsel need express no
opinion) except such as have been obtained or made, specifying the same.
(xii) This Agreement has been duly authorized, executed and
delivered on behalf of the Selling Stockholders (other than the non-Company
Selling Stockholders, as to which no opinion need be expressed).
(xiii) Each Selling Stockholder (other than the non-Company
Selling Stockholders, as to which no opinion need be expressed) has full
legal right, power and authority to sell, assign, transfer and deliver the
portion of the Shares to be sold by such Selling Stockholders.
(xiv) The Custody Agreement and the Power of Attorney executed
and delivered by each Selling Stockholder (other than the non-Company Selling
Stockholders, as to which no opinion need be expressed) is valid and binding.
(xv) The Underwriters (assuming that they are bona fide
purchasers within the meaning of the Uniform Commercial Code), upon payment
therefor pursuant to this Agreement, have acquired valid title to the Shares
being sold by each Selling Stockholder (other than the non-Company Selling
Stockholders, as to which no opinion need be expressed) on the Closing Date,
and the Option Closing Date, as the case may be, free and clear of any
adverse claim within the meaning of the Uniform Commercial Code.
In rendering such opinion Wilson Sonsini Goodrich & Rosati, P.C. may
rely as to matters of fact on certificates of the non-Company Selling
Stockholders and certain officers of the Company and of governmental
officials as to matters governed by state laws other than California law, the
General Corporation Law of the State of Delaware corporate law or applicable
Federal laws on local counsel in such jurisdictions, provided that in each
case Wilson Sonsini Goodrich & Rosati, P.C. shall state that they believe
that they and the Underwriters are justified in relying on such other
counsel. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that such counsel has participated in the
preparation of the Registration Statement and the Prospectus, involving,
among other things, review and discussion of the contents thereof, discussion
and inquiries concerning various legal matters and the review of certain
records, documents and proceedings, and participation in conferences with
certain officers and other representatives of the Company, including its
independent accountants, and with the Underwriters and counsel for the
Underwriters at which the contents of the Registration Statement and the
Prospectus were discussed, but without independent check or verification of
the accuracy or completeness of such information, except as specified herein.
On the basis of such consideration, review and discussion, but without
independent check or verification, nothing has come to such counsel's
attention which causes them to believe (i) that, as of its effective date,
the Registration Statement or any further amendment thereto made by the
Company prior to the date hereof (other than the financial statements and
related schedules and financial and statistical data therein, as to which
such counsel may express no belief) contained an 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, (ii) that
as of its date, the
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Prospectus or any further amendment or supplement thereto made by the Company
prior to the date hereof (other than the financial statements and related
schedules and financial and statistical data therein, as to which we express
no belief) contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, or (iii) that, as
of the date hereof, either the Registration Statement or the Prospectus or
any further amendment or supplement thereto made by the Company prior to the
date hereof (other than the financial statements and related schedules and
financial and statistical data therein, as to which we express no belief)
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading.
(c) Hutchins, Wheeler & Dittmar, counsel for the Summit Entities,
and the internal counsel for Radius Inc., shall have furnished to the
Representatives their respective written opinions consistent with Sections
6(a)(xii) through 6(a)(xv) of this Agreement, addressed to the Underwriters
and dated the Closing Date or the Option Closing Date, as the case may be
(and stating that it may be relied upon by counsel to the Underwriters).
(d) Fenwick & West, LLP, patent counsel for the Company, shall have
furnished to the Representatives its written opinion, addressed to the
Underwriters and dated the Closing Date or the Option Closing Date, as the
case may be, in form and substance reasonably satisfactory to the
Representatives, to the effect that such counsel is familiar with the
technology used by the Company in its business and the manner of its use
thereof and has read the Registration Statement and the Prospectus, including
particularly the portions of the Registration Statement and the Prospectus
referring to patents and trade secrets, and:
(i) to such counsel's knowledge and except as set forth in the
Prospectus under the captions "Risk Factors-Dependence on Proprietary
Technology; Reliance on Third Party Licenses" and "Business--Intellectual
Property," there are no legal or governmental proceedings pending relating to
patent rights trade secrets, of the Company, and to such counsel's knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or others;
(ii) except as set forth in the Prospectus, to the best of
such counsel's knowledge, the Company is not infringing or otherwise
violating any patents or trade secrets of others.
(e) The Representatives shall have received from Gunderson Dettmer
Stough Villeneuve Franklin & Hachigian, LLP, counsel for the Underwriters, an
opinion dated the Closing Date or the Option Closing Date, as the case may
be, substantially to the effect specified in subparagraphs (iv) and (v) of
Paragraph (b) of this Section 6, and that the Company is a duly organized and
validly existing corporation under the laws of the State of Delaware. In
rendering such opinion Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP may rely as to all matters governed other than by the laws of
the States of California and Delaware or Federal laws on the opinion of
counsel referred to in Paragraph (b) of this Section 6. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has
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come to the attention of such counsel which leads them to believe that (i)
the Registration Statement, or any amendment thereto, as of the time it
became effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) as of the Closing
Date or the Option Closing Date, as the case may be, contained an 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,
and (ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact, necessary in order to make
the statements, in the light of the circumstances under which they are made,
not misleading (except that such counsel need express no view as to financial
statements, financial data, schedules and statistical information therein).
With respect to such statement, Gunderson Dettmer Stough Villeneuve Franklin
& Hachigian, LLP may state that their belief is based upon the procedures set
forth therein, but is without independent check and verification.
(f) The Representatives shall have received at or prior to the
Closing Date from Gunderson Dettmer Stough Villeneuve Franklin & Hachigian,
LLP a memorandum or summary, in form and substance satisfactory to the
Representatives, with respect to the qualification for offering and sale by
the Underwriters of the Shares under the State securities or Blue Sky laws of
such jurisdictions as the Representatives may reasonably have designated to
the Company.
(g) The Representatives shall have received, on each of the dates
hereon, the Closing Date and the Option Closing Date, as the case may be, a
letter dated the date hereof, the Closing Date or the Option Closing Date, as
the case may be, in form and substance satisfactory to you, of Coopers &
Lybrand L.L.P. confirming that they are independent public accountants within
the meaning of the Act and the applicable published Rules and Regulations
thereunder and stating that in their opinion the financial statements and
schedules examined by them and included in the Registration Statement comply
in form in all material respects with the applicable accounting requirements
of the Act and the related published Rules and Regulations; and containing
such other statements and information as is ordinarily included in
accountants' "comfort letters" to Underwriters with respect to the financial
statements and certain financial and statistical information contained in the
Registration Statement and Prospectus.
(h) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the
case may be, each of them severally represents as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have been
taken or are, to his knowledge, contemplated by the Commission;
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(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or
the Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules
424 or 430A under the Act have been made;
(iv) He or she has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion, as of the effective
date of the Registration Statement, the statements contained in the
Registration Statement were true and correct, and such Registration Statement
and Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading,
and since the effective date of the Registration Statement, no event has
occurred which should have been set forth in a supplement to or an amendment
of the Prospectus which has not been so set forth in such supplement or
amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business.
(i) The Company and the Selling Stockholders shall have furnished to
the Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
(j) The Lockup Agreements described in Section 1(xxi) shall be in
full force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Gunderson
Dettmer Stough Villeneuve Franklin & Hachigian, LLP, counsel for the
Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company and the Selling Stockholders of
such termination in writing or by telegram at or prior to the Closing Date or
the Option Closing Date, as the case may be.
In such event, the Selling Stockholders, the Company and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
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7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
(a) The obligations of the Sellers to sell and deliver the Shares
as and when specified in this Agreement are subject to the conditions that at
the Closing Date or the Option Closing Date, as the case may be, no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and in effect or proceedings therefor initiated or threatened.
8. 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 the Act, against any losses, claims, damages or liabilities to
which such Underwriter or any such controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii)
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and will reimburse each Underwriter and each such controlling person upon
demand for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage or liability, action or proceeding or
in responding to a subpoena or governmental inquiry related to the offering
of the Shares, whether or not such Underwriter or controlling person is a
party to any action or proceeding; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof; provided further that the
indemnity agreement provided in this Section 8(a) with respect to any
Preliminary Prospectus shall not inure to the benefit of the Underwriters
from whom the person asserting any loss, claim, charge, liability or
litigation based upon any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state therein a material
fact regarding the purchased Shares, if a copy of the Prospectus in which
such untrue statement or alleged untrue statement or omission or alleged
omission was corrected has not been sent or given to such person within the
time required by the Act and the Rules and Regulations thereunder unless such
failure is the result of noncompliance by the Company with Section 4(a)(iv)
hereof. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) The Selling Stockholders severally and not jointly agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act, against any losses,
claims, damages or liabilities to which such Underwriter or any such
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceeds in
respect thereof) arise out of or are based upon any breach of any
representation or warranty contained herein
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<PAGE>
made by such Selling Stockholders, and will reimburse each Underwriter and
each such controlling person upon demand for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in
connection with investigating or defending any such loss, claim, damage or
liability, action or proceeding or in responding to a subpoena or
governmental inquiry related to the offering of the Shares, whether or not
such Underwriter or controlling person is a party to any action or
proceeding; provided, however, that the Selling Stockholders will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement, or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically for
use in the preparation thereof; provided further that the indemnity agreement
provided in this Section 8(b) with respect to any Preliminary Prospectus
shall not inure to the benefit of the Underwriters from whom the person
asserting any loss, claim, charge, liability or litigation based upon any
untrue statement or alleged untrue statement of a material fact or omission
or alleged omission to state therein a material fact regarding the purchased
Shares, if a copy of the Prospectus in which such untrue statement or alleged
untrue statement or omission or alleged omission was corrected has not been
sent or given to such person within the time required by the Act and the
Rules and Regulations thereunder unless such failure is the result of
noncompliance by the Company with Section 4(a)(iv) hereof; and provided
further that under this Agreement, the liability of each Selling Stockholder
shall not exceed the lesser of (A) that proportion of the total of such
losses, claims, damages or liabilities indemnified against equal to the
proportion of the total shares sold hereunder which is being sold by such
Selling Stockholder; or (B) the aggregate proceeds (net of discounts)
received by such Selling Stockholder upon the sale of the Shares by such
Selling Stockholder to the Underwriters. No Selling Stockholder shall be
required to provide indemnification or reimbursement hereunder until such
Underwriter or such controlling person seeking indemnification shall have
first made a written demand for payment on the Company with respect to any
such loss, claim, damage, liability or expense and the Company shall have
either rejected such demand or failed to make such requested payment within
sixty (60) days after receipt thereof. The Company and the Selling
Stockholders may agree, as among themselves and without limiting the rights
of the Underwriters under this Agreement, as to the respective amounts of
such liability for which they each shall be responsible. This indemnity
agreement will be in addition to any liability which the Selling Stockholders
may otherwise have.
(c) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement, the Selling Stockholders, and each
person, if any, who controls the Company or the Selling Stockholders within
the meaning of the Act, against any losses, claims, damages or liabilities to
which the Company or any such director, officer, Selling Stockholder or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated
22
<PAGE>
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other expenses reasonably incurred by the Company or any such
director, officer, Selling Stockholder or controlling person in connection
with investigating or defending any such loss, claim, damage, liability,
action or proceeding; provided, however, that each Underwriter will be liable
in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has
been made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or through
the Representatives specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a), (b) or (c) shall be available
to any party who shall fail to give notice as provided in this Section 8(d)
if the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was materially prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on
account of the provisions of Section 8(a), (b) or (c). In case any such
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 therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have
the right to retain its own counsel at its own expense. Notwithstanding the
foregoing (and subject to Section 8(a) and (b)), the indemnifying party shall
pay as incurred (or within 30 days of presentation) the reasonable fees and
expenses of the counsel retained by the indemnified party to the extent (i)
the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them or (iii) the indemnifying party shall have failed to
assume the defense and employ counsel acceptable to the indemnified party
within a reasonable period of time after notice of commencement of the
action. It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for all such indemnified parties. Such firm shall be
designated in writing by you in the case of parties indemnified pursuant to
Section 8(a) and (b) and by the Company and the Selling Stockholders in the
case of parties indemnified pursuant to Section 8(c). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or
23
<PAGE>
liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party
is an actual or potential party to such claim action or proceeding) unless
such settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim, action
or proceeding.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on
the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Selling Stockholders on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, (or actions or proceedings in
respect thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Stockholders on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Stockholders bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Stockholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 8(e) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this Section 8(e). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) referred to above in this
Section 8(e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter, (ii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to
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<PAGE>
contribution from any person who was not guilty of such fraudulent
misrepresentation, and (iii) no Selling Stockholder shall be required to
contribute any amount in excess of the lesser of (A) that proportion of the
total of such losses, claims, damages or liabilities contributed against
equal to the proportion of the total shares sold hereunder which is being
sold by such Selling Stockholder; or (B) the aggregate proceeds (net of
discounts) received by such Selling Stockholder upon the sale of the Shares
by such Selling Stockholder to the Underwriters. The Underwriters'
obligations in this Section 8(e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this
Section 8 hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process issuing
from such court may be served upon him or it by any other contributing party
and consents to the service of such process and agrees that any other
contributing party may join him or it as an additional defendant in any such
proceeding in which such other contributing party is a party.
(g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company, its directors or officers or any
persons controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor
to any Underwriter, or to the Company, its directors or officers, or any
person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this
Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may
be, any Underwriter shall fail to purchase and pay for the portion of the
Shares which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or
Selling Stockholder), you, as Representatives of the Underwriters, shall use
your reasonable efforts to procure within 36 hours thereafter one or more of
the other Underwriters, or any others, to purchase from the Company and the
Selling Stockholders such amounts as may be agreed upon and upon the terms
set forth herein, the Firm Shares or Option Shares, as the case may be, which
the defaulting Underwriter or Underwriters failed to purchase. If during
such 36 hours you, as such Representatives, shall not have procured such
other Underwriters, or any others, to purchase the Firm Shares or Option
Shares, as the case may be, agreed to be purchased by the defaulting
Underwriter or Underwriters, then (a) if the aggregate number of shares with
respect to which such default shall occur does not exceed 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the other
Underwriters shall be
25
<PAGE>
obligated, severally, in proportion to the respective numbers of Firm Shares
or Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b)
if the aggregate number of shares of Firm Shares or Option Shares, as the
case may be, with respect to which such default shall occur exceeds 10% of
the Firm Shares or Option Shares, as the case may be, covered hereby, the
Company and the Selling Stockholders or you as the Representatives of the
Underwriters will have the right, by written notice given within the next
36-hour period to the parties to this Agreement, to terminate this Agreement
without liability on the part of the non-defaulting Underwriters or of the
Company or of the Selling Stockholders except to the extent provided in
Section 8 hereof. In the event of a default by any Underwriter or
Underwriters, as set forth in this Section 9, the Closing Date or Option
Closing date, as the case may be, may be postponed for such period, not
exceeding seven days, as you, as Representatives, may determine in order that
the required changes in the Registration Statement or in the Prospectus or in
any other documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any action
taken under this Section 9 shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to Alex. Brown
& Sons Incorporated, 101 California Street, 48th Floor, San Francisco,
California 94111, Attention: Andrew T. Sheehan, with a copy to Alex. Brown &
Sons Incorporated, 1 South Street, Baltimore, Maryland 21202, Attention:
General Counsel; if to the Company or the Selling Stockholders to Splash
Technology Holdings, Inc., 555 Del Rey Avenue, Sunnyvale, California 94086,
Attention: Joan P. Platt, with a copy to (i) Summit Partners, L.P., 2884 Sand
Hill Road, Suite 121, Menlo Park, California 94025, Attention: Gregory M.
Avis and (ii) Radius Inc., 215 Moffett Park Drive, Sunnyvale, California
94089, Attention: Mark Housley.
11. TERMINATION.
This Agreement may be terminated by you by notice to the Sellers as
follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m. on
the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following
has occurred: (i) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change in
or affecting the condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole or the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole, whether or
not arising in the ordinary course of business, (ii) any outbreak or
26
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escalation of hostilities or declaration of war or national emergency or
other national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, escalation, declaration,
emergency, calamity, crisis or change on the financial markets of the United
States would, in your reasonable judgment, make it impracticable to market
the Shares or to enforce contracts for the sale of the Shares, or (iii)
suspension of trading in securities generally on the New York Stock Exchange
or the American Stock Exchange or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such Exchange, (iv) the enactment, publication, decree or other promulgation
of any statute, regulation, rule or order of any court or other governmental
authority which in your opinion materially and adversely affects or may
materially and adversely affect the business or operations of the Company,
(v) declaration of a banking moratorium by United States or New York State
authorities, (vi) any downgrading in the rating of the Company's debt
securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Exchange Act); (vii) the
suspension of trading of the Company's common stock by the Commission on the
Nasdaq National Market or (viii) the taking of any action by any governmental
body or agency in respect of its monetary or fiscal affairs which in your
reasonable opinion has a material adverse effect on the securities markets in
the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person
will have any right or obligation hereunder. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign merely
because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company
for inclusion in any Prospectus or the Registration Statement consists of the
information set forth in the last paragraph on the front cover page (insofar
as such information relates to the Underwriters), legends required by Item
502(d) of Regulation S-K under the Act and the information under the caption
"Underwriting" in the Prospectus.
14. MISCELLANEOUS
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants
in this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of
any Underwriter or controlling person thereof, or by or on behalf of the
Company or its directors or officers and (c) delivery of and payment for the
Shares under this Agreement.
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This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Stockholders,
the Company and the several Underwriters in accordance with its terms.
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EXHIBIT 10.01
Any person executing and delivering this Agreement as
Attorney-in-fact for a Selling Stockholder represents by so doing that he has
been duly appointed as Attorney-in-fact by such Selling Stockholder pursuant
to a validly existing and binding Power of Attorney which authorizes such
Attorney-in-fact to take such action.
Very truly yours,
SPLASH TECHNOLOGY HOLDINGS, INC.
By: /s/ Kevin K. Macgillivray
--------------------------------
Kevin K. Macgillivray,
President and Chief Executive Officer
SELLING STOCKHOLDERS LISTED ON
SCHEDULE II
By: /s/ Kevin K. Macgillivray
--------------------------------
Kevin K. Macgillivray
Attorney-in-fact
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above written.
ALEX. BROWN & SONS INCORPORATED
MONTGOMERY SECURITIES
PIPER JAFFRAY INC.
As Representatives of the several
Underwriters listed on Schedule I
By: Alex. Brown & Sons Incorporated
By: /s/ Andrew T. Sheehan
---------------------------
Andrew T. Sheehan
Managing Director
<PAGE>
EXHIBIT 10.01
SCHEDULE I
SCHEDULE OF UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
- ----------- ---------------------
Alex. Brown & Sons Incorporated .............. 1,083,334
Montgomery Securities ........................ 1,083,333
Piper Jaffray Inc. ........................... 1,083,333
---------
TOTAL UNDERWRITERS (3) ....................... 3,250,000
---------
---------
<PAGE>
SCHEDULE II
SCHEDULE OF SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM PERCENTAGE OF
NUMBER OF NUMBER OF TOTAL NUMBER
FIRM SHARES TO OPTION SHARES OF OPTION
NAME OF SELLER BE SOLD TO BE SOLD SHARES
-------------- ------------- -------------
<S> <C> <C> <C>
Summit Subordinated Debt Fund, L.P. 875,000 121,875 25%
Summit Ventures IV, L.P. (all Summit (all Summit (all Summit
Summit Investors III, L.P. Entities included Entities included Entities included
in this number) in this number) in this percentage
Radius Inc. 875,000 121,875 25%
Kevin K. Macgillivray 43,000 -- --
Joan P. Platt 10,000 -- --
Timothy D. Kleffman 43,000 -- --
Christine A. Beheshti 33,500 -- --
Other Non-Executive Employee
Selling Stockholders
30,000 -- --
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TOTAL SELLING STOCKHOLDER SHARES 1,909,500 243,750 50%
TOTAL COMPANY SHARES 1,340,500 243,750 50%
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TOTAL SHARES 3,250,000 487,500 100%
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</TABLE>
