<PAGE>
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-28252
BROADVISION, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3184303
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
333 DISTEL CIRCLE, LOS ALTOS, CALIFORNIA 94022-1404
(Address of principal executive offices) (Zip code)
(415) 943-3600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES / / NO /x/
As of July 31, 1996 there were 19,985,304 shares of the Registrant's Common
Stock outstanding.
- -------------------------------------------------------------------------------
This is page 1 of 13 pages.
Index to exhibits is on page 14
<PAGE>
BROADVISION, INC.
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED JUNE 30, 1996
TABLE OF CONTENTS
Page No.
- -------------------------------------------------------------------------------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations -
Three and six months ended June 30, 1996 and 1995 3
Condensed Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 4
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
- -------------------------------------------------------------------------------
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
- -------------------------------------------------------------------------------
SIGNATURES 13
- -------------------------------------------------------------------------------
<PAGE>
BROADVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------- ----------------
1996 1995 1996 1995
------- ------- ------- -------
Revenues:
Software licenses $ 1,564 $ - $ 2,663 $ -
Services 738 - 1,037 -
------- ------- ------- -------
Total revenues 2,302 - 3,700 -
Cost of revenues
Cost of software licenses 93 - 189 -
Cost of services 331 - 497 -
------- ------- ------- -------
Total cost of revenues 424 - 686 -
------- ------- ------- -------
Gross profit 1,878 - 3,014 -
Operating expenses
Research and development 1,277 575 2,193 946
Sales and marketing 2,486 215 4,093 490
General and administrative 320 201 638 426
------- ------- ------- -------
Total operating expenses 4,083 991 6,924 1,862
------- ------- ------- -------
Operating loss (2,205) (991) (3,910) (1,862)
Interest income 51 28 94 53
Interest and other expense (26) (6) (62) (6)
------- ------- ------- -------
Net loss $(2,180) $( 969) $(3,878) $(1,815)
======= ======= ======= =======
Net loss per share $ (0.13) $( 0.05) $ (0.22) $ (0.10)
======= ======= ======= =======
Shares used in per share calculation 16,822 18,888 17,699 18,888
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
BROADVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
June 30, December 31,
1996 1995
--------- ------------
ASSETS
Current assets:
Cash, cash equivalents, and short
term investments $24,593 $ 4,507
Accounts receivable, net 4,868 395
Other current assets 286 24
---------- ---------
Total current assets 29,747 4,926
Property and equipment, net 1,765 868
Other assets 89 63
---------- ---------
Total assets $31,601 $ 5,857
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 2,309 $ 488
Unearned revenues 3,151 355
Deferred maintenance 679 0
Current portion of long-term
liabilities 167 167
---------- ---------
Total current liabilities 6,306 1,010
Long-term liabilities 533 593
Stockholders' equity
Equity 37,065 11,414
Deferred compensation (2,301) (1,036)
Accumulated deficit (10,002) (6,124)
---------- ---------
Total stockholders' equity 24,762 4,254
---------- ---------
Total liabilities and
stockholders' equity $31,601 $ 5,857
========== =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
BROADVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Six months ended
------------------------
June 30, June 30,
1996 1995
---------- ---------
Cash flows from operating activities:
Net loss $(3,878) $(1,815)
Adjustments to reconcile net loss
to net cash used for operating
activities:
Depreciation and amortization 252 (69)
Deferred compensation 245 -
Changes in operating assets
and liabilities:
Accounts receivable (4,473) -
Prepaid expenses, other
current assets, and other
assets (288) (77)
Accounts payable and accrued
expenses 1,821 172
Deferred revenue 3,475 -
Other liabilities 19 -
---------- ---------
Net cash provided by
(used in) operating
activities (2,827) (1,789)
---------- ---------
Cash flows from investing activities:
Acquisition of property and
equipment (1,149) (58)
Purchase of short-term investments (19,929) -
Maturity of short-term investments 196 1,489
---------- ---------
Net cash provided by (used in)
investing activities (20,882) 1,431
---------- ---------
Cash flows from financing activities:
Proceeds from issuance of common
stock 19,086 -
Proceeds from issuance of preferred
stock, net of issuance costs 5,055 4,135
Proceeds from capital lease - 342
Payments on capital lease (79) -
---------- ---------
Net cash provided by financing
activities 24,062 4,477
---------- ---------
Net increase in cash and cash
equivalents 353 4,119
Cash and cash equivalents,
beginning of period/year 4,311 808
---------- ---------
Cash and cash equivalents,
end of period/year 4,664 4,927
Short-term investments, end of
period/year 19,929 -
---------- ---------
Cash, cash equivalents, and short-
term investments end of period/year $24,593 $4,927
========== =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
BROADVISION, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
BroadVision, Inc. (the "Company") was incorporated in Delaware in May
1993. The Company provides an integrated software application system,
BroadVision One-To-One-TM-, that enables businesses to create
applications for interactive marketing and selling services on the Internet's
World Wide Web.
INTERIM FINANCIAL INFORMATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions for Form 10-Q and
Article 10 of Regulation S-X. In the Company's opinion, the financial
statements include all adjustments, consisting only of normal recurring
adjustments, which the Company considers necessary to fairly state the
Company's financial position and the results of operations and cash flows.
The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. The accompanying financial statements should
be read in conjunction with the financial statements and notes thereto
included in the Company's Prospectus, dated June 21, 1996, filed with the
Securities and Exchange Commission in connection with the Company's initial
public offering. The results of the Company's operations for any interim
period are not necessarily indicative of the results of the Company's
operations for any other interim period or for a full fiscal year.
Through the quarter ended March 31, 1996, the Company was a development
stage enterprise for financial reporting purposes. During the quarter ended
June 30, 1996, the Company exited the development stage.
SHORT-TERM INVESTMENTS
As of June 30, 1996, short-term investments consisted of high-grade
commercial paper with maturities of less than one month and are carried at
cost, which approximates fair value.
NET LOSS PER SHARE
The net loss per share is computed using net loss and, for
periods prior to the Company's initial public offering ("IPO"), is based on
the weighted average number of shares of common stock outstanding,
convertible preferred stock, on an "as-if-converted" basis, using the
exchange rate in effect at the initial public offering date and dilutive
common equivalent shares from stock options and warrants outstanding using
the treasury stock method. In accordance with certain Securities and
Exchange Commission Staff Accounting Bulletins, such computations
include all common and common equivalent shares issued within 12 months of
the offering date as if they were outstanding for all periods presented using
the treasury stock method and the anticipated initial public offering price.
For periods subsequent to the IPO, loss per share is based on weighted
average shares outstanding, excluding the effects of dilutive securities.
6
<PAGE>
3) BALANCE SHEET DETAIL
PROPERTY AND EQUIPMENT
As of the dates shown, property and equipment consisted of the following
(in thousands):
June 30, December 31,
1996 1995
---------- ------------
Furniture and fixtures $ 227 $ 92
Computer and Software 1,858 844
Leasehold improvements 42 42
---------- ------------
2,127 978
Less accumulated depreciation
and amortization 362 110
---------- ------------
$ 1,765 $ 868
========== ============
ACCRUED EXPENSES
As of the dates shown, accrued expenses consisted of the following
(in thousands):
June 30, December 31,
1996 1995
---------- ------------
Accrued employee benefits $ 667 $ 130
Deferred compensation 187 107
Accrued amounts payable to
contractors 115 45
Other accrued liabilities 178 45
---------- ------------
$ 1,147 $ 327
========== ============
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Report contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ significantly from the results
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those
discussed under the caption, "Risk Factors," in the Prospectus, dated June 21,
1996, issued in connection with the Company's registration statement on Form
S-1, filed with the Securities and Exchange Commission (the "Prospectus"), as
well as elsewhere in this Quarterly Report on Form 10-Q.
OVERVIEW
Through March 31, 1996, the Company was a development stage company. The
Company provides an integrated software application system, BroadVision
One-To-One, that enables businesses to create applications for interactive
marketing and selling services on the Internet's World Wide Web. These
applications are designed to allow non-technical business managers to tailor
Web site content to the needs and interests of individual Web site visitors,
personalizing each visit on a real-time basis.
Since its inception, The Company has incurred substantial costs to
research, develop, and enhance its technology and products, to recruit and
train a marketing and sales group, and to establish an administrative
organization. As a result, the Company has incurred net losses in each
fiscal quarter since inception and, as of June 30, 1996, had an accumulated
deficit of $10.0 million. The Company anticipates that its operating expenses
will increase substantially in the foreseeable future as it continues the
development of its technology, increases its sales and marketing activities,
and creates and expands its distribution channels. Accordingly, the Company
expects to incur additional losses for the foreseeable future. In addition,
the Company's limited operating history makes the prediction of future
results of operations difficult and accordingly, there can be no assurance
that the Company will achieve or sustain revenue growth or profitability.
To date, only a limited number of companies have licensed the BroadVision
One-To-One application system. Accordingly, the Company has only a limited
operating history, and its prospects must be evaluated in light of the risks
and uncertainties frequently encountered by a company in its early stage of
development. Some of these risks and uncertainties relate to the new and
rapidly evolving nature of the markets in which the Company operates. Such
risks include, among other things, the early stage of market development for
online commerce, the dependence of online commerce upon the development of the
Internet, the uncertainty of widespread adoption of online commerce and the risk
of government regulation of the Internet. Other risks and uncertainties facing
the Company relate to the Company's ability to, among other things, successfully
implement its marketing strategy, respond to competitive developments, continue
to develop and upgrade its products and technologies more rapidly than its
competitors, and commercialize its products and services incorporating these
enhanced technologies. There can be no assurance that the Company will succeed
in addressing any or all of these risks. A more complete description of these
and other risks relating to the Company's business is set forth under the
caption "Risk Factors" in the Prospectus.
In April 1996, the Company raised proceeds of approximately $5,055,000,
net of offering costs, in a private placement of its Series E Preferred Stock
to certain investors.
In June 1996, the Company completed an initial public offering of its
Common Stock, the proceeds of which, after expenses, were approximately
$18,780,000.
8
<PAGE>
RESULTS OF OPERATIONS
REVENUES
The Company earned its first operating revenues in the third quarter of
fiscal 1995 and recognized its first license revenues in the first quarter of
fiscal 1996. Total revenues for the quarter ended June 30, 1996 were
$2,302,000. For the six-month period ended June 30, 1996, total revenues were
$3,700,000.
Software product license revenues were $1,564,000 for the three-month period
ended June 30, 1996. The software product license revenues consisted of North
American software product license revenues of $777,000, and International
software product license revenues of $787,000, representing in each case, 50% of
total software product license revenues for the period. Software product license
revenues were $2,663,000 for the six-month period ended June 30, 1996. The
software product license revenues consisted of North American software product
license revenues of $1,342,000, and International software product license
revenues of $1,321,000, representing in each case, 50% of total software product
license revenues for the period.
Services revenues were $738,000 for the three-month period ended June 30,
1996. The services revenues consisted of North American services revenues of
$131,000, or 18% of total services revenues, and International services revenues
of $607,000, or 82% of total services revenues for the period. Services
revenues were $1,037,000 for the six-month period ended June 30, 1996. The
services revenues consisted of North American services revenues of $311,000,
or 30% of total services revenues, and International services revenues of
$726,000, or 70% of total services revenues for the period.
OPERATING EXPENSES
The Company's operating expenses have increased substantially since
inception. The Company believes that continued expansion of its operations is
essential to achieving its objectives and, therefore intends to increase
expenditures in all operating areas.
COST OF SOFTWARE LICENSES. Cost of software licenses includes the costs
of royalties payable to third parties for software that is embedded in, or
bundled together or sold with, the Company's products, product media and
duplication, and manuals. The amount of such royalties payable is generally
related to the volume of sales made by the Company to its customers. Cost of
software licenses was $93,000 in the three months ended June 30, 1996, or 6%
of the related license revenues. Cost of software licenses was $189,000 in
the six months ended June 30,1996, or 7% of the related license revenues.
The Company earned its first license revenues in the first quarter of fiscal
1996; therefore, there was no cost of software licenses for the six months
ended June 30, 1995.
COST OF SERVICES. Cost of services consists primarily of
employee-related costs and fees for third-party consultants incurred in
providing consulting, post-contract support, and training services. Cost of
services was $331,000 in the three months ended June 30, 1996, or 45% of the
related service revenues. Cost of services was $497,000 in the six months
ended June 30, 1996, or 48% of the related service revenues. The Company
earned its first services revenues in the third quarter of fiscal 1995;
therefore, there was no cost of services for the six months ended June 30,
1995.
9
<PAGE>
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries, other employee-related costs, and consulting fees
related to the development of the Company's products. Research and
development expenses increased by 122%, to $1,277,000, for the three-month
period ended June 30, 1996 from $575,000 in the same quarter of the prior year.
For the six-month period ended June 30, 1996, research and development expenses
increased by 132%, to $2,193,000, from $946,000 in the same period in fiscal
1995. These amounts reflect significant headcount increases in each of the
periods. The Company anticipates that research and development will continue
to increase in absolute dollars for the remainder of 1996 and for 1997. All
expenditures related to research and development have been expensed as
incurred and, therefore, no amortization of capitalized software development
costs is included.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries and other employee-related costs, commissions and other incentive
compensation, travel and entertainment, and expenditures for marketing
programs such as collateral materials, trade shows, public relations and
creative services. Sales and marketing expenses increased to $2,486,000 for
the three-month period ended June 30, 1996, as compared to $215,000 in the
same quarter of fiscal 1995. For the six-month period ended June 30, 1996,
Sales and marketing expenses increased to $4,093,000 as compared to $490,000
from the same period in fiscal 1995. These amounts reflect significant
headcount increases in each of the periods. The Company expects to continue
to expand its direct sales and marketing efforts and expects sales and
marketing expenses to increase significantly in absolute dollars.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries, other employee-related costs, and fees for
professional services. General and administrative expenses increased by 59%,
to $320,000, for the three-month period ended June 30, 1996 from $201,000 in
the same quarter of fiscal 1995. For the six-month period ended June 30,
1996, general and administrative increased by 50%, to $638,000, from $426,000
in the same period in fiscal 1995. These amounts reflect headcount increases
in each of the periods. The Company expects to continue to add administrative
staff to support expanded operations, relocate to new facilities, and incur
additional costs related to being a public company and, therefore, expects
administrative expenses to increase significantly in absolute dollars.
The Company has recorded deferred compensation and compensation expense
for the difference between the exercise price and the deemed fair value of
the Company's Common Stock with respect to 1,794,000 shares issuable upon
exercise of options granted. These amounts were initially recorded as
deferred compensation and will be amortized to cost of software licenses,
cost of services, research and development, selling and marketing, and
general and administrative expense over the vesting periods of the options,
generally 60 months. Deferred compensation amortized to expense was $100,000
for the year ended December 31, 1995, $110,000 for the quarter ended March
31, 1996, and $135,000 for the quarter ended June 30, 1996. The amortization
of deferred compensation will have an adverse effect on the Company's
reported results of operations through the year 2003, but such effect will be
significantly reduced beginning the third quarter of 2001.
10
<PAGE>
FACTORS AFFECTING QUARTERLY OPERATING RESULTS
The Company expects to experience significant fluctuations in quarterly
operating results that may be caused by many factors including, but not limited
to, those discussed under the caption "Risk Factors" in the Prospectus and, in
particular, those discussed under the caption "Fluctuations in Quarterly
Operating Results" in the Prospectus. The Company also expects that a
significant portion of its revenues will be derived from a limited number of
orders, and the timing of receipt and fulfillment of such orders is likely to
cause material fluctuations in the Company's operating results particularly on
a quarterly basis, as with many software companies. The Company anticipates
that it will make the major portion of each quarter's deliveries near the end of
each quarter and, as a result, short delays in delivery of products at the end
of a quarter could adversely affect operating results for that quarter. Due to
these factors, quarterly revenues and operating results are difficult to
forecast, and the Company believes that period-to-period comparisons of its
operating results will not necessarily be meaningful and should not be relied
upon as any indication of future performance. It is also likely that the
Company's future quarterly operating results from time to time will not meet the
expectations of market analysts or investors, which may have an adverse effect
on the price of the Company's Common Stock.
LIQUIDITY AND CAPITAL RESOURCES
Prior to its initial public offering, the Company financed its operations
primarily through private placements of Common and Preferred Stock, which
have provided net proceeds totaling $15.5 million through May 1996. The
Company's initial public offering yielded net proceeds of approximately
$18,780,000. At June 30, 1996, the Company had approximately $24,600,000 in
cash, cash equivalents and short-term investments. The Company has no credit
facilities. Subsequent to June 30, 1996, the Company issued and sold 360,000
shares of Common Stock with net proceeds of approximately of $2,244,000 upon
exercise by the underwriters of the public offering of the over-allotment
option.
The Company anticipates that its available cash resources will be sufficient
to meet its presently anticipated working capital and capital expenditure
requirements for at least the next 12 months. This estimate is a forward-looking
statement that involves risks and uncertainties, and actual results may vary as
a result of a number of factors, including those discussed under "Risk Factors"
in the Prospectus and those discussed elsewhere herein. The Company may need
to raise additional funds in order to support more rapid expansion, develop new
or enhanced services, respond to competitive pressures, acquire complementary
businesses or technologies, or respond to unanticipated requirements. The
Company may seek to raise additional funds through private or public sales of
securities, strategic relationships, bank or lease financings, or otherwise.
If additional funds are raised through the issuance of equity securities, the
percentage ownership of the stockholders of the Company will be reduced,
stockholders may experience additional dilution, or such equity securities may
have rights, preferences, or privileges senior to those of the holders of the
Company's Common Stock. There can be no assurance that additional financing will
be available on acceptable terms, if at all. If adequate funds are not
available or are not available at acceptable terms, the Company may be unable to
develop or enhance its products, take advantage of future opportunities, or
respond to competitive pressures or unanticipated requirements, which could have
a material adverse effect on the Company's business, financial condition, and
operating results.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
Immediately following the completion of the Company's initial public
offering, the Company filed an Amended and Restated Certificate of
Incorporation, which authorizes the Board of Directors to issue up to
5,000,000 shares of Preferred Stock in one or more series and to fix the
rights, preferences and privileges thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation
preferences, sinking fund terms and the number of shares constituting any
series or the designation of such series, without any further vote or action
by the Company's stockholders.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In June 1996, prior to completion of the Company's initial public
offering, the stockholders of the Company approved the following items: (i)
the amendment and restatement of the Company's Restated Certificate of
Incorporation, (ii) the amendment and restatement of the Company's Bylaws,
(iii) the selection of KPMG Peat Marwick, L.L.P. as the Company's auditors
for the fiscal year ending December 31, 1996, (iv) the amendment and
restatement of the Company's Stock Option Plan, which was renamed the Equity
Incentive Plan, (v) the adoption of the Company's Employee Stock Purchase
Plan, (vi) the adoption of a form of Indemnity Agreement to be entered into
by the Company with each of its directors, and (vii) the waiver of certain
registration rights and consent to certain stock transfers. The action was
effected by stockholder consent in June 1996. All or substantially all of
the stockholders voted in favor of each proposal. The amended documents are
more fully described in the Company's Prospectus.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
ITEM DESCRIPTION
---- -----------
1.1 Underwriting Agreement by and among the Company and Robertson,
Stephens & Co. LLC, Hambrecht & Quist LLC, and Wessels, Arnold &
Henderson, LLC dated June 21, 1996.
11.1 Statement re: Computation of Net Loss Per Share
27.1 Financial Data Schedule
12
<PAGE>
SIGNATURES
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.
BROADVISION, INC
Date: August 14, 1996 /s/ Pehong Chen
----------------------------- ------------------------------
Pehong Chen
President and Chief Executive
Officer
(Principal Executive Officer)
Date: August 14, 1996 /s/ Randall C. Bolten
----------------------------- ------------------------------
Randall C. Bolten
Vice President, Operations and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
13
<PAGE>
BROADVISION, INC.
INDEX TO EXHIBITS
Exhibit
No. Description
- ------- --------------------------------------------
1.1 Underwriting Agreement by and among the
Company and Robertson, Stephens & Co. LLC,
Hambrecht & Quist LLC, and Wessels, Arnold
& Henderson, LLC dated June 21, 1996.
11.1 Statement regarding Computation of Per Share
Earnings
27.1 Financial Data Schedule
14
- -----------------------------------------------------------
<PAGE>
Exhibit 1.1
3,000,000 Shares(1)
BROADVISION, INC.
Common Stock
UNDERWRITING AGREEMENT
June 21, 1996
ROBERTSON, STEPHENS & COMPANY LLC
HAMBRECHT & QUIST LLC
WESSELS, ARNOLD & HENDERSON, L.L.C.
As Representatives of the several Underwriters
c/o Robertson, Stephens & Company LLC
555 California Street
Suite 2600
San Francisco, California 94104
Ladies/Gentlemen:
BroadVision, Inc., a Delaware corporation (the "Company"), addresses you
as the Representatives of each of the persons, firms and corporations listed in
Schedule A hereto (herein collectively called the "Underwriters") and hereby
confirm their respective agreements with the several Underwriters as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell
3,000,000 shares of its authorized and unissued Common Stock, $0.0001 par value
per share (the "Firm Shares") to the several Underwriters. The Company also
proposes to grant to the Underwriters an option to purchase up to 450,000
additional shares of the Company's Common Stock, $0.0001 par value per share
(the "Option Shares"), as provided in Section 7 hereof. As used in this
Agreement, the term "Shares" shall include the Firm Shares and the Option
Shares. All shares of Common Stock, $0.0001 par value per share, of the Company
to be outstanding after giving effect to the sales contemplated hereby,
including the Shares, are hereinafter referred to as "Common Stock."
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
I. The Company represents and warrants to and agrees with
each Underwriter that:
(a) A registration statement on Form S-1 (File No.
333-3844) with respect to the Shares, including a prospectus subject to
completion, has been prepared by the Company in conformity with the requirements
of the Securities Act of 1933, as amended (the "Act"), and the applicable rules
and regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission")
- ------------------------------------
(1) Plus an option to purchase up to 450,000 additional shares from the
Company to cover over-allotments.
<PAGE>
under the Act and has been filed with the Commission; such amendments to such
registration statement, such amended prospectuses subject to completion and such
abbreviated registration statements pursuant to Rule 462(b) of the Rules and
Regulations as may have been required prior to the date hereof have been
similarly prepared and filed with the Commission; and the Company will file such
additional amendments to such registration statement, such amended prospectuses
subject to completion and such abbreviated registration statements as may
hereafter be required. Copies of such registration statement and amendments, of
each related prospectus subject to completion (the "Preliminary Prospectuses"),
and of any abbreviated registration statement pursuant to Rule 462(b) of the
Rules and Regulations have been delivered to you.
If the registration statement relating to the Shares has
been declared effective under the Act by the Commission, the Company will
prepare and promptly file with the Commission the information omitted from the
registration statement pursuant to Rule 430A(a) or, if Robertson, Stephens &
Company LLC, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules and Regulations, the information required
to be included in any term sheet filed pursuant to Rule 434(b) or (c), as
applicable, of the Rules and Regulations pursuant to subparagraph (1), (4) or
(7) of Rule 424(b) of the Rules and Regulations or as part of a post-effective
amendment to the registration statement (including a final form of prospectus).
If the registration statement relating to the Shares has not been declared
effective under the Act by the Commission, the Company will prepare and promptly
file an amendment to the registration statement, including a final form of
prospectus, or, if Robertson, Stephens & Company LLC, on behalf of the several
Underwriters, shall agree to the utilization of Rule 434 of the Rules and
Regulations, the information required to be included in any term sheet filed
pursuant to Rule 434(b) or (c), as applicable, of the Rules and Regulations.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement, including financial statements, schedules and exhibits,
in the form in which it became or becomes, as the case may be, effective
(including, if the Company omitted information from the registration statement
pursuant to Rule 430A(a) or files a term sheet pursuant to Rule 434 of the Rules
and Regulations, the information deemed to be a part of the registration
statement at the time it became effective pursuant to Rule 430A(b) or Rule
434(d) of the Rules and Regulations) and, in the event of any amendment thereto
or the filing of any abbreviated registration statement pursuant to Rule 462(b)
of the Rules and Regulations relating thereto after the effective date of such
registration statement, shall also mean (from and after the effectiveness of
such amendment or the filing of such abbreviated registration statement) such
registration statement as so amended, together with any such abbreviated
registration statement. The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Shares as included in such Registration
Statement at the time it becomes effective (including, if the Company omitted
information from the Registration Statement pursuant to Rule 430A(a) of the
Rules and Regulations, the information deemed to be a part of the Registration
Statement at the time it became effective pursuant to Rule 430A(b) of the Rules
and Regulations); PROVIDED, HOWEVER, that if in reliance on Rule 434 of the
Rules and Regulations and with the consent of Robertson, Stephens & Company LLC
on behalf of the several Underwriters, the Company shall have provided to the
Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable, prior
to the time that a confirmation is sent or given for purposes of Section
2(10)(a) of the Act, the term "Prospectus" shall mean the "prospectus subject to
completion" (as defined in Rule 434(g) of the Rules and Regulations) last
provided to the Underwriters by the Company and circulated by the Underwriters
to all prospective purchasers of the Shares (including the information deemed to
be a part of the Registration Statement at the time it became effective pursuant
to Rule 434(d) of the Rules and Regulations). Notwithstanding the foregoing, if
any revised prospectus shall be provided to the Underwriters by the Company for
use in connection with the offering of the Shares that differs from the
prospectus referred to in the immediately preceding sentence (whether or not
such revised prospectus is required to be filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations), the term "Prospectus" shall refer to
such revised prospectus from and after the time it is first provided to the
Underwriters for such use. If in reliance on Rule 434 of the Rules and
Regulations and with the consent of Robertson, Stephens & Company LLC, on
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behalf of the several Underwriters, the Company shall have provided to the
Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable, prior
to the time that a confirmation is sent or given for purposes of Section
2(10)(a) of the Act, the Prospectus and the term sheet, together, will not be
materially different from the prospectus in the Registration Statement.
(b) The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus or instituted
proceedings for that purpose, and each such Preliminary Prospectus has conformed
in all material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement became or
becomes, as the case may be, effective and at all times subsequent thereto up to
and on the Closing Date (hereinafter defined) and on any later date on which
Option Shares are to be purchased, (i) the Registration Statement and the
Prospectus, and any amendments or supplements thereto, contained and will
contain all material information required to be included therein by the Act and
the Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, (ii) the Registration
Statement, and any amendments or supplements thereto, did not and will not
include any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (iii) the Prospectus, and any amendments or supplements thereto,
did not and will not include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that none of the representations and warranties contained in this subparagraph
(b) shall apply to information contained in or omitted from the Registration
Statement or Prospectus, or any amendment or supplement thereto, in reliance
upon, and in conformity with, written information relating to any Underwriter
furnished to the Company by such Underwriter specifically for use in the
preparation thereof.
(c) Each of the Company and its subsidiary has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation with full corporate
power and authority to own, lease and operate its properties and conduct its
business as described in the Prospectus; the Company owns all of the outstanding
capital stock of its subsidiary free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest; each of the Company and its
subsidiary is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in the United States in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its subsidiary considered as one enterprise; no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification;
each of the Company and its subsidiary is in possession of and operating in
compliance with all authorizations, licenses, certificates, consents, orders and
permits from state, federal and other regulatory authorities which are material
to the conduct of its business, all of which are valid and in full force and
effect; neither the Company nor its subsidiary is in violation of its respective
charter or bylaws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any material bond,
debenture, note or other evidence of indebtedness, or in any material lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or its subsidiary is a party
or by which it or its subsidiary or their respective properties may be bound;
and neither the Company nor its subsidiary is in material violation of any law,
order, rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or its subsidiary or over their respective
properties of which it has knowledge. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other than
4C Consultancy AG.
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(d) The Company has full legal right, power and
authority to enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement on the part of the Company,
enforceable in accordance with its terms, except as rights to indemnification
and contribution hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles or the limitation
on availability of equitable remedies; the performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a
material breach or violation of any of the terms and provisions of, or
constitute (i) a material default under any material bond, debenture, note or
other evidence of indebtedness, or under any material lease, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company or its subsidiary is a party or by
which it or its subsidiary or their respective properties may be bound, (ii) a
default under the charter or bylaws of the Company or its subsidiary, or (iii) a
material default under any law, order, rule, regulation, writ, injunction,
judgment or decree of any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or its subsidiary or
over their respective properties. No consent, approval, authorization or order
of or qualification with any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or its subsidiary or
over their respective properties is required for the execution and delivery of
this Agreement and the consummation by the Company or its subsidiary of the
transactions herein contemplated, except such as may be required under the Act
or under state or other securities laws, all of which requirements have been
satisfied in all material respects (except for any filings under Rule 424 of the
Rules and Regulations, which filings have been or will be made under Section
4(a) of this agreement) or Blue Sky laws.
(e) Except as set forth in the Prospectus, there is
not any pending or, to the best knowledge of the persons named in the table
under "Management" in the Registration Statement, excepting the Secretary and
the nonemployee directors (the "Company's Officers"), threatened action, suit,
claim or proceeding against the Company, its subsidiary or any of their
respective officers or any of their respective properties, assets or rights
before any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or its subsidiary or over their
respective officers or properties or otherwise which (i) would, if adversely
determined, result in any material adverse change in the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company and its subsidiary considered as one enterprise or might materially and
adversely affect their properties, assets or rights, (ii) might prevent
consummation of the transactions contemplated hereby or (iii) is required to be
disclosed in the Registration Statement or Prospectus and is not so disclosed;
and there are no agreements, contracts, leases or documents of the Company or
its subsidiary of a character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an exhibit to the
Registration Statement by the Act or the Rules and Regulations which have not
been accurately described in all material respects in the Registration Statement
or Prospectus or filed as exhibits to the Registration Statement.
(f) All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and the
authorized and outstanding capital stock of the Company is, in all material
respects, as set forth in the Prospectus under the caption "Capitalization" and
conforms in all material respects to the statements relating thereto contained
in the Registration Statement and the Prospectus (and such statements correctly
state the substance of the instruments defining the capitalization of the
Company); the Firm Shares and the Option Shares have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company against payment therefor in accordance with
the terms of this Agreement, will be duly and validly
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<PAGE>
issued and fully paid and nonassessable, and will be sold free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest; and
no preemptive right, co-sale right, registration right, right of first refusal
or other similar right of stockholders exists with respect to any of the Firm
Shares or Option Shares or the issuance and sale thereof other than those that
have been expressly waived prior to the date hereof and those that will
automatically expire upon the consummation of the transactions contemplated on
the Closing Date. No further approval or authorization of any stockholder, the
Board of Directors of the Company or others is required for the issuance and
sale or transfer of the Shares except as may be required under the Act or under
state or other securities or Blue Sky laws. All issued and outstanding shares
of capital stock of each subsidiary of the Company have been duly authorized and
validly issued and are fully paid and nonassessable, and were not issued in
violation of or subject to any preemptive right, or other rights to subscribe
for or purchase shares and are owned by the Company free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest.
Except as disclosed in or contemplated by the Prospectus and the financial
statements of the Company, and the notes thereto, included in the Prospectus,
neither the Company nor its subsidiary has outstanding any options to purchase,
or any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. The description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents the information required to be shown by the Act
and the applicable Rules and Regulations with respect to such plans,
arrangements, options and rights.
(g) KPMG Peat Marwick LLP, which has audited the
financial statements of the Company, together with the related schedules and
notes, as of December 31, 1995 and 1994 for each of the years in the two-year
period ended December 31, 1995 and for the period from May 13, 1993 to December
31, 1993 filed with the Commission as a part of the Registration Statement,
which are included in the Prospectus, are, to the Company's knowledge,
independent accountants within the meaning of the Act and the Rules and
Regulations; the audited financial statements of the Company, together with the
related schedules and notes, and the unaudited financial information, forming
part of the Registration Statement and Prospectus, fairly present the financial
position and the results of operations of the Company and its subsidiary at the
respective dates and for the respective periods to which they apply; and all
audited financial statements of the Company, together with the related schedules
and notes, and the unaudited financial information, filed with the Commission as
part of the Registration Statement, have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved except as may be otherwise stated therein. The selected and
summary financial and statistical data included in the Registration Statement
present fairly the information shown therein and have been compiled on a basis
consistent with the audited financial statements presented therein. No other
financial statements or schedules are required to be included in the
Registration Statement.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been (i) any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiary considered as one enterprise, (ii) any transaction that is material
to the Company and its subsidiary considered as one enterprise, except
transactions entered into in the ordinary course of business, (iii) any
obligation, direct or contingent, that is material to the Company and its
subsidiary considered as one enterprise, incurred by the Company or its
subsidiary, except obligations incurred in the ordinary course of business, (iv)
any change in the capital stock or outstanding indebtedness of the Company or
its subsidiary that is material to the Company and its subsidiary considered as
one enterprise, (v) any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company or its subsidiary, or (vi) any loss or
damage (whether or not insured) to the property of the Company or its subsidiary
which has
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<PAGE>
been sustained which has a material adverse effect on the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company and its subsidiary considered as one enterprise.
(i) Except as set forth in the Registration
Statement and Prospectus, (i) each of the Company and its subsidiary has good
title to all properties and assets described in the Registration Statement and
Prospectus as owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest, other than such as would not
have a material adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiary considered as one enterprise, (ii) the agreements to which the
Company or its subsidiary is a party described in the Registration Statement and
Prospectus are valid agreements, enforceable by the Company and its subsidiary
(as applicable), except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles or the limitation on availability of equitable remedies and, to the
best of the Company's knowledge, the other contracting party or parties thereto
are not in material breach or material default under any of such agreements, and
(iii) each of the Company and its subsidiary has valid and enforceable leases
for all properties described in the Registration Statement and Prospectus as
leased by it, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles or the limitation on availability of equitable remedies. Except as
set forth in the Registration Statement and Prospectus, the Company owns or
leases all such properties as are necessary to its operations as now conducted.
(j) The Company and its subsidiary have timely filed
all necessary federal, state and foreign income and franchise tax returns and
have paid all taxes shown thereon as due, and there is no tax deficiency that
has been or, to the best of the Company's knowledge, might properly and validly
be asserted against the Company or its subsidiary that would have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiary considered as
one enterprise; and all tax liabilities are adequately provided for on the books
of the Company and its subsidiary.
(k) The Company maintains insurance with insurers of
recognized financial responsibility of the types and in the amounts generally
deemed adequate for its businesses and consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, insurance covering real and personal property owned or leased by the
Company or its subsidiary against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against, all of which insurance is in
full force and effect; neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for; and neither the Company
nor any such subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiary considered as one enterprise.
(l) To the best knowledge of the Company's Officers
no labor disturbance by the employees of the Company or its subsidiary exists or
is imminent; and the Company's Officers are not aware of any existing or
imminent labor disturbance by the employees of any of the Company's principal
suppliers, subassemblers, value added resellers, subcontractors, original
equipment manufacturers, authorized dealers or international distributors that
might be expected to result in a material adverse change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company and its subsidiary considered as one enterprise. No collective
bargaining agreement exists with any of the Company's employees and, to the best
of knowledge of the Company's Officers, no such agreement is imminent.
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<PAGE>
(m) Each of the Company and its subsidiary owns or
possesses adequate rights to use all patents, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names and copyrights which
are necessary to conduct its business as described in the Registration Statement
and Prospectus; the Company has not received any written notice of, and the
Company's Officers have not received any notice of and have no knowledge of, any
infringement of or conflict with asserted rights of the Company by others with
respect to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights; and the Company has not
received any notice of, and the Company's Officers have no knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiary considered as
one enterprise.
(n) The Common Stock has been approved for quotation
on the Nasdaq National Market, subject to official notice of issuance.
(o) The Company has been advised concerning the
Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the future
to use its best efforts to conduct, its affairs in such a manner as to ensure
that it will not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules and
regulations.
(p) The Company has not distributed and will not
distribute prior to the later of (i) the Closing Date, or any date on which
Option Shares are to be purchased, as the case may be, and (ii) completion of
the distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectuses, the
Prospectus, the Registration Statement and other materials, if any, permitted by
the Act.
(q) Neither the Company nor its subsidiary has at
any time during the last five (5) years (i) made any unlawful contribution to
any candidate for foreign office or failed to disclose fully any such
contribution in violation of law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
(r) The Company has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.
(s) Each officer and director of the Company and the
beneficial owners of 97% of the outstanding shares of Common Stock and Preferred
Stock as of the date hereof have agreed in writing that such person will not,
for the period beginning on the date that the Registration Statement is filed
with the Commission and ending 180 days after the Registration is declared
effective by the Commission (the "Lock-up Period"), offer to sell, contract to
sell, or otherwise sell, dispose of, loan, pledge or grant any rights with
respect to (collectively, a "Disposition") any shares of Common Stock, any
options or warrants to purchase any shares of Common Stock or any securities
convertible into or exchangeable for shares of Common Stock (collectively,
"Securities") now owned or hereafter acquired directly by such person or with
respect to which such person has or hereafter acquires the power of disposition,
otherwise than (i) as a bona fide gift or gifts, provided the donee or donees
thereof agree in writing to be bound by this restriction, (ii) as a distribution
to limited partners or stockholders of such person, provided that the
distributees thereof agree in writing to be bound by the terms of this
restriction,
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<PAGE>
or (iii) with the prior written consent of Robertson, Stephens & Company LLC,
provided that the foregoing does not apply to any of the Firm Shares or the
Option Shares. The Company has provided to counsel for the Underwriters a
complete and accurate list of all securityholders of the Company and the number
and type of securities held by each securityholder. The Company has provided to
counsel for the Underwriters true, accurate and complete copies of all of the
agreements pursuant to which its officers, directors and stockholders have
agreed to such or similar restrictions (the "Lock-up Agreements") presently in
effect or effected hereby. The Company hereby represents and warrants that it
will not release any of its officers, directors or other stockholders from any
Lock-up Agreements currently existing or hereafter effected without the prior
written consent of Robertson, Stephens & Company LLC.
(t) Except as set forth in the Registration
Statement and Prospectus, (i) the Company is in material compliance with all
rules, laws and regulations relating to the use, treatment, storage and disposal
of toxic substances and protection of health or the environment ("Environmental
Laws") which are applicable to its business, (ii) the Company has received no
notice from any governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the Registration
Statement and the Prospectus, (iii) the Company will not be required to make
future material capital expenditures to comply with Environmental Laws and (iv)
no property which is owned, leased or occupied by the Company has been
designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, ET
SEQ.), or otherwise designated as a contaminated site under applicable state or
local law.
(u) The Company and its subsidiary maintain a system
of internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(v) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus.
(w) The Company has complied with all provisions of
Section 517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $6.51 per share, the
respective number of Firm Shares as hereinafter set forth. The obligation of
each Underwriter to the Company shall be to purchase from the Company that
number of Firm Shares which is set forth opposite the name of such Underwriter
in Schedule A hereto (subject to adjustment as provided in Section 10).
Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 3 shall be made against
payment of the purchase price therefor by the several Underwriters by wire
transfer or certified or official bank check or checks drawn in same-day funds,
at the option of the Company, payable to the order of the Company, at the
offices of Cooley Godward Castro Huddleson & Tatum, One Maritime Plaza, 20th
Floor, San Francisco, California 94111 (or at such other
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place as may be agreed upon among the Representatives and the Company, at 7:00
A.M., San Francisco time (a) on the third (3rd) full business day following the
first day that Shares are traded, (b) if this Agreement is executed and
delivered after 1:30 P.M., San Francisco time, the fourth (4th) full business
day following the day that this Agreement is executed and delivered or (c) at
such other time and date not later than seven (7) full business days following
the first day that Shares are traded as the Representatives and the Company may
determine (or at such time and date to which payment and delivery shall have
been postponed pursuant to Section 10 hereof), such time and date of payment and
delivery being herein called the "Closing Date"; PROVIDED, HOWEVER, that if the
Company has not made available to the Representatives copies of the Prospectus
within the time provided in Section 4(d) hereof, the Representatives may, in
their sole discretion, postpone the Closing Date until no later than two (2)
full business days following delivery of copies of the Prospectus to the
Representatives. The certificates for the Firm Shares to be so delivered will
be made available to you at such office or such other location including,
without limitation, in New York City, as you may reasonably request for checking
at least one (1) full business day prior to the Closing Date and will be in such
names and denominations as you may request, such request to be made at least two
(2) full business days prior to the Closing Date. If the Representatives so
elect, delivery of the Firm Shares may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by the
Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the Closing
Date for the Firm Shares to be purchased by such Underwriter or Underwriters.
Any such payment by you shall not relieve any such Underwriter or Underwriters
of any of its or their obligations hereunder.
After the Registration Statement becomes effective, the several
Underwriters intend to make an initial public offering (as such term is
described in Section 11 hereof) of the Firm Shares at an initial public offering
price of $7.00 per share. After the initial public offering, the several
Underwriters may, in their discretion, vary the public offering price.
The information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters), in the
paragraph on the inside front cover page, concerning stabilization and
over-allotment by the Underwriters, and in the first, second, third and last two
paragraphs and third sentence of the fifth paragraph under the caption
"Underwriting" in any Preliminary Prospectus and in the final form of Prospectus
filed pursuant to Rule 424(b) constitutes the only information furnished by the
Underwriters to the Company for inclusion in any Preliminary Prospectus, the
Prospectus or the Registration Statement, and you, on behalf of the respective
Underwriters, represent and warrant to the Company that the statements made
therein do not include any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
4. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the
several Underwriters that:
(a) The Company will use its best efforts to cause
the Registration Statement and any amendment thereof, if not effective at the
time and date that this Agreement is executed and delivered by the parties
hereto, to become effective as promptly as possible; the Company will use its
best efforts to cause any abbreviated registration statement pursuant to Rule
462(b) of the Rules and Regulations as may be required subsequent to the date
the Registration Statement is declared effective to become effective as promptly
as possible; the Company will notify you, promptly after it shall receive notice
thereof, of the time when the Registration Statement, any subsequent amendment
to the Registration
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Statement or any abbreviated registration statement has become effective or any
supplement to the Prospectus has been filed; if the Company omitted information
from the Registration Statement at the time it was originally declared effective
in reliance upon Rule 430A(a) of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus contains such
information and has been filed, within the time period prescribed, with the
Commission pursuant to subparagraph (1) or (4) of Rule 424(b) of the Rules and
Regulations or as part of a post-effective amendment to such Registration
Statement as originally declared effective which is declared effective by the
Commission; if the Company files a term sheet pursuant to Rule 434 of the Rules
and Regulations, the Company will provide evidence satisfactory to you that the
Prospectus and term sheet meeting the requirements of Rule 434(b) or (c), as
applicable, of the Rules and Regulations, have been filed, within the time
period prescribed, with the Commission pursuant to subparagraph (7) of Rule
424(b) of the Rules and Regulations; if for any reason the filing of the final
form of Prospectus is required under Rule 424(b)(3) of the Rules and
Regulations, it will provide evidence satisfactory to you that the Prospectus
contains such information and has been filed with the Commission within the time
period prescribed; it will notify you promptly of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; promptly upon your request, it will
prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of counsel for the
several Underwriters, Brobeck, Phleger & Harrison LLP ("Underwriters' Counsel"),
may be necessary or advisable in connection with the distribution of the Shares
by the Underwriters; it will promptly prepare and file with the Commission, and
promptly notify you of the filing of, any amendments or supplements to the
Registration Statement or Prospectus which may be necessary to correct any
statements or omissions, if, at any time when a prospectus relating to the
Shares is required to be delivered under the Act, any event shall have occurred
as a result of which the Prospectus or any other prospectus relating to the
Shares as then in effect would include any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; in
case any Underwriter is required to deliver a prospectus nine (9) months or more
after the effective date of the Registration Statement in connection with the
sale of the Shares, it will prepare promptly upon request, but at the expense of
such Underwriter, such amendment or amendments to the Registration Statement and
such prospectus or prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act; and it will file no amendment
or supplement to the Registration Statement or Prospectus which shall not
previously have been submitted to you a reasonable time prior to the proposed
filing thereof or to which you shall reasonably object in writing, subject,
however, to compliance with the Act and the Rules and Regulations and the
provisions of this Agreement.
(b) The Company will advise you, promptly after it
shall receive notice or obtain knowledge, of the issuance of any stop order by
the Commission suspending the effectiveness of the Registration Statement or of
the initiation or threat of any proceeding for that purpose; and it will
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
(c) The Company will use its best efforts to qualify
the Shares for offering and sale under the securities laws of such jurisdictions
as you may designate and to continue such qualifications in effect for so long
as may be required for purposes of the distribution of the Shares, except that
the Company shall not be required in connection therewith or as a condition
thereof to qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction in which it is not otherwise required to
be so qualified or to so execute a general consent to service of process. In
each jurisdiction in which the Shares shall have been qualified as above
provided, the Company will make and file such statements and reports in each
year as are or may be reasonably required by the laws of such jurisdiction for
such purpose.
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(d) The Company will furnish to you, as soon as
available, and, in the case of the Prospectus and any term sheet or abbreviated
term sheet under Rule 434, in no event later than the first (1st) full business
day following the first day that Shares are traded, copies of the Registration
Statement (three of which will be signed and which will include all exhibits),
each Preliminary Prospectus, the Prospectus and any amendments or supplements to
such documents, including any prospectus prepared to permit compliance with
Section 10(a)(3) of the Act, all in such quantities as you may from time to time
reasonably request. Notwithstanding the foregoing, if Robertson, Stephens &
Company LLC, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules and Regulations, the Company shall provide
to you copies of a Preliminary Prospectus updated in all respects through the
date specified by you in such quantities as you may from time to time reasonably
request.
(e) The Company will make generally available to its
securityholders as soon as practicable, but in any event not later than the
forty-fifth (45th) day following the end of the fiscal quarter first occurring
after the first anniversary of the effective date of the Registration Statement,
an earnings statement (which will be in reasonable detail but need not be
audited) complying with the provisions of Section 11(a) of the Act (including,
at the election of the Company, Rule 158 of the Rules and Regulations) and
covering a twelve (12) month period beginning after the effective date of the
Registration Statement.
(f) During a period of five (5) years after the date
hereof, the Company will furnish to its stockholders as soon as practicable
after the end of each respective period, annual reports (including financial
statements audited by independent certified public accountants) and unaudited
quarterly reports of operations for each of the first three quarters of the
fiscal year, and will furnish to you and the other several Underwriters
hereunder, upon request (i) concurrently with furnishing such reports to its
stockholders, statements of operations of the Company for each of the first
three (3) quarters in the form furnished to the Company's stockholders, (ii)
concurrently with furnishing to its stockholders, a balance sheet of the Company
as of the end of such fiscal year, together with statements of operations, of
stockholders' equity, and of cash flows of the Company for such fiscal year,
accompanied by a copy of the certificate or report thereon of independent
certified public accountants, (iii) as soon as they are available, copies of all
reports (financial or other) mailed to stockholders, (iv) as soon as they are
available, copies of all reports and financial statements furnished to or filed
with the Commission, any securities exchange or the National Association of
Securities Dealers, Inc. ("NASD"), (v) every material press release and every
material news item or article in respect of the Company or its affairs which was
generally released to stockholders or prepared by the Company or its subsidiary,
and (vi) any additional information of a public nature concerning the Company or
its subsidiary, or its business which you may reasonably request. During such
five (5) year period, if the Company shall have active subsidiary, the foregoing
financial statements shall be on a consolidated basis to the extent that the
accounts of the Company and its subsidiary are consolidated, and shall be
accompanied by similar financial statements for any significant subsidiary which
is not so consolidated.
(g) The Company will apply the net proceeds from the
sale of the Shares being sold by it in the manner set forth under the caption
"Use of Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and,
if necessary under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for its Common Stock.
(i) The Company will file Form SR in conformity with
the requirements of the Act and the Rules and Regulations.
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(j) If at any time after the Registration Statement
becomes effective until the later of (A) twenty five days after the date of the
Prospectus and (B) the date the Representatives advise the Company that the
distribution of Shares has been completed (which in the absence of express
notice will be deemed to be the closing of the sale of the Option Shares or the
termination or expiration of the option period set forth in section 7(a)), any
rumor, publication or event relating to or affecting the Company shall occur as
a result of which in your opinion the market price of the Common Stock has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you advising the
Company to the effect set forth above, forthwith prepare, consult with you
concerning the substance of and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(k) During the period from the date hereof through
the date 180 days after the Registration Statement is declared effective by the
Commission, the Company will not, without the prior written consent of Robertson
Stephens & Company LLC, effect the Disposition of, directly or indirectly, any
Securities other than (i) the sale of the Firm Shares and the Option Shares
hereunder, (ii) the issuance of options or Common Stock under the Company's
presently authorized Stock Option Plan adopted in December 1993 and Employee
Stock Purchase Plan adopted in April 1996 (the "Plans"), (iii) pursuant to the
exercise of options or warrants otherwise outstanding at the date hereof, (iv)
the issuance of options (or Common Stock upon exercise thereof) to employees,
consultants or directors or otherwise for compensatory purposes outside the
Plans (provided that upon exercise of such options, the optionee agrees to be
bound by a Lock-up Agreement for the days remaining in the Lock-up Period), or
(v) pursuant to equipment or lease financing activities entered into in the
ordinary course of the Company's business, in connection with the acquisition,
by the Company, of another business, product or technology, or to a strategic
investor or partner of the Company in conjunction with an agreement involving a
technical, manufacturing or marketing collaboration in the ordinary course of
business, provided that in each case, the parties agree not to make a
Disposition of, directly or indirectly, any Securities and are bound to the
Lock-up Agreement for the days remaining in the Lock-up Period.
(l) During a period of thirty (30) days from the
effective date of the Registration Statement, the Company will not file a
registration statement registering shares under the Plans or other employee
benefit plan.
5. EXPENSES.
(a) The Company agrees with each Underwriter that:
(i) The Company will pay and bear all costs
and expenses in connection with the preparation, printing and filing of the
Registration Statement (including financial statements, schedules and exhibits),
Preliminary Prospectuses and the Prospectus and any amendments or supplements
thereto; the printing of this Agreement, the Agreement Among Underwriters, the
Selected Dealer Agreement, the Preliminary Blue Sky Survey and any Supplemental
Blue Sky Survey, the Underwriters' Questionnaire and Power of Attorney, and any
instruments related to any of the foregoing; the issuance and delivery of the
Shares hereunder to the several Underwriters, including transfer taxes, if any,
the cost of all certificates representing the Shares and transfer agents' and
registrars' fees; the fees and disbursements of counsel for the Company; all
fees and other charges of the Company's independent certified public
accountants; the cost of furnishing to the several Underwriters copies of the
Registration Statement (including appropriate exhibits), Preliminary Prospectus
and the Prospectus, and any amendments or supplements to any of the foregoing;
NASD filing fees and the cost of qualifying the Shares under the laws of such
jurisdictions as you may designate (including filing fees and fees and
reasonable and customary disbursements of Underwriters' Counsel in connection
with such NASD filings and Blue Sky qualifications);
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and all other expenses directly incurred by the Company in connection with the
performance of their obligations hereunder.
(ii) In addition to its other obligations
under Section 8(a) hereof, the Company agrees that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
described in Section 8(a) hereof, it will reimburse the Underwriters on a
monthly basis for all reasonable legal or other expenses reasonably incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
obligation to reimburse the Underwriters for such expenses and the possibility
that such payments might later be held to have been improper by the Commission,
a court or arbitration tribunal of competent jurisdiction. To the extent that
any such interim reimbursement payment is so held to have been improper, the
Underwriters shall promptly return such payment to the Company together with
interest, compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) listed
from time to time in The Wall Street Journal which represents the base rate on
corporate loans posted by a substantial majority of the nation's thirty (30)
largest banks (the "Prime Rate"). Any such interim reimbursement payments which
are not made to the Underwriters within thirty (30) days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request.
(b) In addition to their other obligations under
Section 8(b) hereof, the Underwriters severally and not jointly agree that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding described in Section 8(b) hereof, they will
reimburse the Company on a monthly basis for all reasonable legal or other
expenses reasonably incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and enforceability
of the Underwriters' obligation to reimburse the Company for such expenses and
the possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company shall
promptly return such payment to the Underwriters together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within thirty (30) days
of a request for reimbursement shall bear interest at the Prime Rate from the
date of such request.
(c) It is agreed that any controversy arising out of
the operation of the interim reimbursement arrangements set forth in
Sections 5(a)(ii) and 5(b) hereof, including the amounts of any requested
reimbursement payments, the method of determining such amounts and the basis on
which such amounts shall be apportioned among the reimbursing parties, shall be
settled by arbitration conducted under the provisions of the Constitution and
Rules of the Board of Governors of the New York Stock Exchange, Inc. or pursuant
to the Code of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or a written notice of
intention to arbitrate, therein electing the arbitration tribunal. In the event
the party demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to said demand or
notice is authorized to do so. Any such arbitration will be limited to the
operation of the interim reimbursement provisions contained in Sections 5(a)(ii)
and 5(b) hereof and will not resolve the ultimate propriety or enforceability of
the obligation to indemnify for expenses which is created by the provisions of
Sections 8(a) and 8(b) hereof or the obligation to contribute to expenses which
is created by the provisions of Section 8(d) hereof.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Shares as provided herein shall
be subject to the accuracy, as of the date hereof
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and the Closing Date and any later date on which Option Shares are to be
purchased, as the case may be, of the representations and warranties of the
Company herein, to the performance by the Company of its obligations hereunder
and to the following additional conditions:
(a) The Registration Statement shall have become
effective not later than 2:00 P.M., San Francisco time, on the date following
the date of this Agreement, or such later date as shall be consented to in
writing by you; and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall have been initiated
or, to the knowledge of the Company or any Underwriter, threatened by the
Commission, and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal
matters in connection with this Agreement, the form of Registration Statement
and the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to Underwriters'
Counsel, and such counsel shall have been furnished with such papers and
information as they may reasonably have requested to enable them to pass upon
the matters referred to in this Section.
(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have been any change in
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiary considered as one
enterprise from that set forth in the Registration Statement or Prospectus,
which, in your reasonable judgment, is material and adverse and that makes it,
in your reasonable judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus.
(d) You shall have received on the Closing Date and
on any later date on which Option Shares are purchased, as the case may be, the
following opinion of counsel for the Company, dated the Closing Date or such
later date on which Option Shares are purchased addressed to the Underwriters
and with reproduced copies or signed counterparts thereof for each of the
Underwriters, to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation;
(ii) The Company has the corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus;
(iii) To such Counsel's knowledge, the Company
is duly qualified to do business as a foreign corporation and is
in good standing in each state of the United States, if any, in
which the ownership or leasing of its properties or the conduct
of its business requires such qualification, except where the
failure to be so qualified or be in good standing would not have
a material adverse effect on the condition (financial or
otherwise), earnings, operations or business of the Company and
its subsidiary considered as one enterprise. To such counsel's
knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity other
than 4C Consultancy AG;
(iv) The authorized, issued and outstanding
capital stock of the Company was as set forth in the Prospectus
under the caption "Capitalization" as of
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the date stated therein, the issued and outstanding shares of
capital stock of the Company have been duly and validly issued
and are fully paid and nonassessable, and, to such counsel's
knowledge, have not been issued in violation of or subject to
any preemptive right, co-sale right, registration right, right
of first refusal or other similar right;
(v) The Firm Shares or the Option Shares, as
the case may be, have been duly authorized and, upon issuance
and delivery against payment therefor in accordance with the
terms hereof, will be duly and validly issued and fully paid and
nonassessable, and will not have been issued in violation of or
subject to any preemptive right, or, to such counsel's knowledge
co-sale right, registration right, right of first refusal or
other similar right of stockholders;
(vi) The Company has the corporate power and
authority to enter into this Agreement and to issue, sell and
deliver to the Underwriters the Shares;
(vii) This Agreement has been duly authorized
by all necessary corporate action on the part of the Company and
has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by you, is a
valid and binding agreement of the Company, enforceable in
accordance with its terms, except insofar as indemnification and
contribution provisions may be limited by applicable law and
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating
to or affecting creditors' rights generally or by general
equitable principles and limitations on availability of
equitable remedies;
(viii) The Registration Statement has become
effective under the Act and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are pending or threatened under the Act;
(ix) The Registration Statement and the
Prospectus, and each amendment or supplement thereto (other than
the financial statements (including supporting schedules) and
financial and statistical data contained therein as to which
such counsel need express no opinion), as of the effective date
of the Registration Statement, complied as to form in all
material respects with the requirements of the Act and the
applicable Rules and Regulations;
(x) The information in the Prospectus under
the caption "Description of Capital Stock," to the extent that
it constitutes matters of law or legal conclusions, has been
reviewed by such counsel and is a fair summary of such matters
and conclusions to the extent required by the Act and the
applicable Rules and Regulations; and the form of certificate
evidencing the Common Stock and filed as an exhibit to the
Registration Statement complies with Delaware law;
(xi) The descriptions in the Registration
Statement and the Prospectus under the caption "Risk Factors -
Effects of Certain Charter and Bylaw Provisions" and
"Description of Capital Stock" of the charter and bylaws of the
Company are accurate and fairly present the information required
to be presented by the Act and the applicable Rules and
Regulations, and the descriptions in the Registration Statement
and the Prospectus of statutes (except the Telecommunications
Act of 1996 as to which such
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<PAGE>
counsel need express no opinion) are accurate in all material
respects and fairly present the information required to be
presented by the Act and the applicable Rules and Regulations;
(xii) To such counsel's knowledge, there are
no agreements, contracts, leases or documents to which the
Company is a party of a character required under the Act and the
applicable Rules and Regulations to be described or referred to
in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which are not described or
referred to therein or filed as required;
(xiii) The performance of this Agreement and
the consummation of the transactions herein contemplated (other
than performance of the Company's indemnification and
contribution obligations hereunder, concerning which no opinion
need be expressed) will not (a) result in any violation of the
Company's charter or bylaws or (b) to such counsel's knowledge,
result in a material breach or violation of any of the terms and
provisions of, or constitute a material default under, any bond,
debenture, note or other evidence of indebtedness, or under any
lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument known
to such counsel to which the Company is a party or by which its
properties are bound, and which has been identified to us by the
Company as material and filed as exhibits 10.1 to 10.23 to the
Registration Statement or any applicable statute, rule or
regulation known to such counsel or, to such counsel's
knowledge, any order, writ or decree of any court, government or
governmental agency or body having jurisdiction over the Company
or its subsidiary, or over any of their properties or
operations, except such as may be required under securities or
Blue Sky laws of the various states in connection with the
purchase and distribution of the Shares by the Underwriters.
(xiv) No consent, approval, authorization or
order of or qualification with any court, government or
governmental agency in the United States having jurisdiction
over the Company over any of its properties or operations is
necessary in connection with the consummation by the Company of
the transactions herein contemplated, except such as have been
obtained under the Act or such as may be required under state or
other securities or Blue Sky laws in connection with the
purchase and the distribution of the Shares by the Underwriters;
(xv) To such counsel's knowledge, there are
no legal or governmental proceedings pending or threatened
against the Company or its subsidiary of a character required to
be disclosed in the Registration Statement or the Prospectus by
the Act or the Rules and Regulations, other than those described
therein;
(xvi) To such counsel's knowledge, except as
set forth in the Registration Statement and Prospectus, no
holders of Common Stock or other securities of the Company have
registration rights with respect to securities of the Company
and, except as set forth in the Registration Statement and
Prospectus, the rights, known to such counsel, of holders, to
register their shares of Common Stock or other securities,
because of the filing of the Registration Statement by the
Company have, with respect to the offering contemplated thereby
been waived or such rights have expired by reason of lapse of
time following notification of the Company's intent to file the
Registration Statement or have included securities in the
Registration Statement pursuant to the exercise of and in full
satisfaction of such rights.
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In addition, such counsel shall state that such counsel
has participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel which leads them to believe
that, at the time the Registration Statement became effective, as the case may
be, the Registration Statement and any amendment or supplement thereto (other
than the financial statements, including supporting schedules, and other
financial and statistical information contained therein as to which such counsel
need express no comment) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or at the Closing Date or any later
date on which the Option Shares are to be purchased, as the case may be, the
Registration Statement, the Prospectus and any amendment or supplement thereto
(other than the financial statements, including supporting schedules, and other
financial and statistical information contained therein) contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Counsel rendering the foregoing opinion may rely as to
questions of law not involving the laws of the United States or the State of
California and the corporate laws of the State of Delaware upon opinions of
local counsel, and as to questions of fact upon representations or certificates
of officers of the Company, and of government officials, in which case their
opinion is to state that they are so relying and that they have no knowledge of
any material misstatement or inaccuracy in any such opinion, representation or
certificate. Copies of any opinion, representation or certificate so relied
upon shall be delivered to you, as Representatives of the Underwriters, and to
Underwriters' Counsel.
(e) You shall have received on the Closing Date and
on any later date on which Option Shares are to be purchased, as the case may
be, an opinion of Brobeck, Phleger & Harrison LLP, in form and substance
reasonably satisfactory to you, with respect to the sufficiency of all such
corporate proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as you may reasonably require, and the Company
shall have furnished to such counsel such documents as they may have reasonably
requested for the purpose of enabling them to pass upon such matters.
(f) You shall have received on the Closing Date and
on any later date on which Option Shares are to be purchased, as the case may
be, a letter from KPMG Peat Marwick LLP addressed to the Company and the
Underwriters, dated the Closing Date or such later date on which Option Shares
are to be purchased, as the case may be, confirming that they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the applicable published Rules and Regulations and based upon the
procedures described in such letter delivered to you concurrently with the
execution of this Agreement (herein called the "Original Letter"), but carried
out to a date not more than five (5) business days prior to the Closing Date or
such later date on which Option Shares are to be purchased, as the case may be,
(i) confirming, to the extent true, that the statements and conclusions set
forth in the Original Letter are accurate as of the Closing Date or such later
date on which Option Shares are to be purchased, as the case may be, and (ii)
setting forth any revisions and additions to the statements and conclusions set
forth in the Original Letter which are necessary to reflect any changes in the
facts described in the Original Letter since the date of such letter, or to
reflect the availability of more recent financial statements, data or
information. The letter shall not disclose any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company and its subsidiary considered as one enterprise from that set
forth in the Registration Statement or Prospectus, which, in your reasonable
judgment, is material and adverse and that makes it, in your reasonable
judgment, impracticable or inadvisable to proceed with the public offering of
the Shares as contemplated by the Prospectus. The
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Original Letter from KPMG Peat Marwick LLP shall be addressed to or for the use
of the Underwriters in form and substance satisfactory to the Underwriters and
shall (i) represent, to the extent true, that KPMG Peat Marwick LLP are
independent certified public accountants with respect to the Company within the
meaning of the Act and the applicable published Rules and Regulations, (ii) set
forth their opinion with respect to their audit of the balance sheet of the
Company as of December 31, 1995 and 1994, and related statements of operations,
stockholders' equity, and cash flows for the two-year period ended December 31,
1995 and for the period from May 13, 1993 to December 31, 1993, (iii) state that
KPMG Peat Marwick LLP has performed the procedure set out in Statement on
Auditing Standards No. 71 ("SAS 71") for a review of interim financial
information and providing the report of KPMG Peat Marwick LLP as described in
SAS 71 on the financial statements for each of the quarters presented in the
Prospectus, and (iv) address other matters agreed upon by KPMG Peat Marwick LLP
and you. In addition, you shall have received from KPMG Peat Marwick LLP a
letter addressed to the Company and made available to you for the use of the
Underwriters stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's consolidated financial statements as
of December 31, 1995, did not disclose any weaknesses in internal controls that
they considered to be material weaknesses.
(g) You shall have received on the Closing Date and
on any later date on which Option Shares are to be purchased, as the case may
be, a certificate of the Company, dated the Closing Date or such later date on
which Option Shares are to be purchased, as the case may be, signed by the Chief
Executive Officer and Chief Financial Officer of the Company, to the effect
that, and you shall be reasonably satisfied that:
(i) The representations and warranties of
the Company in this Agreement are true and correct, as if made
on and as of the Closing Date or any later date on which Option
Shares are to be purchased, as the case may be, and the Company
has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior
to the Closing Date or any later date on which Option Shares are
to be purchased, as the case may be;
(ii) No stop order suspending the
effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are
pending or threatened under the Act;
(iii) When the Registration Statement became
effective and at all times subsequent thereto up to the delivery
of such certificate, the Registration Statement and the
Prospectus, and any amendments or supplements thereto, contained
all material information required to be included therein by the
Act and the Rules and Regulations, and in all material respects
conformed to the requirements of the Act and the Rules and
Regulations, the Registration Statement, and any amendment or
supplement thereto, did not and does not include any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, the Prospectus, and any
amendment or supplement thereto, did not and does not include
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth
in an amended or supplemented Prospectus which has not been so
set forth; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration Statement and
Prospectus, there has not been
-18-
<PAGE>
(a) any material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects
of the Company and its subsidiary considered as one enterprise,
(b) any transaction that is material to the Company and its
subsidiary considered as one enterprise, except license and
other transactions entered into in the ordinary course of
business, (c) any obligation, direct or contingent, that is
material to the Company and its subsidiary considered as one
enterprise, incurred by the Company or its subsidiary, except
obligations incurred in the ordinary course of business, (d) any
change in the capital stock or outstanding indebtedness of the
Company or its subsidiary that is material to the Company and
its subsidiary considered as one enterprise, (e) any dividend or
distribution of any kind declared, paid or made on the capital
stock of the Company or its subsidiary, or (f) any loss or
damage (whether or not insured) to the property of the Company
or its subsidiary which has been sustained which has a material
adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the
Company and its subsidiary considered as one enterprise.
(h) The Company shall have obtained and delivered to
you an agreement from each officer and director of the Company, and the
beneficial owners of at least 97% of the outstanding shares of Common Stock and
Preferred Stock as of the date hereof in writing prior to the date hereof that
such person will not, during the Lock-up Period, effect the Disposition of any
Securities now owned or hereafter acquired directly by such person or with
respect to which such person has or hereafter acquires the power of disposition,
otherwise than (i) as a bona fide gift or gifts, provided the donee or donees
thereof agree in writing to be bound by this restriction, (ii) as a distribution
to limited partners or stockholders of such person, provided that the
distributees thereof agree in writing to be bound by the terms of this
restriction, or (iii) with the prior written consent of Robertson, Stephens &
Company LLC, provided that the foregoing does not apply to any of the Firm
Shares or the Option Shares. Furthermore, such person will have also agreed and
consented to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of the Securities held by such person except in
compliance with this restriction.
(i) The Company shall have furnished to you such
further certificates and documents as you shall reasonably request (including
certificates of officers of the Company as to the accuracy of the
representations and warranties of the Company herein, as to the performance by
the Company of its obligations hereunder and as to the other conditions
concurrent and precedent to the obligations of the Underwriters hereunder).
All such opinions, certificates, letters and documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory to Underwriters' Counsel. The Company will furnish you with such
number of conformed copies of such opinions, certificates, letters and documents
as you shall reasonably request.
7. OPTION SHARES.
(a) On the basis of the representations, warranties
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company hereby grants to the several Underwriters, for the
purpose of covering over-allotments in connection with the distribution and sale
of the Firm Shares only, a nontransferable option to purchase up to an aggregate
of 450,000 Option Shares at the purchase price per share for the Firm Shares set
forth in Section 3 hereof. Such option may be exercised by the Representatives
on behalf of the several Underwriters on one occasion in whole or in part during
the period of thirty (30) days after the date on which the Firm Shares are
initially offered to the public, by giving written notice to the Company. The
number of Option Shares to be purchased by each Underwriter upon the exercise of
such option shall be the same proportion of the total number of Option
-19-
<PAGE>
Shares to be purchased by the several Underwriters pursuant to the exercise of
such option as the number of Firm Shares purchased by such Underwriter (set
forth in Schedule A hereto) bears to the total number of Firm Shares purchased
by the several Underwriters (set forth in Schedule A hereto), adjusted by the
Representatives in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option
Shares to be purchased by the several Underwriters pursuant to the exercise of
the option granted by this Section 7 shall be made against payment of the
purchase price therefor by the several Underwriters by wire transfer or
certified or official bank check or checks drawn in same-day funds, payable to
the order of the Company. In the event of any breach of the foregoing, the
Company shall reimburse the Underwriters for the interest lost and any other
expenses borne by them by reason of such breach. Such delivery and payment
shall take place at the offices of Cooley Godward Castro Huddleson & Tatum, One
Maritime Plaza, 20th Floor, San Francisco, California 94111 or at such other
place as may be agreed upon among the Representatives and the Company (i) on the
Closing Date, if written notice of the exercise of such option is received by
the Company at least two (2) full business days prior to the Closing Date, or
(ii) on a date which shall not be later than the third (3rd) full business day
following the date the Company receives written notice of the exercise of such
option, if such notice is received by the Company less than two (2) full
business days prior to the Closing Date.
The certificates for the Option Shares to be so
delivered will be made available to you at such office or such other location
including, without limitation, in New York City, as you may reasonably request
for checking at least one (1) full business day prior to the date of payment and
delivery and will be in such names and denominations as you may request, such
request to be made at least two (2) full business days prior to such date of
payment and delivery. If the Representatives so elect, delivery of the Option
Shares may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the date of
payment and delivery for the Option Shares to be purchased by such Underwriter
or Underwriters. Any such payment by you shall not relieve any such Underwriter
or Underwriters of any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in
Section 7(a) hereof, the obligations of the several Underwriters to purchase
such Option Shares will be subject (as of the date hereof and as of the date of
payment and delivery for such Option Shares) to the accuracy of and compliance
with the representations, warranties and agreements of the Company herein, to
the accuracy of the statements of the Company and officers of the Company made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the condition that all proceedings taken at or
prior to the payment date in connection with the sale and transfer of such
Option Shares shall be satisfactory in form and substance to you and to
Underwriters' Counsel, and you shall have been furnished with all such
documents, certificates and opinions as you may reasonably request in order to
evidence the accuracy and completeness of any of the representations, warranties
or statements, the performance of any of the covenants or agreements of the
Company or the compliance with any of the conditions herein contained.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold
harmless each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under the Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
-20-
<PAGE>
otherwise, specifically including, but not limited to, losses, claims, damages
or liabilities, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any breach of any
representation, warranty, agreement or covenant of the Company herein contained,
(ii) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment or supplement thereto,
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
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, and agrees to reimburse each Underwriter for any legal or other
related expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, such Preliminary Prospectus or the
Prospectus, or any such amendment or supplement thereto, in reliance upon, and
in conformity with, written information relating to any Underwriter furnished to
the Company by such Underwriter, directly or through you, specifically for use
in the preparation thereof and, 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 any Underwriter from whom the person asserting any
losses, claims, damages, liabilities or actions based upon any untrue statement
or alleged untrue statement of material fact or omission or alleged omission to
state therein a material fact purchased Shares, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the time
required by the Act and the Rules and Regulations, unless such failure is the
result of noncompliance by the Company with Section 4(d) hereof.
The indemnity agreement in this Section 8(a) shall
extend upon the same terms and conditions to, and shall inure to the benefit of,
each person, if any, who controls any Underwriter within the meaning of the Act
or the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which the Company may otherwise have.
(b) Each Underwriter, severally and not jointly,
agrees to indemnify and hold harmless the Company against any losses, claims,
damages or liabilities, joint or several, to which the Company may become
subject under the Act or otherwise, specifically including, but not limited to,
losses, claims, damages or liabilities, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any breach of any representation, warranty, agreement or covenant of such
Underwriter herein contained, (ii) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in the case of subparagraphs (ii) and (iii) of this
Section 8(b) to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter, directly or through you, specifically for use in the preparation
thereof, and agrees to reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action.
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<PAGE>
The indemnity agreement in this Section 8(b) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
officer of the Company who signed the Registration Statement and each director
of the Company, and each person, if any, who controls the Company within the
meaning of the Act or the Exchange Act. This indemnity agreement shall be in
addition to any liabilities which each Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 8. In case any such
action is brought against any indemnified party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it shall elect by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party; PROVIDED,
HOWEVER, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of the indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with appropriate
local counsel) approved by the indemnifying party representing all the
indemnified parties under Section 8(a) or 8(b) hereof who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. In no event shall any
indemnifying party be liable in respect of any amounts paid in settlement of any
action unless the indemnifying party shall have approved the terms of such
settlement; PROVIDED that such consent shall not be unreasonably withheld. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnification
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) In order to provide for just and equitable
contribution in any action in which a claim for indemnification is made pursuant
to this Section 8 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 8 provides for indemnification in such case, all the parties hereto
shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others) in such proportion so
that the Underwriters severally and not jointly are responsible pro rata for the
portion represented by the percentage that the underwriting discount bears to
the initial public offering price, and the Company are responsible for the
remaining portion, PROVIDED, HOWEVER, that (i) no Underwriter shall be required
to contribute any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter in excess of the amount of damages
which
-22-
<PAGE>
such Underwriter has otherwise been required to pay and (ii) no person guilty of
a fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. The contribution agreement in this Section 8(d)
shall extend upon the same terms and conditions to, and shall inure to the
benefit of, each person, if any, who controls the Underwriters or the Company
within the meaning of the Act or the Exchange Act and each officer of the
Company who signed the Registration Statement and each director of the Company.
(e) The parties to this Agreement hereby acknowledge
that they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including, without
limitation, the provisions of this Section 8, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section 8
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement and Prospectus as required by the Act and the
Exchange Act.
9. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties, covenants and agreements of the
Company and the Underwriters herein or in certificates delivered pursuant
hereto, and the indemnity and contribution agreements contained in Section 8
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling person
within the meaning of the Act or the Exchange Act, or by or on behalf of the
Company or any of its officers, directors or controlling persons within the
meaning of the Act or the Exchange Act, and shall survive the delivery of the
Shares to the several Underwriters hereunder or termination of this Agreement.
10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or
Underwriters shall fail to take up and pay for the number of Firm Shares agreed
by such Underwriter or Underwriters to be purchased hereunder upon tender of
such Firm Shares in accordance with the terms hereof, and if the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters so
agreed but failed to purchase does not exceed 10% of the Firm Shares, the
remaining Underwriters shall be obligated, severally in proportion to their
respective commitments hereunder, to take up and pay for the Firm Shares of such
defaulting Underwriter or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters agreed
but failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for
twenty-four (24) hours to allow the several Underwriters the privilege of
substituting within twenty-four (24) hours (including non-business hours)
another underwriter or underwriters (which may include any nondefaulting
Underwriter) satisfactory to the Company. If no such underwriter or
underwriters shall have been substituted as aforesaid by such postponed Closing
Date, the Closing Date may, at the option of the Company, be postponed for a
further twenty-four (24) hours, if necessary, to allow the Company the privilege
of finding another underwriter or underwriters, satisfactory to you, to purchase
the Firm Shares which the defaulting Underwriter or Underwriters so agreed but
failed to purchase. If it shall be arranged for the remaining Underwriters or
substituted underwriter or underwriters to take up the Firm Shares of the
defaulting Underwriter or Underwriters as provided in this Section 10, (i) the
Company shall have the right to postpone the time of delivery for a period of
not more than seven (7) full business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or
-23-
<PAGE>
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
made necessary, and (ii) the respective number of Firm Shares to be purchased by
the remaining Underwriters and substituted underwriter or underwriters shall be
taken as the basis of their underwriting obligation. If the remaining
Underwriters shall not take up and pay for all such Firm Shares so agreed to be
purchased by the defaulting Underwriter or Underwriters or substitute another
underwriter or underwriters as aforesaid and the Company shall not find or shall
not elect to seek another underwriter or underwriters for such Firm Shares as
aforesaid, then this Agreement shall terminate.
In the event of any termination of this Agreement pursuant to
the preceding paragraph of this Section 10, neither the Company shall be liable
to any Underwriter (except as provided in Sections 5 and 8 hereof) nor shall any
Underwriter (other than an Underwriter who shall have failed, otherwise than for
some reason permitted under this Agreement, to purchase the number of Firm
Shares agreed by such Underwriter to be purchased hereunder, which Underwriter
shall remain liable to the Company, and the other Underwriters for damages, if
any, resulting from such default) be liable to the Company (except to the extent
provided in Sections 5 and 8 hereof).
The term "Underwriter" in this Agreement shall include any
person substituted for an Underwriter under this Section 10.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at the
earlier of (i) 6:30 A.M., San Francisco time, on the first full business day
following the effective date of the Registration Statement, or (ii) the time of
the initial public offering of any of the Shares by the Underwriters after the
Registration Statement becomes effective. The time of the initial public
offering shall mean the time of the release by you, for publication, of the
first newspaper advertisement relating to the Shares, or the time at which the
Shares are first generally offered by the Underwriters to the public by letter,
telephone, telegram or telecopy, whichever shall first occur. By giving notice
as set forth in Section 12 before the time this Agreement becomes effective,
you, as Representatives of the several Underwriters, or the Company, may prevent
this Agreement from becoming effective without liability of any party to any
other party, except as provided in Sections 4(j), 5 and 8 hereof.
(b) You, as Representatives of the several
Underwriters, shall have the right to terminate this Agreement by giving notice
as hereinafter specified at any time at or prior to the Closing Date or on or
prior to any later date on which Option Shares are to be purchased, as the case
may be, (i) if the Company shall have failed, refused or been unable to perform
any agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled is not fulfilled,
including, without limitation, any change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its subsidiary considered as one enterprise from that set forth in the
Registration Statement or Prospectus, which, in your reasonable judgment, is
material and adverse, or (ii) if additional material governmental restrictions,
not in force and effect on the date hereof, shall have been imposed upon trading
in securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock Exchange or
in the over the counter market by the NASD, or trading in securities generally
shall have been suspended on either such exchange or in the over the counter
market by the NASD, or if a banking moratorium shall have been declared by
federal, New York or California authorities, or (iii) if the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as to interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured, or (iv) if there shall have been a material adverse change in the
general political or economic conditions or financial markets as in your
reasonable
-24-
<PAGE>
judgment makes it inadvisable or impracticable to proceed with the offering,
sale and delivery of the Shares, or (v) if there shall have been an outbreak or
escalation of hostilities or of any other insurrection or armed conflict or the
declaration by the United States of a national emergency which, in the
reasonable opinion of the Representatives, makes it impracticable or inadvisable
to proceed with the public offering of the Shares as contemplated by the
Prospectus.
If you elect to prevent this Agreement from becoming effective
or to terminate this Agreement as provided in this Section 11, you shall
promptly notify the Company by telephone, telecopy or telegram, in each case
confirmed by letter. If the Company shall elect to prevent this Agreement from
becoming effective, the Company shall promptly notify you by telephone, telecopy
or telegram, in each case, confirmed by letter.
12. NOTICES. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to you
shall be mailed, delivered, telegraphed (and confirmed by letter) or telecopied
(and confirmed by letter) to you c/o Robertson, Stephens & Company LLC, 555
California Street, Suite 2600, San Francisco, California 94104, telecopier
number (415) 781-0278, Attention: General Counsel; if sent to the Company, such
notice shall be mailed, delivered, telegraphed (and confirmed by letter) or
telecopied (and confirmed by letter) to 333 Distel Circle, Los Altos, California
94022, telecopier number (415) 934-3701, Attention: Pehong Chen, Chief Executive
Officer.
13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and the Company and their respective
executors, administrators, successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
or corporation, other than the parties hereto and their respective executors,
administrators, successors and assigns, and the controlling persons within the
meaning of the Act or the Exchange Act, officers and directors referred to in
Section 8 hereof, any legal or equitable right, remedy or claim in respect of
this Agreement or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective executors,
administrators, successors and assigns and said controlling persons and said
officers and directors, and for the benefit of no other person or corporation.
No purchaser of any of the Shares from any Underwriter shall be construed a
successor or assign by reason merely of such purchase.
In all dealings with the Company under this Agreement, you shall
act on behalf of each of the several Underwriters, and the Company shall be
entitled to act and rely upon any statement, request, notice or agreement made
or given by you jointly or by Robertson, Stephens & Company LLC on behalf of
you.
14. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
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<PAGE>
15. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which will constitute an original.
If the foregoing correctly sets forth the understanding among
the Company and the several Underwriters, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among the Company and the several Underwriters.
Very truly yours,
BROADVISION, INC.
By /s/ Pehong Chen
----------------------------------
Accepted as of the date first above written:
ROBERTSON, STEPHENS & COMPANY LLC
HAMBRECHT & QUIST LLC
WESSELS, ARNOLD & HENDERSON, L.L.C.
On their behalf and on behalf of each of the
several Underwriters named in Schedule A hereto.
ROBERTSON, STEPHENS & COMPANY LLC
By ROBERTSON, STEPHENS & COMPANY GROUP, L.L.C.
By /s/ Frank W. Birnie
---------------------------------
Authorized Signatory
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<PAGE>
SCHEDULE A
Number of
Firm Shares
To Be
Underwriters Purchased
- ----------------------------------------- -------------
Robertson, Stephens & Company LLC. . . . . . . . . . . . . . . . 1,040,000
Hambrecht & Quist LLC. . . . . . . . . . . . . . . . . . . . . . 1,040,000
Wessels, Arnold & Henderson, L.L.C.. . . . . . . . . . . . . . . 520,000
Cowen & Company. . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Dakin Securities Corporation . . . . . . . . . . . . . . . . . . 100,000
Laidlaw Equities, Inc. . . . . . . . . . . . . . . . . . . . . . 100,000
Funk, Ziegel & Knoell. . . . . . . . . . . . . . . . . . . . . . 100,000
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
---------
---------
<PAGE>
EXHIBIT 11.1
BROADVISION, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF LOSS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Statement of operations data:
Net Loss: $(2,180) $( 969) $(3,878) $(1,815)
Weighted average number of common and dilutive
equivalent shares used in computations:
Common Stock 16,822 6,720 11,615 6,720
Preferred Stock (as if converted) - 5,600 2,800 5,600
Stock options and other common stock equivalents * * * *
------- ------- ------- -------
Subtotal 16,822 12,320 14,415 12,320
------- ------- ------- -------
Pursuant to Staff Accounting Bulletin No. 83:
Preferred Stock converted on as-if basis according
at exercise prices less than the anticipated initial
public offering price - 3,934 1,967 3,934
Stock options - 2,634 1,317 2,634
------- ------- ------- -------
Shares used in computing net loss per share 16,822 18,888 17,699 18,888
------- ------- ------- -------
Net loss per share $(0.13) $(0.05) $(0.22) $(0.10)
======= ======= ======= =======
</TABLE>
* not included as effects are anti-dilutive.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
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0
0
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