Exhibit 1.1
FORM OF UNDERWRITING AGREEMENT
KINZAN, INC.
_____SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
_______ __, 2000
CHASE SECURITIES INC.
XXXXXX XXXXXX PARTNERS LLC
XXXXXXX XXXXX & COMPANY, L.L.C.
c/o Chase Securities Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Kinzan, Inc., a Delaware corporation (herein called the "Company"),
proposes to issue and sell _____ shares of its authorized but unissued common
stock, $0.001 par value (herein called the "Common Stock") (said shares of
Common Stock being herein called the "Underwritten Stock"). The Company proposes
to grant to the Underwriters (as hereinafter defined) an option to purchase up
to _____ additional shares of Common Stock to cover over-allotments, if any
(herein called the "Option Stock" and, with the Underwritten Stock, herein
collectively called the "Stock"). The Common Stock is more fully described in
the Registration Statement and the Prospectus hereinafter mentioned.
The Company hereby confirms the agreements made with respect to the
purchase of the Stock by the several underwriters, for whom you are acting,
named in Schedule I hereto (herein collectively called the "Underwriters," which
term shall also include any underwriter purchasing Stock pursuant to Section
3(b) hereof). You represent and warrant that you have been authorized by each of
the other Underwriters to enter into this Agreement on its behalf and to act for
it in the manner herein provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities
and Exchange Commission (herein called the "Commission") a Registration
Statement (as hereinafter defined) on Form S-1 (File No. 333-35886), including
the related preliminary prospectus, for the
--------
1 Plus an option to purchase from the Company up to _____additional
shares to cover over-allotments, if any.
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registration under the Securities Act of 1933, as amended (herein called the
"Securities Act") of the Stock. Copies of such Registration Statement and of
each amendment thereto, including the related preliminary prospectus meeting the
requirements of Rule 430A of the rules and regulations of the Commission (herein
called "Rule 430A") heretofore filed by the Company with the Commission have
been delivered to you.
The term Registration Statement as used in this Agreement shall mean
such registration statement, all exhibits and financial statements, all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus (as hereinafter defined), in the form in which it became effective
(the "Registration Statement"), and any Registration Statement filed pursuant to
Rule 462(b) of the rules and regulations of the Commission with respect to the
Stock (herein called a "Rule 462(b) Registration Statement"), and, in the event
of any amendment thereto after the effective date of such Registration Statement
(herein called the "Effective Date"), shall also mean (from and after the
effectiveness of such amendment) such Registration Statement as so amended
(including any Rule 462(b) Registration Statement). The term Prospectus as used
in this Agreement shall mean the prospectus relating to the Stock first filed
with the Commission pursuant to Rule 424(b) and Rule 430A (or if no such filing
is required, as included in the Registration Statement) and, in the event of any
supplement or amendment to such prospectus after the Effective Date, shall also
mean (from and after the filing with the Commission of such supplement or the
effectiveness of such amendment) such prospectus as so supplemented or amended.
The term Preliminary Prospectus as used in this Agreement shall mean each
preliminary prospectus included in such registration statement prior to the time
it becomes effective.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants as follows:
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, has full
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement and the Prospectus and as
being conducted, and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property owned or
leased or the nature of the business transacted by it makes qualification
necessary except where the failure to be so qualified would not have a material
adverse effect on the business, properties, financial condition or results of
operations of the Company (herein called a "Material Adverse Effect").
(b) The Company has no "significant subsidiaries," within the meaning
of Rule 405 of the Securities Act.
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(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (A) there has not been any material
adverse change or any development which the Company has a reasonable basis to
believe may result in a prospective material adverse change in the business,
properties, financial condition or results of operations of the Company, whether
or not arising from transactions in the ordinary course of business, other than
as set forth in the Registration Statement and the Prospectus; (B) except in the
ordinary course of business, the Company has not entered into any material
transaction not referred to in the Registration Statement and the Prospectus;
(C) there has not been any change in the capital stock (other than the exercise
of stock options or warrants and grants under the employee stock plans as
described in the Prospectus) or short-term or long-term debt of the Company,
whether or not arising from transactions in the ordinary course of business; (D)
there has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of capital stock or repurchase or redemption by the
Company of any class of capital stock; and (E) there has been no amendment or
termination of any material contract, agreement or license to which the Company
is a party or by which it is bound.
(d) The Registration Statement and the Prospectus comply, and on the
Closing Date (as hereinafter defined) and the Option Closing Date (as
hereinafter defined), as the case may be, the Prospectus will comply, in all
material respects, with the provisions of the Securities Act and the rules and
regulations of the Commission thereunder; on the Effective Date, the
Registration Statement did not contain any untrue statement of a material fact
and did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and, on the
Effective Date the Prospectus did not and, on the Closing Date and the Option
Closing Date, as the case may be, will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that none of the representations and
warranties in this subparagraph (d) shall apply to statements in, or omissions
from, the Registration Statement or the Prospectus made in reliance upon and in
conformity with information herein or otherwise furnished in writing to the
Company by or on behalf of the Underwriters for use in the Registration
Statement or the Prospectus.
(e) No action has been taken and no statute, rule, regulation or order
has been enacted, adopted or issued by any governmental agency that prevents the
issuance or sale of the Stock or prevents or suspends the use of the Prospectus;
no injunction, restraining order or order of any nature by a federal, state or
foreign court of competent jurisdiction has been issued that prevents the
issuance of the Stock, prevents or suspends the sale of the Stock in any
jurisdiction or that could adversely affect the consummation of the transactions
contemplated by this Agreement or the Prospectus; and every request from any
securities authority or agency of any jurisdiction for additional information
has been complied with in the all material respects.
(f) The outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable; the
Stock is duly authorized, is (or in the case of shares of the Stock to be sold
by the Company, will be, when issued and sold to the
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Underwriters as provided herein) validly issued, fully paid and non-assessable;
and no preemptive, co-sale, registration right, right of first refusal or other
similar rights of stockholders exists with respect to any of the Stock or the
issue and sale thereof, which have not otherwise been validly waived. No further
approval or authority of the stockholders or the Board of Directors of the
Company will be required for the issuance and sale of the Stock as contemplated
hereby. Neither the filing of the Registration Statement nor the offering or
sale of the Stock as contemplated by this Agreement gives rise to any rights
relating to the registration of any shares of capital stock of the Company,
which have not otherwise been validly waived. There are no contracts, agreements
or understandings between the Company and any person granting such person the
right to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to any other registration statement filed by the
Company under the Securities Act, except as otherwise disclosed in the
Registration Statement. There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest in, the Company,
except as otherwise disclosed in the Registration Statement.
(g) The information set forth under the heading "Capitalization" in the
Prospectus is true and correct in all material respects. All of the Stock
conforms in all material respects to the description thereof contained in the
Registration Statement. The form of certificates for the Stock conforms to the
legal requirements of the State of Delaware.
(h) The financial statements of the Company, together with the related
notes and schedules set forth in the Registration Statement, present fairly the
financial position and the results of operations and cash flows of the Company
at the indicated dates and for the indicated periods. Such financial statements
and related schedules have been prepared in accordance with generally accepted
accounting principles, consistently applied throughout the periods involved, and
all adjustments necessary for a fair presentation of results for such periods
have been made. The financial data set forth in the Prospectus under the
headings "Summary -- Summary Financial Data," "Capitalization" and "Selected
Financial Data" present fairly the information set forth therein on a basis
consistent with that of the audited financial statements of the Company included
in the Prospectus.
(i) Ernst & Young LLP, who have certified certain of the financial
statements filed with the Commission as part of the Registration Statement, are
independent public accountants as required by the Securities Act and the rules
and regulations of the Commission thereunder.
(j) There is no action, suit, claim, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company or
any of their respective directors, officers or properties before any court or
administrative agency or otherwise, which if determined adversely to the Company
could reasonably be expected, either singly or in the aggregate, to result in
any Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby; and there are no agreements, contracts, leases or documents
of
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the Company 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 Securities Act or the rules and regulations of the
Commission thereunder which have not been accurately described in all material
respects or referred to in the Registration Statement or Prospectus or filed as
exhibits to the Registration Statement. The contracts so described in the
Registration Statement and Prospectus are in full force and effect on the date
hereof, and neither the Company nor, to the best of the Company's knowledge, any
other party, is in breach of or default under any of such contracts where such
breach of default, either singly or in the aggregate, would have a Material
Adverse Effect.
(k) The Company does not own any real property. The Company has good
and marketable title to all other properties and assets owned by it which are
material to its business, in each case, free and clear of any lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in such
financial statements or as described in the Registration Statement or such that
would not have a Material Adverse Effect. All leases to which the Company is a
party are valid and binding obligations of the Company and no default by the
Company has occurred or is continuing thereunder which could reasonably be
expected to result in a Material Adverse Effect.
(l) The Company has timely filed all federal, state, local and foreign
income tax returns, as the case may be, which have been required to be filed and
have paid all taxes required by said returns and all assessments received by
them or any of them to the extent that such taxes have become due and are not
being contested in good faith except where the failure to file such returns and
pay such taxes would not have, either singly or in the aggregate, a Material
Adverse Effect. All tax liabilities (including those being contested in good
faith) for the periods covered by the financial statements of the Company that
are included in the Registration Statement have been adequately accounted for or
described in such financial statements. The Company has made adequate charges,
accruals and reserves in the financial statements of the Company included in the
Prospectus in respect of all federal, state and foreign income and franchise
taxes for all periods as to which the tax liability of the Company has not been
finally determined.
(m) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby, including, without limitation,
the corporate power and authority to issue, sell and deliver the Stock as
provided herein and the power to effect the "Use of Proceeds" as described in
the Prospectus.
(n) This Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company, enforceable
against it in accordance with its terms except insofar as indemnification and
contribution provisions may be limited by applicable law or equitable principles
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.
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(o) The Company is not now, nor with the giving of notice or lapse of
time or both will be, (i) in violation of its certificate of incorporation or
bylaws, (ii) in default under an agreement, mortgage, lease, contract, indenture
or other instrument or obligation to which it is a party or by which it, or any
of its properties, is bound or subject or (iii) in violation of any federal,
state, local or foreign law, statute, ordinance, rule, regulation, requirement,
judgment or court decree applicable to the Company, any of its assets or
properties (whether owned or leased) other than, in the case of clause (ii) and
(iii), any default or violation that could not reasonably be expected to (A)
result, either singly or in the aggregate, in a Material Adverse Effect, (B)
interfere with or adversely affect the sale of the Stock pursuant hereto or (C)
in any manner draw into question the validity of this Agreement.
(p) None of (i) the execution, delivery or performance by the Company
of this Agreement, (ii) the issuance or sale of the Stock and (iii) the
consummation by the Company of the transactions contemplated hereby violate,
conflict with or constitute a breach of any of the terms or provisions of, or
default under (or an event that with notice or the lapse of time, or both, would
constitute a default), or require consent which has not been obtained under, or
result in the imposition of a lien on any properties of the Company, or an
acceleration of any indebtedness of the Company pursuant to (A) the certificate
of incorporation or bylaws of the Company, (B) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company is a party or by which the Company or its properties is or may be bound
or subject, (C) any statute, rule or regulation applicable to the Company or any
of its assets or properties or (D) any judgment, order or decree of any court of
governmental agency or authority having jurisdiction over the Company or any of
its assets or properties, except in the case of clauses (B), (C) and (D) for
such violations, conflicts, breaches, defaults, consents, impositions or liens
or accelerations that (x) would not result, either singly or in the aggregate,
in a Material Adverse Effect or (y) which are disclosed in the Prospectus.
(q) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions hereby
contemplated (except such additional steps as may be required by the National
Association of Securities Dealers, Inc. (herein called the "NASD") or such
additional steps as may be necessary to qualify the Stock for public offering by
the Underwriters under state securities or blue sky laws) has been obtained or
made and is in full force and effect.
(r) The Company is operating in compliance with all federal, state,
local and foreign statutes, laws, regulations, ordinances or court decrees
applicable to its businesses and operations, except where any such
non-compliance, either singly or in the aggregate, would not have a Material
Adverse Effect. The Company has not violated any federal, state, local or
foreign law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants or relating to discrimination in the hiring, promotion or pay of,
or to the wages and hours of, employees, except for such violations as in the
aggregate would not result in any Material Adverse Effect. No labor disturbance
by the employees of the Company exists or is imminent, and the Company
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is not aware of any existing or imminent labor disturbance by the employees of
any of its principal suppliers, manufacturers' representatives or international
distributors that might be expected to result, either singly or in the
aggregate, in a Material Adverse Effect. No collective bargaining agreement
exists with the Company's employees and, to the best of the Company's knowledge,
no such agreement is imminent.
(s) The Company is in compliance in all material respects with all
currently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder (herein called "ERISA"); no "reportable event" (as defined in ERISA)
has occurred with respect to any "pension plan" (as defined in ERISA) for which
the Company would have any liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretation thereunder (herein called the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, that
would cause the loss of such qualification.
(t) The Company holds all material licenses, certificates and permits
from governmental authorities and third parties that are necessary to conduct
its business and as contemplated by the Prospectus.
(u) The Company owns, possesses or has the right to use all issued and
pending patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable designs,
software and other computer programs, computer codes, proprietary or
confidential information, software, systems or procedures), trademarks,
copyrights and trade names, technical data and other information (herein
collectively called "Intellectual Property") that are necessary to conduct its
business as described in the Registration Statement and the Prospectus. The
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with any rights of the Company by others with
respect to any Intellectual Property which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect. The Company has not received any notice of, and has no knowledge
of, any infringement of or conflict with any rights of others with respect to
any Intellectual Property which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a Material Adverse
Effect; to the best of the Company's knowledge none of the Intellectual Property
licensed to or by the Company is unenforceable or invalid; and the Company is
not aware of the granting of any patent rights to third parties or the filing of
any patent applications by third parties or any other rights of third parties to
any Intellectual Property owned by the Company.
(v) The Company is not and, after giving effect to the offering and
sales of the Stock and the application of the net proceeds therefrom as
described in the Prospectus, will not be an
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"investment company" as such term is defined in the Investment Company Act of
1940, as amended (herein called the "Investment Act").
(w) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(x) The Company is insured by recognized, financially sound
institutions with policies in such amounts and with such deductibles and
covering such risks as are customary for similarly situated businesses
including, but not limited to policies covering property owned or leased by the
Company against theft, damage, destruction and acts of vandalism. The Company
has no reason to believe that it will not be able (i) to renew its existing
insurance coverage as and when such policies expire or (ii) to obtain comparable
coverage from similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at a cost that would not result in a Material
Adverse Effect.
(y) The statements in the Prospectus under the heading "Certain
Transactions" set forth all existing agreements, arrangements, understandings or
transactions or proposed agreements, arrangements, understandings or
transactions between or among the Company, on the one hand, and any officer,
director or stockholder of the Company or with any partner, affiliate or
associate of any of the foregoing persons or entities, on the other hand,
required to be set forth or described thereunder pursuant to the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(z) The Company has not violated any provisions of the Foreign Corrupt
Practices Act of 1977, as amended, or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate, would
not have a Material Adverse Effect.
(aa) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date or the Option Closing Date, as the case may
be, and (ii) the completion of the distribution of the Stock, any offering
material in connection with the offering and sale of the Stock other than any
Preliminary Prospectuses, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Securities Act.
(bb) The Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions contemplated hereby
other than to the Underwriters.
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(cc) The minute books of the Company have been made available to the
Representatives and their counsel and contain a complete summary of all meetings
and actions of the directors, stockholders, audit committee, compensation
committee and any other committee of the Board of Directors of the Company,
respectively, since the date of its initial incorporation in the State of
California, and reflect all transactions referred to in such minutes accurately.
(dd) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters pursuant to this
Agreement shall be deemed to be a representation and warranty by the Company to
the Underwriters as to the matters covered thereby. The Company acknowledges
that each of the Underwriters and, for purposes of the opinion letter to be
delivered to the Underwriters pursuant to Section 9(c) hereof, counsel to the
Underwriters, will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
(ee) The Stock to be sold by the Company is listed and duly admitted to
trading on the Nasdaq National Market, and prior to the Closing Date, the Stock
to be issued and sold by the Company will be authorized for listing by the
Nasdaq National Market upon official notice of issuance; and the Company has
taken no action designed to, or likely to have the effect of, delisting the
Common Stock from the Nasdaq nor has the Company received any notification that
the Nasdaq is contemplating terminating such listing.
(ff) The Company has not taken, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of the Common Stock to facilitate the sale or resale of the
Stock.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
_____ shares of the Underwritten Stock to the several Underwriters, and each of
the Underwriters agrees to purchase from the Company the respective aggregate
number of shares of Underwritten Stock set forth opposite its name in Schedule
I. The price at which such shares of Underwritten Stock shall be sold by the
Company and purchased by the several Underwriters shall be $___ per share. The
obligation of each Underwriter to the Company shall be to purchase from the
Company that number of shares of the Underwritten Stock which represents the
same proportion of the total number of shares of the Underwritten Stock to be
sold by the Company pursuant to this Agreement as the number of shares of the
Underwritten Stock set forth opposite the name of such Underwriter in Schedule I
hereto represents of the total number of shares of the Underwritten Stock to be
purchased by all Underwriters pursuant to this Agreement, as adjusted by you in
such manner as you deem advisable to avoid fractional shares. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraphs (b) and (c) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
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(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company shall immediately give notice thereof
to you, and the non-defaulting Underwriters shall have the right within 24 hours
after the receipt by you of such notice to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any part of the shares of the Stock which such
defaulting Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such shares
and portion, the number of shares of the Stock which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase;
PROVIDED, HOWEVER, that the non-defaulting Underwriters shall not be obligated
to purchase the shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such shares of the
Stock exceeds 10% of the total number of shares of the Stock which all
Underwriters agreed to purchase hereunder. If the total number of shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
above referred to, to make arrangements with other underwriters or purchasers
reasonably satisfactory to you for purchase of such shares and portion on the
terms herein set forth. In any such case, either you or the Company shall have
the right to postpone the Closing Date determined as provided in Section 5
hereof for not more than seven business days after the date originally fixed as
the Closing Date pursuant to said Section 5 in order that any necessary changes
in the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If neither the non-defaulting Underwriters nor the
Company shall make arrangements within the 24-hour periods stated above for the
purchase of all the shares of the Stock which the defaulting Underwriter or
Underwriters agreed to purchase hereunder, this Agreement shall be terminated
without further act or deed and without any liability on the part of the Company
to any non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company. Nothing in this paragraph (b), and no
action taken hereunder, shall relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth, the
Company grants an option to the several Underwriters to purchase, severally and
not jointly, up to ___ shares in the aggregate of the Option Stock from the
Company at the same price per share as the Underwriters shall pay for the
Underwritten Stock. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Stock by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the 30th
day after the date of this Agreement upon written or telegraphic notice by you
to the Company setting forth the aggregate number of shares of the Option Stock
as to which the several Underwriters are exercising the option. Delivery of
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certificates for the shares of Option Stock, and payment therefor, shall be made
as provided in Section 5 hereof. The number of shares of the Option Stock to be
purchased by each Underwriter shall be the same percentage of the total number
of shares of the Option Stock to be purchased by the several Underwriters as
such Underwriter is purchasing of the Underwritten Stock, as adjusted by you in
such manner as you deem advisable to avoid fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of the
Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front cover
page and under "Underwriting" in the Registration Statement, any Preliminary
Prospectus and the Prospectus relating to the Stock filed by the Company
(insofar as such information relates to the Underwriters) constitutes the only
information furnished by the Underwriters to the Company for inclusion in the
Registration Statement, any Preliminary Prospectus, and the Prospectus, and you
on behalf of the respective Underwriters represent and warrant to the Company
that the statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten Stock
and the Option Stock (if the option granted by Section 3(c) hereof shall have
been exercised not later than 7:00 A.M., San Francisco time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of Xxxxxxx Xxxxxxx & Xxxxxxxx, 0000 Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxxx Xxxx, Xxxxxxxxxx 00000, at 7:00 a.m., San Francisco time, on the fourth
business day after the date of this Agreement, or at such time on such other
day, not later than seven full business days after such fourth business day, as
shall be agreed upon in writing by the Company and you. The date and hour of
such delivery and payment (which may be postponed as provided in Section 3(b)
hereof) are herein called the "Closing Date."
(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of Xxxxxxx Xxxxxxx & Xxxxxxxx,
0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxxxxx 00000, at 7:00 a.m., San
Francisco time, on the third business day after the exercise of such option. The
date and hour of such delivery and payment are herein called the "Option Closing
Date."
(c) Payment for the Stock purchased from the Company shall be made to
the Company or its order by one or more certified or official bank check or wire
transfer in same day funds. Such payment shall be made upon delivery of
certificates for the Stock to you for the respective accounts of the several
Underwriters against receipt therefor signed by you.
12
Certificates for the Stock to be delivered to you shall be registered in such
name or names and shall be in such denominations as you may request at least one
business day before the Closing Date, in the case of Underwritten Stock and at
least one day before the Option Closing Date, in the case of Option Stock. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 0000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxxxxx 00000, on the business day prior to the
Closing Date or, in the case of the Option Stock, by 12:00 p.m., San Francisco
time, on the business day preceding the Option Closing Date.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or on the Option Closing Date, as the case
may be. Any such payment by you shall not relieve such Underwriter from any of
its obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees
as follows:
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at the
Effective Date in reliance on Rule 430A and (ii) not file any amendment to the
Registration Statement or supplement to the Prospectus of which you shall not
previously have been advised and furnished with a copy or to which you shall
have reasonably objected in writing or which is not in compliance with the
Securities Act or the rules and regulations of the Commission thereunder
(b) The Company will promptly notify each Underwriter in the event of
(i) the request by the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company will
make every reasonable effort to prevent the issuance of such a stop order and,
if such an order shall at any time be issued, to obtain the withdrawal thereof
at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you
a signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the Effective Date and, promptly upon the
filing thereof, a signed copy of each post-effective amendment, if any, to the
Registration Statement (together with, in each case, all exhibits thereto unless
previously furnished to you) and will also deliver to you, for distribution to
the Underwriters, a sufficient number of additional conformed copies of each of
the foregoing (but without exhibits) so that one copy of each may be distributed
to each Underwriter, (ii) as promptly as possible deliver to you and send to the
several Underwriters, at such office or offices as you may designate, as many
copies of the Prospectus as you may reasonably request and (iii)
13
thereafter from time to time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer likewise send to
the Underwriters as many additional copies of the Prospectus and as many
copies of any supplement to the Prospectus and of any amended prospectus,
filed by the Company with the Commission, as you may reasonably request for
the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the opinion of counsel
for the Company or of counsel for the Underwriters, to supplement or amend the
Prospectus so that it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statement contained in the Prospectus in the light of the
circumstances existing at the time it is delivered to a purchaser of the Stock,
not misleading, the Company will forthwith prepare and file with the Commission
a supplement to the Prospectus or an amended prospectus so that the Prospectus
as so supplemented or amended will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time such
Prospectus is delivered to such purchaser, not misleading. If, after the initial
public offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion of counsel for the
Company or of counsel for the Underwriters such proposed variation requires that
the Prospectus be supplemented or amended, the Company will forthwith prepare
and file with the Commission a supplement to the Prospectus or an amended
prospectus setting forth such variation. The Company authorizes the Underwriters
and all dealers to whom any of the Stock may be sold by the several Underwriters
to use the Prospectus, as from time to time amended or supplemented, in
connection with the sale of the Stock in accordance with the applicable
provisions of the Securities Act and the rules and regulations of the Commission
thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue
sky laws of such jurisdictions as you may designate and, during the period in
which a prospectus is required by law to be delivered by an Underwriter or
dealer, in keeping such qualifications in good standing under said securities
or blue sky laws; PROVIDED, HOWEVER, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. The Company
will, from time to time, prepare and file such statements, reports and other
documents as are or may be required to continue such qualifications in effect
for so long a period as you may reasonably request for distribution of the
Stock.
14
(g) During a period of five years commencing with the date hereof,
the Company will furnish to you, and to each Underwriter who may so request
in writing, copies of all periodic and special reports furnished to
stockholders of the Company and of all information, documents and reports
filed with the Commission.
(h) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date,
the Company will make generally available to its securityholders an earnings
statement in accordance with Section 11(a) of the Securities Act and Rule 158
thereunder.
(i) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, including all costs and
expenses incident to (i) the preparation, printing and filing with the
Commission and the NASD of the Registration Statement, any Preliminary
Prospectus and the Prospectus, (ii) the furnishing to the Underwriters of
copies of any Preliminary Prospectus and of the several documents required by
paragraph (c) of this Section 6 to be so furnished, (iii) the printing of
this Agreement and related documents delivered to the Underwriters, (iv) the
preparation, printing and filing of all supplements and amendments to the
Prospectus referred to in paragraph (d) of this Section 6, (v) the furnishing
to you and the Underwriters of the reports and information referred to in
paragraph (g) of this Section 6 and (vi) the printing and issuance of stock
certificates, including the transfer agent's fees.
(j) The Company agrees to reimburse you, for the account of the
several Underwriters, for blue sky fees and related disbursements (including
reasonable counsel fees and disbursements and cost of printing memoranda for
the Underwriters) paid by or for the account of the Underwriters or their
counsel in qualifying the Stock under state securities or blue sky laws and
in the review of the offering by the NASD.
(k) The Company agrees that, without the prior written consent of
Chase Securities Inc. on behalf of the Underwriters, the Company will not,
for a period of 180 days following the Effective Date, directly or
indirectly, (i) sell, offer, contract to sell, transfer the economic risk of
ownership in, make any short sale, pledge, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of any shares of Common
Stock or any securities convertible into or exchangeable or exercisable for
or any rights to purchase or acquire Common Stock or (ii) enter into any swap
or other agreement that transfers, in whole or in part, any of the economic
consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Stock to be sold to the Underwriters pursuant to
this Agreement, (B) shares of Common Stock issued by the Company upon the
exercise of options granted under the stock option plans of the Company (the
"Option Plans") or upon the exercise of warrants outstanding as of the date
hereof and (C) options to purchase Common Stock granted under the Option
Plans.
15
(l) The Company agrees to use its best efforts to cause all
directors, officers, option holders and stockholders to agree that, without
the prior written consent of Chase Securities Inc. acting alone or each of
the Representatives of the Underwriters acting jointly, for a period of 180
days following the Effective Date, directly or indirectly, sell, offer,
contract to sell, make any short sale, pledge, or otherwise transfer or
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire
Common Stock (other than the exercise of stock options).
(m) If at any time during the 25-day period after the Effective Date
any rumor, publication or event relating to or affecting the Company shall
occur as a result of which in your opinion the market price for the 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.
(n) The Company will comply with the Securities and Exchange Act of
1934, as amended (herein called the "Exchange Act") and the rules and
regulations of the Commission thereunder so as to permit the completion of
the distribution of the Stock as contemplated by this Agreement and the
Prospectus.
(o) The Company is familiar with the Investment Company Act of 1940,
as amended, (herein called the "Investment Company Act") and has in the past
conducted its affairs, and will in the future conduct its affairs, in such a
manner to ensure that the Company was not and will not be an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act, and the rules and regulations of the
Commission thereunder.
(p) The Company shall apply the net proceeds of its sale of the
Stock as set forth in the Prospectus under the heading "Use of Proceeds."
(q) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, registrar (which may
be the same entity as the transfer agent) for its Common Stock.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of this Section 7,
the Company agrees to indemnify and hold harmless each Underwriter and each
person (including each partner or officer thereof) who controls any
Underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages or liabilities, joint or several,
to which such indemnified parties or any of them may become subject under the
Securities Act, the Exchange Act, or the common law or otherwise, and the
Company agrees to reimburse each such
16
Underwriter and controlling person for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties,
in each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) Registration
Statement) or any post-effective amendment thereto (including any Rule 462(b)
Registration Statement), or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus
or the Prospectus (as amended or as supplemented if the Company shall have
filed with the Commission any amendment thereof or supplement thereto) or the
omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that (A) the
indemnity agreements of the Company contained in this paragraph (a) shall not
apply to any such losses, claims, damages, liabilities or expenses if such
statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing to
the Company by or on behalf of any Underwriter for use in any Preliminary
Prospectus or the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto and (B) the indemnity agreement
contained in this paragraph (a) with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages, liabilities or expenses purchased
the Stock which is the subject thereof (or to the benefit of any person
controlling such Underwriter) if at or prior to the written confirmation of
the sale of such Stock a copy of the Prospectus (or the Prospectus as amended
or supplemented) was not sent or delivered to such person and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented) unless the failure is the result of noncompliance by the
Company with paragraph (c) of Section 6 hereof. The indemnity agreements of
the Company contained in this paragraph (a) and the representations and
warranties of the Company contained in Section 2 hereof shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the delivery of
and payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its officers who signs the Registration Statement on his
own behalf or pursuant to a power of attorney, each of its directors, each
other Underwriter and each person (including each partner or officer thereof)
who controls the Company or any such other Underwriter within the meaning of
Section 15 of the Securities Act, from and against any and all losses,
claims, damages or
17
liabilities, joint or several, to which such indemnified parties or any of
them may become subject under the Securities Act, the Exchange Act, or the
common law or otherwise and to reimburse each of them for any legal or other
expenses (including, except as otherwise hereinafter provided, reasonable
fees and disbursements of counsel) incurred by the respective indemnified
parties in connection with defending against any such losses, claims, damages
or liabilities or in connection with any investigation or inquiry of, or
other proceeding which may be brought against, the respective indemnified
parties, in each case arising out of or based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (including the Prospectus as part thereof and any Rule 462(b)
Registration Statement) or any post-effective amendment thereto (including
any Rule 462(b) Registration Statement) or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading or (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (as
amended or as supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, if such statement or omission was made in reliance
upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of such
indemnifying Underwriter for use in the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto. The indemnity
agreement of each Underwriter contained in this paragraph (b) shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the delivery of
and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and
(b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in
such paragraphs, it will promptly give written notice (herein called the
"Notice") of such service or notification to the party or parties from whom
indemnification may be sought hereunder. No indemnification provided for in
such paragraphs shall be available to any party who shall fail so to give the
Notice if the party to whom such Notice was not given was unaware of the
action, suit, investigation, inquiry or proceeding to which the Notice would
have related and was prejudiced by the failure to give the Notice, but the
omission so to notify such indemnifying party or parties of any such service
or notification shall not relieve such indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution
or otherwise than on account of such indemnity agreement. Any indemnifying
party shall be entitled at its own expense to participate in the defense of
any action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(herein called the "Notice of Defense") to the indemnified party, to assume
(alone or in conjunction with any other indemnifying party or parties) the
entire defense of such action, suit, investigation, inquiry or proceeding, in
which event such defense shall be conducted, at the expense of the
indemnifying party or parties, by counsel chosen by such indemnifying party
or parties and reasonably satisfactory to the indemnified party or parties;
PROVIDED, HOWEVER, that (i) if the indemnified party or parties reasonably
determine that there may be a conflict between the positions of the
indemnifying party or parties and of the indemnified party or parties in
conducting the defense of such action, suit, investigation, inquiry or
proceeding or that there may be legal defenses available to such
18
indemnified party or parties different from or in addition to those available
to the indemnifying party or parties, then counsel for the indemnified party
or parties shall be entitled to conduct the defense to the extent reasonably
determined by such counsel to be necessary to protect the interests of the
indemnified party or parties and (ii) in any event, the indemnified party or
parties shall be entitled to have counsel chosen by such indemnified party or
parties participate in, but not conduct, the defense. If, within a reasonable
time after receipt of the Notice, an indemnifying party gives a Notice of
Defense and the counsel chosen by the indemnifying party or parties is
reasonably satisfactory to the indemnified party or parties, the indemnifying
party or parties will not be liable under paragraphs (a) through (c) of this
Section 7 for any legal or other expenses subsequently incurred by the
indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear the legal and other expenses incurred in
connection with the conduct of the defense as referred to in clause (i) of
the proviso to the preceding sentence and (B) the indemnifying party or
parties shall bear such other expenses as it or they have authorized to be
incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims,
damages or liabilities referred to in paragraph (a) or (b) of this Section 7
(i) in such proportion as is appropriate to reflect the relative benefits
received by each indemnifying party from the offering of the Stock or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of each
indemnifying party in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, or actions in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Stock received
by the Company and the total underwriting discount received by the
Underwriters, as set forth in the table on the cover page of the Prospectus,
bear to the aggregate public offering price of the Stock. Relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by each
indemnifying party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to in the first sentence of
this paragraph (d). The
19
amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the
first sentence of this paragraph (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigation, preparing to defend or defending against any action or
claim which is the subject of this paragraph (d). Notwithstanding the
provisions of this paragraph (d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to
the Stock purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this paragraph
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of
a summons or other initial legal process upon it in any action instituted
against it in respect of which contribution may be sought, it will promptly
give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in paragraph (c) of this Section
7).
(e) The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such
Underwriter or any person who controls such Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act is a party
to such claim, action, suit or proceeding) unless such settlement, compromise
or consent includes an unconditional release of such Underwriter and each
such controlling person from all liability arising out of such claim, action,
suit or proceeding.
8. TERMINATION. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company if after
the date of this Agreement trading in the Common Stock shall have been
suspended, or if there shall have occurred (a) the engagement in hostilities
or an escalation of major hostilities by the United States or the declaration
of war or a national emergency by the United States, (b) any outbreak of
hostilities or other national or international calamity or crisis or change
in economic or political conditions if the effect of such outbreak, calamity,
crisis or change in economic or political conditions in the financial markets
of the United States would, in the Underwriters' reasonable judgment, make
the offering or delivery of the Stock impracticable, (c) suspension of
trading in securities generally or a material adverse decline in value of
securities generally on the New York Stock Exchange, the American Stock
Exchange, or the Nasdaq National Market, or limitations on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such exchange or system, (d) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of,
or commencement of any proceeding or investigation by, any court, legislative
body, agency or other governmental authority which in the Underwriters'
reasonable opinion materially and adversely affects or will materially or
adversely affect the business or operations of the Company, (e) declaration
of a banking moratorium by either federal or California or New York State
authorities or (f) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in
the Underwriters'
20
reasonable opinion has a material adverse effect on the securities markets in
the United States. If this Agreement shall be terminated pursuant to this
Section 8, there shall be no liability of the Company to the Underwriters and
no liability of the Underwriters to the Company; PROVIDED, HOWEVER, that in
the event of any such termination the Company agrees to indemnify and hold
harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company under this Agreement, including
all costs and expenses referred to in paragraphs (i) and (j) of Section 6
hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to
the performance by the Company of all of its obligations to be performed
hereunder at or prior to the Closing Date or the Option Closing Date, as the
case may be, and to the following further conditions:
(a) The Registration Statement shall have become effective and no
stop order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The Prospectus shall have been printed and copies distributed to
the Underwriters not later than 10:00 a.m., New York City time, on the second
business day following the date of this Agreement or at such later date and
time as to which the Underwriters may agree.
(c) The legality and sufficiency of the sale of the Stock hereunder
and the validity and form of the certificates representing the Stock, all
corporate proceedings and other legal matters incident to the foregoing, and
the form of the Registration Statement and of the Prospectus (except as to
the financial statements contained therein), shall have been approved at or
prior to the Closing Date by Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the
Underwriters.
(d) You shall have received from Weil, Gotshal & Xxxxxx LLP, counsel
for the Company, an opinion addressed to the Underwriters and dated the
Closing Date, covering the matters set forth in Annex A hereto and from the
general counsel of the Company, an opinion addressed to the Underwriters and
dated the Closing Date, covering the matters set forth in Annex B hereto, and
if Option Stock is purchased at any date after the Closing Date, additional
opinions from such counsel, addressed to the Underwriters and dated the
Option Closing Date, confirming that the statements expressed as of the
Closing Date in such opinions remain valid as of such later date.
(e) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true
and correct and neither the Registration Statement nor the Prospectus omitted
to state any material fact required to be stated therein or necessary in
order to make the statements therein, respectively, not misleading, (ii)
since the Effective Date, no event has occurred which should have been set
forth in a supplement or amendment to the Prospectus which has not been set
forth in such a supplement or
21
amendment, (iii) since the respective dates as of which information is given
in the Registration Statement in the form in which it originally became
effective and the Prospectus contained therein, there has not been any
Material Adverse Effect whether or not arising from transactions in the
ordinary course of business, and, since such dates, except in the ordinary
course of business, the Company has not entered into any material transaction
not referred to in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, (iv) the
Company has no material contingent obligations which are not disclosed in the
Registration Statement and the Prospectus, (v) there are not any pending or
known threatened legal proceedings to which the Company is a party or of
which property of the Company is the subject which are material and which are
not disclosed in the Registration Statement and the Prospectus, (vi) there
are no other documents which are required to be filed as exhibits to the
Registration Statement which have not been filed as required, (vii) the
representations and warranties of the Company herein are true and correct in
all material respects as of the Closing Date and the Option Closing Date, as
the case may be, and (viii) there has not been any material change in the
market for securities in general or in political, financial or economic
conditions from those reasonably foreseeable as to render it impracticable in
your reasonable judgment to make a public offering of the Stock or a material
adverse change in market levels for securities in general (or those of
companies in particular) or financial or economic conditions which render it
inadvisable to proceed with such offering
(f) You shall have received on the Closing Date and on the Option
Closing Date, as the case may be, a certificate, dated the Closing Date or
Option Closing Date, as the case may be, and signed by the President and the
Chief Financial Officer of the Company, stating that the respective signers
of said certificate have carefully examined the Registration Statement in the
form in which it originally became effective and the Prospectus contained
therein and any supplements or amendments thereto, and that the statements
included in clauses (i) through (vii) of paragraph (e) of this Section 9 are
true and correct.
(g) You shall have received from Ernst & Young LLP letters addressed
to the Underwriters and dated the date hereof, the Closing Date and the
Option Closing Date, as the case may be, in each case, in form and substance
satisfactory to the Underwriters (i) confirming that they are independent
public accountants with respect to the Company within the meaning of the
Securities Act and the rules and regulations of the Commission thereunder;
(ii) containing statements and information of the type ordinarily included in
auditors' "comfort letters" to underwriters with respect to financial
statements and certain information of the Company contained in the
Registration Statement and the Prospectus; (iii) with respect to the letters
delivered on the Closing Date or the Option Closing Date, as the case may be,
based upon the procedures described in its 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 three business
days prior to the Closing Date or the Option Closing Date, as the case may
be, (A) confirming, to the extent true, that the statements and conclusions
set forth in the Original Letter are accurate as of the Closing Date and the
Option Closing Date, as the case may be, and (B) setting forth any revisions
and additions to the statements and conclusions set forth in the
22
Original Letter which are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information; (iv) confirming that the underlying information, determinations,
estimates and assumptions contained in the section of the Prospectus entitled
"Management Discussion and Analysis of Financial Condition and Results of
Operations" provide a reasonable basis for the statements contained therein;
and (v) address other matters agreed upon by Ernst & Young LLP and you. The
letters shall not disclose any change, or any development involving a
prospective change, in or affecting the business or properties of the Company
which, in your sole judgment, makes it impractical or inadvisable to proceed
with the public offering of the Stock or the purchase of the Option Stock as
contemplated by the Prospectus.
(h) You shall have received from Ernst & Young LLP a letter
addressed to the Company and made available to you and your counsel for the
use of the Underwriters stating that its review of the Company's system of
internal accounting controls, to the extent they deemed necessary in
establishing the scope of its examination of the Company's financial
statements as of December 31, 1999 and unaudited financials for the quarter
ended as of March 31, 2000, did not disclose any weaknesses in internal
controls that they considered to be material weaknesses.
(i) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (f) of Section 6 hereof.
(j) Prior to the Closing Date, the Stock to be issued and sold by
the Company shall have been duly authorized for listing by the Nasdaq
National Market upon official notice of issuance.
(k) On or prior to the Closing Date, you shall have received from
all directors, officers, and holders of any shares of common stock and any
options or similar rights to purchase common stock, Lock-up Agreements in the
form of Annex C attached hereto.
All the agreements, opinions, certificates and letters mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the
Underwriters, shall be reasonably satisfied that they comply in form and
scope.
In case any of the conditions specified in this Section 9 shall not
be fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to
the Underwriters and without liability of the Underwriters to the Company;
PROVIDED, HOWEVER, that (i) in the event of such termination, the Company
agrees to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company under
this Agreement, including all costs and expenses referred to in paragraphs
(i) and (j) of Section 6 hereof, and (ii) if this Agreement is terminated by
you because of any refusal, inability or failure on the part of the Company
to perform any agreement herein, to fulfill any of the conditions herein, or
to comply
23
with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY. The obligation of
the Company to deliver the Stock shall be subject to the conditions that (a)
the Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall
not be fulfilled, this Agreement may be terminated by the Company by giving
notice to you. Any such termination shall be without liability of the Company
to the Underwriters and without liability of the Underwriters to the Company;
PROVIDED, HOWEVER, that in the event of any such termination the Company
agrees to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company under
this Agreement, including all costs and expenses referred to in paragraphs
(i) and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to its other
obligations under Section 7 of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in paragraph (a) of Section 7 of this Agreement, notwithstanding
the absence of a judicial determination as to the propriety and
enforceability of the obligations under this Section 11 and the possibility
that such payments might later be held to be improper; PROVIDED, HOWEVER,
that (a) to the extent any such payment is ultimately held to be improper,
the persons receiving such payments shall promptly refund them and (b) such
persons shall provide to the Company, upon request, reasonable assurances of
their ability to effect any refund, when and if due.
12. DIRECTED SHARE PROGRAM. It is understood that approximately
________ shares of the Underwritten Stock ("Directed Shares") will initially
be reserved by the Underwriters for offer and sale upon the terms and
conditions set forth in the Prospectus and in accordance with the rules and
regulations of the NASD (the "Directed Share Program") to employees,
directors and persons related to them, service providers and other third
parties having business relationships with the Company ("Directed Share
Participants") who have heretofore delivered to you offers to purchase shares
of Underwritten Stock in form satisfactory to you, and that any allocation of
such Underwritten Stock among such persons will be made in accordance with
timely directions received by you from the Company. Under no circumstances
will any Underwriter be liable to the Company or to any Directed Share
Participant for any action taken or omitted to be taken in good faith in
connection with such Directed Share Program. It is further understood that to
the extent any Directed Shares are not affirmatively reconfirmed for purchase
by any Directed Share Participant on or immediately after the date of this
Agreement, such Directed Shares may be offered to the public as part of the
public offering contemplated hereby.
24
The Company agrees to pay all fees and disbursements
incurred by the Underwriters in connection with the Directed Share Program,
including reasonable counsel fees and any stamp duties or other taxes
incurred by the Underwriters in connection with the Directed Share Program.
In connection with the offer and sale of the Directed
Shares, the Company agrees, promptly upon a request in writing, to indemnify
and hold harmless the Underwriters from and against any loss, claim, damage,
expense, liability or action which (i) arises out of, or is based upon, any
untrue statement or alleged untrue statement of a material fact contained in
any material prepared by or with the approval of the Company for distribution
to Directed Share Participants in connection with the Directed Share Program
or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (ii) arises out of the failure of any Directed Share Program
participant to pay for and accept delivery of Directed Shares that the
Directed Share Participant agreed to purchase, (iii) arises out of the
failure of any Directed Share Participant that is also an employee of the
Company to pay for and accept delivery by the end of the first day after the
date of this Agreement any Directed Shares that were allocated to such
employee Directed Share Participant or (iv) is otherwise directly related to
the Directed Share Program, other than losses, claims, damages or liabilities
(or expenses relating thereto) that are finally judicially determined to have
resulted directly from the bad faith or gross negligence of such Underwriter.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of the Company and the several Underwriters and, with
respect to the provisions of Section 7 hereof, the several parties (in
addition to the Company and the several Underwriters) indemnified under the
provisions of said Section 7, and their respective personal representatives,
successors and assigns. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any
provision herein contained. The term "successors and assigns" as herein used
shall not include any purchaser, as such purchaser, of any of the Stock from
any of the several Underwriters.
14. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters,
shall be mailed, telegraphed or delivered to Chase Securities Inc., Xxx Xxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: _____________, with a
copy, which shall not constitute notice, to Xxxxxxx Xxxxxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxx, Esq.;
and if to the Company, shall be mailed, telegraphed or delivered to it at its
office, 0000 Xxxxxxx Xxxxxxx Xx., Xxxxx 000, Xxxxxxxx, XX 00000, Attention:
Xxxxxxx X. Xxxxxxx, Esq., with a copy to Weil, Gotshal & Xxxxxx LLP, 0000
Xxxx Xxxx Xxxx, Xxxxx 000, Xxxxx Xxxx, XX 00000, Attention: Xxxxx X. Xxxx,
Esq. All notices given by telegraph shall be promptly confirmed by letter.
15. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement
25
shall remain in full force and effect regardless of (a) any termination of
this Agreement, (b) any investigation made by or on behalf of any Underwriter
or controlling person thereof, or by or on behalf of the Company or its
respective directors or officers, and (c) delivery and payment for the Stock
under this Agreement; PROVIDED, HOWEVER, that if this Agreement is terminated
prior to the Closing Date, the provisions of paragraphs (l) and (m) of
Section 6 hereof shall be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California.
26
Please sign and return to the Company the enclosed duplicates of
this letter, whereupon this letter will become a binding agreement among the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
KINZAN, INC.
By ___________________________
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
CHASE SECURITIES INC.
XXXXXX XXXXXX PARTNERS LLC
XXXXXXX XXXXX & COMPANY, L.L.C.
By __________________________
Managing Director
Acting on behalf of the several Underwriters, including themselves, named in
Schedule I hereto.
SCHEDULE I
UNDERWRITERS
UNDERWRITERS NUMBER OF SHARES TO BE PURCHASED
Chase Securities Inc..........................................
Xxxxxx Xxxxxx Partners LLC....................................
Xxxxxxx Xxxxx & Company, L.L.C................................
Total......................................... _____
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF WEIL, GOTSHAL & XXXXXX
ANNEX B
MATTERS TO BE COVERED IN THE OPINION OF GENERAL COUNSEL OF THE COMPANY
ANNEX C
FORM OF LOCK-UP AGREEMENT
April ____, 2000
Chase Securities Inc.
Xxxxxx Xxxxxx Partners LLC
Xxxxxxx Xxxxx & Company, L.L.C.
As Representatives of the
Several Underwriters
c/o Chase Securities Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
The undersigned is an officer, director, optionholder, or shareholder of
xxxxxx.xxx (the "Company") and wishes to facilitate the initial public
offering (the "Offering") of Common Stock of the Company ("Common Stock")
pursuant to a Registration Statement on Form S-1 (the "Registration
Statement") to be transmitted for filing with the Securities and Exchange
Commission on or about April ___, 2000.
In consideration of the foregoing, and in order to induce you to act as
underwriters in the Offering, the undersigned hereby irrevocably agrees that
it will not, directly or indirectly, sell, offer, contract to sell, transfer
the economic risk of ownership in, make any short sale, pledge or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire
Common Stock (other than the exercise of stock options), without the prior
written consent of Chase Securities Inc. acting alone or of each of the
Representatives of the Underwriters acting jointly, for a period of 180 days
from the effective date of the Registration Statement.
Notwithstanding the foregoing, (a) if the undersigned is an individual, he or
she may transfer any shares of Common Stock or securities convertible into or
exchangeable or exercisable for the Common Stock (i) during his or her
lifetime to his or her immediate family or to a trust the beneficiaries of
which are exclusively the undersigned and/or a member or members of his or
her immediate family or (ii) upon his or her death by will or intestacy and
(b) if the undersigned is not an individual, the undersigned may transfer any
shares of Common Stock or securities convertible into exchangeable or
exercisable for, the Common Stock to the undersigned's members, stockholders,
partners or affiliates; provided, however, that prior to any such transfer
each transferee shall execute an agreement, satisfactory to Chase Securities
Inc., pursuant to which each transferee shall agree to receive and hold such
shares of Common Stock, or securities
Chase Securities Inc.
April ____, 2000
Page 2
convertible into or exchangeable or exercisable for Common Stock, subject to
the provisions hereof, and there shall be no further transfer except in
accordance with the provisions hereof. For the purposes of this paragraph,
"immediate family" shall mean spouse, lineal descendant, father, mother,
brother or sister of the transferor or father, mother, brother or sister of
the transferor's spouse.
In addition, the restrictions set forth in this agreement shall not apply to
(a) transactions relating to shares of Common Stock or other securities
acquired in open market transactions after the completion of the Offering and
(b) the repurchase by the Company of any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock in
connection with the undersigned's termination, removal or resignation as a
director, officer or employee of the Company.
The undersigned hereby waives any rights of the undersigned to sell shares of
Common Stock or any other security issued by the Company pursuant to the
Registration Statement, and acknowledges and agrees that for a period of 180
days from the effective date of the Registration Statement the undersigned
has no right to require the Company to register under the Securities Act of
1933 such Common Stock or other securities issued by the Company and
beneficially owned by the undersigned.
The undersigned understands that the agreements of the undersigned contained
herein shall be binding upon the undersigned's heirs, legal representatives,
successors and assignees. The undersigned agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of Common Stock or other securities of the Company held by the
undersigned except in compliance with this agreement.
This Agreement shall terminate if the Company withdraws the Registration
Statement pursuant to Rule 477 under the Securities Act of 1933, as amended.
Very truly yours,
Dated: April __, 2000 ___________________________
Signature
----------------------------
Printed Name and Title
