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Exhibit 1.1
4,000,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
__________, 1999
XX XXXXXXXXX + Co., LLC
DLJ direct Inc.
ADVEST, INC.
x/x XX Xxxxxxxxx + Co., LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Xxxxxxx.Xxx, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell up to an aggregate of 4,000,000 shares of its authorized but
unissued common stock, par value $.01 per share (the "Common Stock") (said
4,000,000 shares of Common Stock being herein called the "Underwritten Stock")
to the Underwriters (as hereinafter defined) and to grant the Underwriters an
option to purchase up to an aggregate of 600,000 additional shares of Common
Stock (the "Option Stock" and collectively with the Underwritten Stock, the
"Shares"). 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 Shares by the underwriters, for whom you are acting as
representatives, named in Schedule I hereto (herein collectively called the
"Underwriters," which term shall also include any underwriter purchasing Shares
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 (the "Commission") a registration statement on Form S-1
(No. 333-_____, including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (the "Act"), of the
Shares. Copies of such registration statement and of each amendment thereto, if
any, including the related preliminary prospectus (meeting the requirements of
Rule 430A of the rules and regulations of the
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(1) Plus an option to purchase from the Company up to an aggregate of
600,000 additional shares to cover over-allotments.
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Commission) heretofore filed by the Company with the Commission have been
delivered to you.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Shares (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 Shares first filed with the Commission
pursuant to Rule 424(b) and Rule 430A (or if no such filing is required, as
included in the Registration Statement) and, in the event of any supplement or
amendment so 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 Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Underwriters as follows:
(a) Neither the Commission nor any state securities commission
has issued any order preventing or suspending the use of any Preliminary
Prospectus or has instituted or, to the Company's knowledge, threatened to
institute any proceedings with respect to such an order. The Registration
Statement and the Prospectus comply, and on the Closing Date (as hereinafter
defined) and any later date on which the Option Stock is to be purchased, the
Prospectus will comply, in all material respects, with the provisions of the Act
and the rules and regulations of the Commission thereunder. On the Effective
Date, the Registration Statement did not contain any untrue statement of a
material fact and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, and
on the Effective Date the Prospectus did not and, on the Closing Date and any
later date on which the Option Stock
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is to be purchased, will 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, 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 (a) 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 expressly for use in the Registration Statement or Prospectus.
(b) Each of the Company and its subsidiaries (i) has been duly
organized and is validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation, as the case may be, having full
power and corporate authority, to own or lease its properties and to conduct its
business as described in the Registration Statement and the Prospectus; and (ii)
is duly qualified to do business as a foreign corporation or limited liability
company, as the case may be, and is 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 and its subsidiaries, taken as a whole). The Company and its
subsidiaries do not own any capital stock or other equity securities in any
entity.
(c) The Company has the duly authorized and validly issued
outstanding capitalization set forth under the caption "Capitalization" in the
Prospectus and will have the adjusted capitalization set forth therein on the
Closing Date and any later date on which the Option Stock is to be purchased,
based on the assumptions set forth therein. The securities of the Company
conform to the descriptions thereof contained in the Prospectus. The form of
certificates for the Shares conforms to the corporate law of the jurisdiction of
the Company's incorporation. The outstanding shares of Common Stock (other than
the Shares) have been duly authorized and validly issued by the Company and are
fully paid and nonassessable. Except as created hereby or referred to in the
Prospectus, there are no outstanding options, warrants, rights or other
arrangements requiring the Company at any time to issue any capital stock. No
holders of outstanding shares of capital stock of the Company are entitled as
such to any preemptive or other rights to subscribe for any of the Shares, and
neither the filing of the Registration Statement nor the offering or sale of the
Shares as contemplated by this Agreement gives rise to any rights, other than
those which have been waived or satisfied, for or relating to, the registration
of any securities of the Company. The Shares are duly authorized, and will be,
when sold to the Underwriters as provided herein, validly issued, fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus. 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
Shares as contemplated herein.
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The outstanding shares of capital stock or ownership interests of each of its
subsidiaries have been duly authorized and validly issued, are fully paid and
non-assessable, and are solely owned by the Company free and clear of all liens,
encumbrances and equities and claims; and no options, warrants or other rights
to purchase, agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in such
subsidiary are outstanding.
(d) The Company has full legal right, power and authority to
enter into this Agreement and to consummate the transactions provided for
herein. This Agreement has been duly authorized, executed and delivered by the
Company and, assuming it is a binding agreement of the Underwriters, constitutes
a legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
creditors' rights and the application of equitable principles relating to the
availability of remedies and except as rights to indemnity or contribution may
be limited by federal or state securities laws and the public policy underlying
such laws), and none of the Company's execution or delivery of this Agreement,
its performance hereunder, its consummation of the transactions contemplated
herein, its application of the net proceeds of the offering in the manner set
forth under the caption "Use of Proceeds" or the conduct of its business as
described in the Prospectus, conflicts or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, causes or will cause (or permits
or will permit) the maturation or acceleration of any liability or obligation or
the termination of any right under, or result in the creation or imposition of
any lien, charge, or encumbrance upon, any property or assets of the Company or
any of its subsidiaries pursuant to the terms of (i) the certificate of
incorporation or bylaws of the Company or any of its subsidiaries, (ii) any
indenture, mortgage, deed of trust, voting trust agreement, stockholders'
agreement, note agreement or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which it is or may be bound or to
which its respective property is or may be subject or (iii) any statute,
judgment, decree, order, rule or regulation applicable to the Company or any of
its subsidiaries of any government, arbitrator, court, regulatory body or
administrative agency or other governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries, or their
activities or properties, which would materially and adversely affect the
business or properties of the Company and its subsidiaries taken as a whole.
(e) The Common Stock is approved for quotation on The Nasdaq
National Market and, prior to the Closing Date, (i) the Common Stock shall be
listed and duly admitted to trading on The Nasdaq National Market and (ii) the
Shares will be authorized for inclusion in The Nasdaq National Market.
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(f) The financial statements of the Company and its
subsidiaries and the related notes and schedules thereto included in the
Registration Statement and the Prospectus fairly present the financial position,
results of operations, stockholders' equity and cash flows of the Company and
its subsidiaries at the dates and for the periods specified therein. Such
financial statements and the related notes and schedules thereto have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise noted
therein) and all adjustments necessary for a fair presentation of results for
such periods have been made; provided, however, that the unaudited financial
statements are subject to normal year-end audit adjustments (which are not
expected to be material) and do not contain all footnotes required under
generally accepted accounting principles. The summary and selected financial and
statistical data included in the Registration Statement and the Prospectus
present fairly the information shown therein and such data have been prepared on
a basis consistent with the financial statements contained therein and in the
books and records of the Company.
(g) Xxxxxx Xxxxxxxx LLP, who have certified the financial
statements filed with the Commission as part of the Registration Statement, are
independent public accountants as required by the Act and the rules and
regulations promulgated thereunder.
(h) Each of the Company and its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific 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.
(i) The Company and its subsidiaries have filed all necessary
federal, state and local income, franchise and other material tax returns and
has paid all taxes shown as due thereunder, and the Company and its subsidiaries
have no tax deficiency that has been or, to their knowledge, which might be
assessed against the Company and its subsidiaries which, if so assessed, would
materially and adversely affect the business or properties of the Company and
its subsidiaries, taken as a whole. All tax liabilities accrued through the date
hereof have been adequately provided for on the books of the Company and its
subsidiaries.
(j) The Company and its subsidiaries maintain insurance
underwritten by insurers of recognized financial responsibility of the types and
in amounts and with
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such deductibles as customary for companies in the same or similar business, all
of which insurance is in full force and effect.
(k) Except as disclosed in the Prospectus, there is no action,
suit, claim, proceeding or investigation pending or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries before or by any
court, regulatory body or administrative agency or any other governmental agency
or body, domestic or foreign, which (i) questions the validity of the capital
stock of the Company or this Agreement or of any action taken or to be taken by
the Company pursuant to or in connection with this Agreement, (ii) is required
to be disclosed in the Registration Statement which is not so disclosed (and
such proceedings, if any, as are summarized in the Registration Statement are
accurately summarized in all material respects), or (iii) may have a material
adverse affect upon the business operations, financial conditions or income of
the Company and its subsidiaries, taken as a whole.
(l) All executed agreements or copies of executed agreements
filed or incorporated by reference as exhibits to the Registration Statement to
which the Company or any of its subsidiaries is a party or by which it is or may
be bound or to which its assets, properties or businesses are or may be subject
have been duly and validly authorized, executed and delivered by the Company or
such subsidiary and constitute the legal, valid and binding agreements of the
Company or such subsidiary enforceable by and against it in accordance with
their respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to enforcement of creditors' rights generally, and general equitable principles
relating to the availability of remedies, and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the public
policy underlying such laws). The descriptions in the Registration Statement of
contracts and other documents are accurate and fairly present the information
required to be shown with respect thereto by the Act and the rules and
regulations promulgated thereunder, and there are no contracts or other
documents which are required by the Act or the rules and regulations promulgated
thereunder to be described in the Registration Statement or filed as exhibits to
the Registration Statement which are not described or filed as required and the
exhibits which have been filed are complete and correct copies of the documents
of which they purport to be copies.
(m) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as expressly
contemplated therein, neither the Company nor any of its subsidiaries has
incurred, other than in the ordinary course of its business, any material
liabilities or obligations, direct or contingent, purchased any of its
outstanding capital stock, paid or declared any dividends or other distributions
on its capital stock or entered into any material transactions, and there has
been no material change in capital stock or debt or any material adverse change
in the
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business, properties, assets, net worth, condition (financial or other), or
results of operations or prospects of the Company and its subsidiaries, taken as
a whole, whether or not arising from transactions in the ordinary course of
business.
(n) Neither the Company nor any of its subsidiaries is, or
with the giving of notice or lapse of time or both, will be, in violation of or
in default under, any term or provision of (i) its certificate of incorporation,
bylaws or operating agreement, (ii) any indenture, mortgage, deed of trust,
voting trust agreement, stockholders' agreement, note agreement or other
agreement or instrument to which it is a party or by which it is or may be bound
or to which any of its property is or may be subject, or any indebtedness, the
effect of which breach or default singly or in the aggregate may have a material
adverse effect on the business, management, properties, assets, rights,
operations, or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole, or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company or such subsidiary or of any
arbitrator, court, regulatory body, administrative agency or any other
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or such subsidiary or its activities or properties and the effect of
which breach or default singly or in the aggregate may have a material adverse
effect on the business, management, properties, assets, rights, operations, or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole.
(o) The Company has not incurred any liability for a fee,
commission, or other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this Agreement other
than as contemplated hereby.
(p) No labor disturbance by the employees of the Company or
any of its subsidiaries exists or, to the Company's knowledge, is imminent.
(q) Each of the Company and its subsidiaries owns, is licensed
or otherwise possesses all rights to use, all patents, patent rights,
inventions, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names, copyrights and other intellectual
property rights (collectively, the "Rights") necessary for the conduct of its
business as described in the Prospectus. To the Company's knowledge, no claims
have been asserted against the Company or any of its subsidiaries by any person
with respect to the use of any such Rights or challenging or questioning the
validity or effectiveness of any such Rights. The continued use of the Rights in
connection with the business and operations of the Company and its subsidiaries
does not, to the knowledge of the Company and its subsidiaries, infringe on the
rights of any person, which, if the subject of an unfavorable decision, ruling
or filing, would have a material adverse effect on the condition, business or
properties of the Company and its subsidiaries, taken as a whole.
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(r) The Company and its subsidiaries are conducting their
businesses in compliance with all applicable laws, ordinances or governmental
rules or regulations of the jurisdictions in which they are conducting business,
except where the failure to be so in compliance would not materially and
adversely affect the business or properties of the Company and its subsidiaries,
taken as a whole. Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the National
Association of Securities Dealers, Inc. (the "NASD"), the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or to qualify or exempt
the Shares for public offering by the Underwriters under state securities or
Blue Sky laws) has been obtained or made and is in full force and effect.
(s) Neither the Company nor, to the Company's knowledge, any
of its officers, directors or affiliates (within the meaning of the rules and
regulations promulgated under the Act) has taken or may take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock of the Company, to
facilitate the sale or resale of the Shares or otherwise.
(t) Neither the Company nor any of its subsidiaries is, or
after giving effect to the issuance and sale of the Shares by the Company will
be, an "investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the Commission
promulgated thereunder.
(u) The Company and its subsidiaries have good and marketable
title to all properties and assets described in the Prospectus as owned by them,
free and clear of all liens, encumbrances, security interests, equities, claims
and defects, except such as are described in the Registration Statement and
Prospectus, or such as are not materially important in relation to the business
of the Company and its subsidiaries when taken in the aggregate. The Company has
valid and enforceable leases for the properties described in the Prospectus as
leased by it, free and clear of all liens, encumbrances, security interests,
equities, claims and defects, except such as are not material and do not
interfere with the use made by the Company and its subsidiaries thereof. The
Company and its subsidiaries own or lease all such properties as are necessary
to their operations as now conducted, as set forth in the Registration Statement
and the Prospectus and the properties and business of the Company and its
subsidiaries conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(v) Each of the Company and its subsidiaries holds all
franchises, licenses, permits, approvals, certificates and other authorizations
from federal, state and
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other governmental or regulatory authorities necessary to the ownership, leasing
and operation of its properties or required for the present conduct of its
business, and such franchises, licenses, permits, approvals, certificates and
other governmental authorizations are in full force and effect and the Company
and its subsidiaries are in compliance therewith in all material respects,
except where the failure so to obtain, maintain or comply with would not have a
materially adverse effect on the business, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole.
(w) The Company and its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (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 or any of its subsidiaries would have
any liability; the Company and its subsidiaries have not incurred and do 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 interpretations thereunder (the "Code"); and each "Pension Plan"
for which the Company and its subsidiaries would have liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(x) No relationship, direct or indirect, exists between or
among the Company or its subsidiaries, on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or its
subsidiaries, on the other hand, which is required to be described in the
Prospectus that is not so described.
(y) Neither the Company nor any of its subsidiaries, nor to
the Company's knowledge any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of its subsidiaries,
has used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any provisions of
the Foreign Corrupt Practices Act of 1972; or made any bribe, rebate, payoff,
influence, payment, kickback or other unlawful payment.
(z) The business, operations and facilities of the Company and
each of its subsidiaries have been and are being conducted or operated in
compliance with all applicable laws, ordinances, rules, regulations, licenses,
permits, approvals, plans, authorizations or requirements relating to
occupational safety and health, pollution,
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protection of health or the environment (including, without limitation, those
relating to emissions, discharges, release or threatened releases of pollutants,
contaminants or hazardous or toxic substances, materials or wastes into ambient
air, surface water, groundwater or land, or relating to the manufacture,
processing, distribution, use treatment, storage, disposal, transport or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, gaseous or liquid in nature) or
otherwise relating to remediating real property in which the Company or any of
its subsidiaries has or has had any interest, whether owned or leased, of any
governmental department, commission, board, bureau, agency or instrumentality of
the United States, any state or political subdivision thereof and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and
orders relating thereto, except for such failures to so comply as would not,
individually or in the aggregate, have a material adverse effect on the business
of the Company and its subsidiaries taken as a whole, and neither the Company
nor any of its subsidiaries has received any notice from a governmental
instrumentality or any third party alleging any violation thereof or liability
thereunder (including, without limitation, liability for costs of investigating
or remediating sites containing hazardous substances or damage to natural
resources).
(aa) Neither the Company nor any of its subsidiaries, nor to
the Company's knowledge any officer or employee of the Company or any of its
subsidiaries, is a party to any contract or commitment that restricts in any
material respect the ability of the Company, any of its subsidiaries or such
individual to engage in the business of the Company or such subsidiary as
described in the Registration Statement and the Prospectus.
3. PURCHASE OF THE SHARES BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Company shall issue
and sell the Underwritten Stock to the Underwriters, and the Underwriters agree
to purchase from the Company the Underwritten Stock. The price at which such
shares of Underwritten Stock shall be sold by the Company and purchased by the
Underwriters shall be $______ per share (the "Purchase Price"). 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.
(b) If for any reason one of the Underwriters shall fail or
refuse (other than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 7 or 12 hereof) to purchase and pay
for the number of shares of the Common Stock agreed to be purchased by such
Underwriter, the Company shall
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immediately give notice thereof to you, and the non-defaulting Underwriter 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
and upon the terms herein set forth, all or any part of the shares of the Common
Stock which such defaulting Underwriter agreed to purchase. If the
non-defaulting Underwriter fails so to make such arrangements with respect to
all such shares and portion, the number of shares of the Common Stock which the
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 agreed to
purchase; provided, however, that the non-defaulting Underwriter shall not be
obligated to purchase the shares and portion which the defaulting Underwriter
agreed to purchase if the aggregate number of such shares of Common Stock
exceeds 10% of the total number of Shares which the Underwriters agreed to
purchase under this Agreement. If the total number of shares of the Common Stock
which the defaulting Underwriter 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 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
the non-defaulting Underwriter does not make arrangements within the 24-hour
periods stated above for the purchase of all the shares of the Common Stock
which the defaulting Underwriter 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 the non-defaulting Underwriter and without any liability
on the part of the non-defaulting Underwriter to the Company. Nothing in this
paragraph (b), and no action taken hereunder, shall relieve the 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 Underwriters to purchase, severally
and not jointly, the Option Stock at the Purchase Price. 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 thirtieth day after the date of this agreement
upon written or telegraphic notice by the Underwriters to the Company setting
forth the aggregate number of shares of Option Stock as to which the
Underwriters are exercising the option. Delivery of the certificates for the
shares of Option Stock, and payment therefor shall be made as provided in
Section 5 hereof. The number of shares of
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the Option Stock to be purchased by each Underwriter shall be in such amounts as
the Underwriters shall agree upon prior to the exercise of the option set forth
hereunder.
4. OFFERING BY THE UNDERWRITERS.
(a) The terms of the initial public offering by the
Underwriters of the Shares to be purchased by them shall be as set forth in the
Prospectus. The Underwriters may from time to time change the public offering
price after the closing of the initial public offering and increase or decrease
the concessions and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the
front cover page and under the caption "Plan of Distribution" in the
Registration Statement, any Preliminary Prospectus and the Prospectus relating
to the Shares filed by the Company (insofar as such information relates to the
Underwriters or related persons) 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
Underwriters represent and warrant to the Company that the statements made
therein (insofar as they relate to the Underwriters or related persons) are
correct and do not omit any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
5. DELIVERY OF AND PAYMENT FOR THE SHARES.
(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 Xxxxxxxx Xxxxxxx & Xxxxxxx, 000 Xxxxxxx Xxxxxx,
Xxxxxx, XX 00000, on the third 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 third business day, as shall be agreed upon in writing by the Company and
you. The date and hour of such delivery and payment 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 Xxxxxxxx Xxxxxxx &
Xxxxxxx, 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 at 7:00 A.M., San Francisco time,
on the third business day after the exercise of such Option.
(c) Payment for the Shares purchased from the Company shall be
made to the Company or its order by wire transfer or one or more certified or
official bank
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check or checks in same day funds. Such payment shall be made upon delivery of
certificates for the Shares to you against receipt therefor signed by you.
Certificates for the Shares to be delivered to you shall be registered in the
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 business day prior to the purchase thereof, in the case of Option
Stock. Such certificates will be made available to the Underwriters for
inspection, checking and packaging by BHC Securities, Inc. on the business day
preceding the Closing Date or, in the case of Option Stock, by 12:00 P.M., San
Francisco time, on the business day preceding the date of purchase.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees as
follows:
(a) The Company will (i) prepare and timely file with the
Commission under 424(b) a Prospectus containing information previously omitted
at the time of effectiveness of the Registration Statement in reliance on Rule
430A and (ii) not file with the Commission any amendment to the Registration
Statement or supplement to the Prospectus (A) of which the Underwriters shall
not previously have been advised and furnished with a copy a reasonable period
of time prior to the proposed filing and as to which filing the Underwriters
shall not have given their consent or (B) which is not in compliance with the
Act or the rules and regulations of the Commission thereunder.
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Underwriters (i) of any request made by the
Commission for amendment of the Registration Statement, for supplement to the
Prospectus or for additional information, (ii) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement, or
the institution or threat of any action, investigation or proceeding for that
purpose, or (iii) the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in any jurisdiction,
or the receipt by it of notice of the initiation or threatening of any
proceeding for that purpose. The Company will use its best efforts to prevent
the issuance of any such order and, if issued, to obtain the lifting or
withdrawal thereof as soon as possible.
(c) The Company will (i) on or before the Closing Date,
deliver to the Underwriters a signed copy of the Registration Statement as
originally filed and of each amendment thereto filed prior to the time the
Registration Statement becomes effective and, promptly upon the filing thereof,
a signed copy of each post-effective amendment, if any to the Registration
Statement (together with, in each case, all exhibits thereto unless previously
delivered to the Underwriter), (ii) as promptly as possible deliver to the
Underwriters, at such office as the Underwriters may designate, as many copies
of the Prospectus as the Underwriters may reasonably request, and (iii)
thereafter from time to
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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 the Underwriters may reasonably request for the purposes
contemplated by the 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 by in
writing by the Underwriters, 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 in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser of the Shares, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus or an amended prospectus
so that the Prospectus as so supplemented or amended will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances existing
at the time such Prospectus is delivered to such purchaser, not misleading. If,
after the initial public offering of the Shares by the Underwriters and during
such period, the Underwriters shall propose to vary the terms of the offering
thereof by reason of changes in general market conditions or otherwise, you will
advise the Company in writing of the proposed variation, and, if in the opinion
either of counsel for the Company or of counsel for the Underwriters such
proposed variation requires that the Prospectus be supplemented or amended, the
Company will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended prospectus setting forth such variation. The Company
authorizes the Underwriters and all dealers to whom any of the Shares may be
sold by the Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Shares in accordance with the
applicable provisions of the Act and the applicable rules and regulations
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 Shares for offer and sale under the securities or
blue sky laws of such jurisdictions as you may designate and, during the period
in which a prospectus is required by law to be delivered by an Underwriter or a
dealer, in keeping such qualifications in good standing under said securities or
blue sky laws; provided, however, that the Company shall not be required to
qualify as a foreign corporation or file any general consent to service of
process in any jurisdiction in which it is not so qualified.
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The Company will from time to time, prepare and file such statements, reports,
and other documents as are or may be required to continue such qualifications in
effect for so long a period as you may reasonably request for distribution of
the Shares.
(g) The Company agrees to pay all costs and expenses incident
to the performance of the obligations of the Company under this Agreement,
including, without limitation, 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 of the reports and information
referred to in paragraph (j) of this Section 6, and (vi) the printing and
issuance of stock certificates, including the transfer agent's fees.
(h) The Company agrees to reimburse you, for the account of
the several Underwriters, for blue sky fees and related disbursements (including
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 Shares under state securities or blue sky laws and in the review
of the offering by the NASD.
(i) As soon as practicable, but in any event not later than 45
days after the end of the first fiscal quarter first occurring after the first
anniversary of the Effective Date, the Company will make generally available to
its security holders, in the manner specified in Rule 158(b) of the rules and
regulations promulgated under the Act, an earnings statement which will be in
the detail required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the rules and regulations
promulgated thereunder.
(j) During a period of three years after 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.
(k) 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.
(l) The Company will not, directly or indirectly, without the
prior written consent of XX Xxxxxxxxx + Co., LLC on behalf of the Underwriters,
issue, offer, sell, grant any option to purchase or otherwise dispose (or
announce any issuance, offer, sale, grant of any option to purchase or other
disposition) of any shares of Common Stock
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or any securities convertible into, or exchangeable or exercisable for, shares
of Common Stock for a period of 180 days following the commencement of the
public offering of the Shares by the Underwriters, except pursuant to this
Agreement and except for issuances pursuant to the exercise of stock options
outstanding on or granted subsequent to the date hereof, pursuant to a stock
option or other employee benefit plan in existence on the date hereof and except
as contemplated by the Prospectus.
(m) The Company will cause the Shares to be duly included for
quotation on the Nasdaq National Market prior to the Closing Date.
(n) The Company will not take, directly or indirectly, and
will use its best efforts to cause its officers, directors or affiliates not to
take, directly or indirectly, any action designed to, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company.
(o) The Company will apply the net proceeds of the offering
received by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(p) The Company will timely file all such reports, forms or
other documents as may be required from time to time, under the Act, the rules
and regulations promulgated thereunder, the Exchange Act and the rules and
regulations promulgated thereunder, and all such reports, forms and documents
filed will comply as to form and substance with the applicable requirements
under the Act, the rules and regulations promulgated thereunder, the Exchange
Act and the rules and regulations promulgated thereunder.
(q) The Company is familiar with the Investment Company Act of
1940, as amended, 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 of 1940,
as amended, and the rules and regulations thereunder.
(r) The Company either has caused to be delivered to you or
will cause to be delivered to you prior to the effective date of the
Registration Statement a letter (the "Lock-Up Agreement") from (i) each of the
Company's directors, officers and holders of 5% or more of the outstanding
capital stock of the Company stating that such person agrees that he or she will
not, without the prior written consent of XX Xxxxxxxxx + Co., LLC, directly or
indirectly, sell, offer, contract or grant any option to sell (including without
limitation any short sale), pledge, transfer, establish an open "put equivalent
position" within the meaning of Rule 16a - 1 (h) under the Exchange Act or
otherwise dispose of (or enter into any transaction which is designed to, or
could be expected to, result in the disposition by any person of) any shares of
Common Stock, options or warrants to acquire shares of Common Stock, or
securities exchangeable
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or exercisable for or convertible into shares of Common Stock currently or
hereafter owned either of record or beneficially (within the meaning of Rule
13d-3 under the Exchange Act) by him or her, or publicly announce his or her
intention to do any of the foregoing, prior to the date of the Prospectus for a
period of 180 days after the first date any Underwritten Stock is released by
the Underwriters for sale to the public and (ii) each of the Company's other
stockholders containing identical restrictions to the Lock-Up Agreements
referred to in (i) above but covering a period of 90 days from the date of
prospectus.
7. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligations of the
several Underwriters under this Agreement are subject to the performance by the
Company on and as of the Closing Date or any later date on which Option Stock is
to be purchased, as the case may be, of its covenants and agreements hereunder,
and the following additional conditions:
(a) The Registration Statement shall have become effective,
and no stop order suspending the effectiveness of the Registration Statement
shall have been issued, and no proceedings for that purpose shall have been
instituted or threatened or, to the knowledge of the Company or the Underwriter,
shall be contemplated by the Commission.
(b) The Underwriters 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 a fact required to be stated therein or is necessary
to make the statements therein 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 an effective supplement or
amendment, (iii) since the respective dates as of which information is given in
the Registration Statement in the form in which it originally became effective
and the Prospectus contained therein, there has not been any material adverse
change or any development involving a prospective material adverse change in the
business, properties, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, and since such dates, except in
the ordinary course of business, neither the Company nor any of its subsidiaries
has entered into any material transaction not referred to in the Registration
Statement in the form in which it originally became effective and the Prospectus
contained therein, (iv) neither the Company nor any of its subsidiaries has any
material contingent obligations which are not disclosed in the Registration
Statement and the Prospectus, (v) there are not pending or known threatened
legal proceedings to which the Company or any of its subsidiaries is a party or
of which property of the Company or any of its subsidiaries is subject which are
material and which are not disclosed in the Registration Statement and the
Prospectus, (vi) there are not any franchises, contracts, leases or other
documents which are required to be filed as exhibits to the Registration
Statement which have not been filed as required, and (vii) the representations
and warranties of the Company herein are true and correct in all material
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respects as of the Closing Date or any later date on which Option Stock is to be
purchased, as the case may be.
(c) On or prior to the Closing Date, the legality and
sufficiency of the sale of the Shares hereunder and the validity and form of the
certificates representing the Shares, all corporate proceedings and other legal
matters incident to the foregoing, and the form of the Registration Statement
and of the Prospectus (except as to the financial statements contained therein),
shall have been approved at or prior to the Closing Date by Xxxxxxx Xxxx &
Xxxxxxxxx, counsel for the Underwriters. The Underwriters shall have received
from counsel to the Underwriters, such opinion or opinions with respect to the
issuance and sale of the Shares, the Registration Statement and the Prospectus
and such other related matters as the Underwriters reasonably may request and
such counsel shall have received such documents and other information as they
request to enable them to pass upon such matters.
(d) On the Closing Date, and if Option Stock is purchased at
any date after the Closing Date, on such later date, the Underwriters shall have
received an opinion addressed to the Underwriters, dated the Closing Date or, if
related to the later sale of Option Stock, such later date, of Xxxxxxxx Xxxxxxx
& Xxxxxxx, counsel to the Company, to the effect set forth below:
(i) Each of the Company and its subsidiaries has been
duly organized and is validly existing and in good standing
under the laws of its jurisdiction of incorporation or
formation, as the case may be, with full power and corporate
authority to own or, lease its properties and to conduct its
business as described in the Registration Statement and the
Prospectus and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in
which the ownership or leasing of property or the conduct of
its business requires such qualification (except for those
jurisdictions in which the failure so to qualify would not
have a material adverse effect on the Company and its
subsidiaries, taken as a whole);
(ii) Upon the closing of the sale of the Underwritten
Stock, the authorized capital stock of the Company consists of
1,000,000 shares of Preferred Stock, $.01 par value, of which
there are no outstanding shares, and 100,000,000 shares of
Common Stock, $0.01 par value, of which there are outstanding
________ shares (including the Underwritten Stock and any
shares of Option Stock issued on the date hereof). The
securities of the Company conform in all material respects to
the description thereof contained in the Prospectus. Proper
corporate proceedings have been validly taken to authorize the
Company's authorized capital stock and all outstanding shares
of such capital stock (including the Underwritten Stock
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have been duly authorized and validly issued by the Company,
are fully paid and nonassessable. Any Option Stock purchased
after the Closing Date has been duly authorized and when
issued and delivered to and paid for by the Underwriters as
provided in the Underwriting Agreement, will have been duly
and validly issued and be fully paid and nonassessable. No
preemptive rights, rights of first refusal or other rights
exist with respect to the Shares, or the issue and sale
thereof, pursuant to the Company's certificate of
incorporation or bylaws and, there are to the knowledge of
such counsel no contractual preemptive rights that have not
been waived, right of first refusal or rights of co-sale which
exist with respect to the Shares.
(iii) The outstanding shares of capital stock or
ownership interests of each of the Company's subsidiaries have
been duly authorized and validly issued, are fully paid and
non-assessable, and are solely owned by the Company free and
clear of all liens, encumbrances and equities and claims; and
no options, warrants or other rights to purchase, agreements
or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership
interests in such subsidiary are outstanding.
(iv) To such counsel's knowledge, there are no rights
of any holders of the Company's securities, not effectively
satisfied or waived, to require registration under the Act of
any of the Company's securities or other securities of the
Company in connection with the filing of the Registration
Statement or with the offer or sale of the Shares;
(v) The Company has full legal right, power, and
authority to enter into the Underwriting Agreement and to
consummate the transactions provided for therein. The
Underwriting Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and
binding agreement of the Company, enforceable in accordance
with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights
generally or by general principles of equity relating to the
availability of remedies and except as rights to indemnity and
contribution may be limited by federal or state securities
laws or the public policy underlying such laws.
(vi) None of the Company's execution or delivery of
the Underwriting Agreement, its performance thereof, its
consummation of the transactions contemplated therein or its
application of the net proceeds of
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the offering in the manner set forth under the caption "Use of
Proceeds," conflicts or will conflict with or results or will
result in any breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance
upon, any property or assets of the Company pursuant to the
terms of the certificate of incorporation, bylaws or operating
agreement of the Company or any of its subsidiaries; the terms
of any indenture, mortgage, deed of trust, voting trust
agreement, stockholder's agreement, note agreement or other
agreement or instrument known to such counsel to which the
Company or any of its subsidiaries is a party or by which it
is or may be bound or to which its properties may be subject;
any statute, rule or regulation of any regulatory body or
administrative agency or other governmental agency or body,
domestic or foreign, having jurisdiction over the Company or
any of its subsidiaries or any of their activities or
properties, which would materially and adversely affect the
business or properties of the Company and its subsidiaries
taken as a whole; or any judgment, decree or order, known to
such counsel of any government, arbitrator, court, regulatory
body or administrative agency or other governmental agency or
body, domestic or foreign, having such jurisdiction, which
would materially and adversely affect the business or
properties of the Company and its subsidiaries taken as a
whole;
(vii) No consent, approval, authorization or order of
any court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, has been or
is required for the consummation of the transactions
contemplated in the Underwriting Agreement, except such as
have been obtained under the Act or may be required under
state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(viii) To the best of such counsel's knowledge, the
conduct of the business of the Company and its subsidiaries is
not in violation of any federal, state or local statute,
administrative regulation or other law, which violation is
likely to have a material adverse effect on the Company and
its subsidiaries, taken as a whole; and each of the Company
and its subsidiaries has obtained all licenses, permits,
franchises, certificates and other authorizations from state,
federal and other regulatory authorities as are necessary or
required for the ownership, leasing and operation of its
properties and the conduct of its business as presently
conducted and as contemplated in the Prospectus;
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(ix) The Registration Statement is effective under
the Act; any required filing of the Prospectus pursuant to
Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); and no stop order suspending
the effectiveness of the Registration Statement or any
amendment thereto has been issued, and no proceedings for that
purpose have been instituted or are pending or, to the
knowledge of such counsel, are threatened or contemplated by
the Commission;
(x) The Registration Statement and the Prospectus
(except for the financial statements, schedules and other
financial data included therein, as to which such counsel need
not express any opinion), complied as to form in all material
respects with the requirements of the Act and the rules and
regulations of the Commission thereunder;
(xi)The descriptions contained and summarized in the
Registration Statement and the Prospectus of franchises,
contracts, leases, documents, or any threatened legal or
governmental actions, suits or proceedings, are accurate and
fairly represent in all material respects the information
required to be shown by the Act and the rules and regulations
of the Commission thereunder. To the knowledge of such
counsel, there are no franchises, contracts, leases,
documents, or any threatened legal or governmental actions,
suits or proceedings, which are required by the Act and the
rules and regulations of the Commission thereunder to be
described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement which
are not described or filed as required;
(xii) The statements (1) in the Prospectus under the
captions "Risk Factors - Our Efforts To Protect Our Trademarks
May Not Be Adequate To Prevent Third Parties From
Misappropriating Our Intellectual Property Rights," "Business
- Intellectual Property," Management," "Certain Transactions,"
"Description of Capital Stock" and "Shares Eligible for Future
Sale" and (2) in the Registration Statement in Part II, Items
14 and 15 in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information required
under the Act and the rules and regulations promulgated
thereunder (the "Act and Rules") with respect to such legal
matters, documents and proceedings and fairly summarize the
matters referred to therein to the extent required by the Act
and Rules;
(xiii) Good and marketable title to the Shares sold
under the Underwriting Agreement, free and clear of all liens,
encumbrances, equities, security interests and claims of which
counsel has knowledge, has
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been transferred to the Underwriters, assuming for the purpose
of this opinion that the Underwriters purchased the same in
good faith without notice of any liens, encumbrances,
equities, security interests or adverse claims; and
(xiv) The Shares have been duly authorized for
inclusion in The Nasdaq National Market upon official notice
of issuance.
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and representatives of the Company and
with the Company's independent public accountants, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Registration Statement and the Prospectus and
(without taking any further action to verify independently the statements made
in the Registration Statement and the Prospectus and, except as stated in the
foregoing opinion, without assuming responsibility for the accuracy,
completeness or fairness of such statements) nothing has come to such counsel's
attention that causes such counsel to believe that either the Registration
Statement as of the date it is declared effective and as of the Closing Date (or
if related to the later sale of the Option Stock, such later date) or the
Prospectus as of the date thereof and as of the Closing Date (or if related to
the later sale of the Option Stock, such later date) contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (it being understood that such counsel need not express any opinion
with respect to the financial statements, schedules and other financial data
included in the Registration Statement or the Prospectus).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials. References to the Registration
Statement and the Prospectus in this paragraph (d) shall include any amendment
or supplement thereto at the date of such opinion.
(e) You shall have received from Xxxxxx Xxxxxxxx LLP a letter
or letters, addressed to the Underwriters and dated the Closing Date and any
later date on which Option Stock is purchased, confirming that they are
independent public accountants with respect to the Company within the meaning of
the Act and the applicable published rules and regulations thereunder and based
upon the procedures described in their letter delivered to the Underwriters
concurrently with the execution of this Agreement (the "Original Letter"), but
carried out to a date not more than three business days prior to the Closing
Date or such later date on which Option Stock is purchased (i) confirming, to
the extent true, that the statements and conclusions set forth
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in the Original Letter are accurate as of the Closing Date or such later date,
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 the Original Letter or to reflect the availability of more recent
financial statements, data or information. The letters shall not disclose any
change, or any development involving a prospective change, in or affecting the
business or properties of the Company or any of its subsidiaries, which in your
sole judgment, makes it impractical or inadvisable to proceed with the public
offering of the Shares or the purchase of the Option Stock as contemplated by
the Prospectus.
(f) You shall have from Xxxxxx Xxxxxxxx LLP a letter stating
that their review of the Company's internal accounting controls, to the extent
they deemed necessary in establishing the scope of their examination of the
Company's financial statements as at June 30, 1999, did not disclose any
weakness in internal controls that they considered to be material weaknesses.
(g) On the Closing Date, and on any later date on which Option
Stock is purchased, you shall have received a certificate, dated the Closing
Date or such later date, as the case may be, signed by the Chief Executive
Officer and 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 amendments or supplements thereto and this Agreement, and that
the statements included in clauses (i) through (xiii) of paragraph (d) of this
Section 7 are true and correct.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Shares shall have been duly
authorized for inclusion on the Nasdaq National Market upon official notice of
issuance.
In case any of the conditions specified in this Section 7 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 (g) and (h) of
Section 6 hereof, and (ii) if this Agreement is terminated by you because of any
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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 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.
8. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
(a) The obligations of the Company to deliver the Shares shall
be subject to the conditions that (i) the Registration Statement shall have
become effective and (ii) no stop order suspending the effectiveness thereof
shall be in effect and no proceedings therefor shall be pending or threatened by
the Commission.
(b) In case either of the conditions specified in paragraph
(a) of this Section 8 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 (g) and (h) of Section 6 hereof.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (d) of this Section
9, the Company agrees to indemnify and hold harmless each Underwriter (and any
person participating in the distribution who is deemed to be an underwriter (as
defined in Section 2(11) of the Act) and each person (including each member or
officer thereof), if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which such indemnified parties or any of them may become
subject, under the Act, the Exchange Act or other federal or state statutory law
or regulation, at common law or otherwise, and the Company agrees to reimburse
each such Underwriter and controlling person for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages, 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 are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-
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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 any 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 required to be stated therein or necessary to make the
statements therein, in light of the circumstance under which they were made, not
misleading; provided, however, that (i) the indemnity agreement of the Company
contained in this paragraph (a) shall not apply to any such loss, claim, damage,
liability or action 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 expressly for use
in any Preliminary Prospectus or the Registration Statement or the Prospectus or
any such amendment thereof or supplement thereto, and (ii) that the indemnity
agreement contained in this paragraph (a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or such persons)
if the person asserting any such loss, claim, damage, liability or action
purchased Shares which are the subject thereof to the extent that any such loss,
claim, damage, liability or action (A) results from the fact that such
Underwriter failed to send or give a copy of the Prospectus (as amended or
supplemented) to such person at or prior to the confirmation of the sale of such
Shares to such person in any case where such delivery is required by the Act and
(B) arises out of or is based upon an untrue statement or omission of a material
fact contained in such Preliminary Prospectus that was corrected in the
Prospectus (as amended and supplemented), unless such failure resulted from
non-compliance 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 and payment for the Shares.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the Registration Statement, each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the
other Underwriters 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 Act, the Exchange Act or other federal or state statutory law
or regulation, at 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
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arising out of or are based upon (i) any untrue statement or alleged untrue
statement of any 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 any 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 required to be stated therein
or necessary to make the statements therein, in light of the circumstance under
which they were made, not misleading, in each case to the extent, but only to
the extent, that such statement or omission was made in reliance upon and in
conformity with information furnished as herein stated or otherwise furnished in
writing by or on behalf of such indemnifying Underwriter to the Company
expressly for use in the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto, and will reimburse, as incurred, all
legal or other expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. 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 and payment for the Shares.
(c) Each party indemnified under the provisions of paragraph
(a) or (b) of this Section 9 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, such indemnified party will promptly notify any party or parties
from whom indemnification may be sought hereunder of the commencement thereof in
writing. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give such notice if the party to whom such
notice was not given was unaware of the action, suit, investigation, inquiry or
proceeding to which such 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 or parties against which a claim is
to be made will be entitled, at its own expense, to participate in the defense
of such action, suit, investigation or inquiry of, an indemnified party. Any
indemnifying party shall be entitled, if it so elects within a reasonable time
after receipt of notice from the indemnified party or parties of an action,
suit, investigation or inquiry to which indemnity
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may be sought, to assume the entire defense thereof (alone or in conjunction
with any other indemnifying party or parties), at its own expense, in which case
such defense shall be conducted by counsel reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties has reasonably concluded 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
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 such 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. Upon receipt of notice
from the indemnifying party to such indemnified party of its 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 9 for any legal or other expenses (other than the reasonable
costs of investigation) subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party has
employed such counsel in connection with the assumption of different or
additional legal defenses in accordance with the proviso to the immediately
preceding sentence, or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. If no such notice to assume the defense of such action has
been given within a reasonable time of the indemnified party's or parties'
notice to such indemnifying party or parties, 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 9 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any losses, claims, damages, expenses
or liabilities (or actions in respect thereof) referred to therein, 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 such losses, claims, damages or liabilities (or actions in respect thereof)
referred to in paragraphs (a) and (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified, on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative
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benefits received by the Company, on the one hand, and the Underwriters, on the
other, shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Shares (before deducting expenses) and the total
underwriting discount received by the Underwriters, in each case as set forth in
the table on the cover page of the Prospectus, bear to the aggregate public
offering price of the Shares. Relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by each indemnifying party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable consideration referred to above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this paragraph (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph (d), no Underwriter
shall be required to contribute any amount in excess of the underwriting
discount applicable to the Shares purchased by the Underwriter hereunder. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 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 to which a claim for contribution may be made against another
party or parties under this paragraph (d), it will promptly notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any other obligation it may have hereunder or otherwise
(except as specifically provided in paragraph (c) of this Section 9). The
contribution agreement set forth above shall be in addition to any liabilities
which any indemnifying party may have at common law or otherwise.
(e) No indemnifying party will, without the prior written
consent of the indemnified party, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or proceeding
in respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any person who controls such Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act is a party to such
claim, action, suit or proceeding) unless
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such settlement, compromise or consent includes an unconditional release of such
indemnified party and each such controlling person from all liability arising
out of such claim, action, suit or proceeding.
10. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 9 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 9 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 10 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent that any such payment
is ultimately held to be improper, the Underwriters shall promptly refund it and
(ii) the Underwriters shall provide to the Company, upon request, reasonable
assurances of their ability to effect any refund, when and if due.
11. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers, and the Underwriters,
respectively, set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriters, and will survive delivery of and payment for the Shares. Any
successors to the Underwriters shall be entitled to the indemnity, contribution
and reimbursement agreements contained in this Agreement.
12. TERMINATION.
(a) This Agreement (except for the provisions of Section 9
hereof) may be terminated by you by notice to the Company at any time prior to
the Closing Date if: (i) the Company shall have sustained a loss by strike,
fire, flood, accident or other calamity of such a character as to interfere
materially with the conduct of the business and operations of the Company
regardless of whether or not such loss was insured; (ii) trading in the Common
Stock shall have been suspended or trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market
shall have been suspended or limitations on such trading shall have been imposed
or limitations on prices shall have been established on any such exchange or
market system; (iii) the engagement in hostilities or an escalation of major
hostilities by the United States or the declaration of war or a national
emergency by the United States on or after the date hereof shall have occurred;
(iv) any outbreak of hostilities or other national or international calamity or
crisis or material adverse change in economic or political conditions shall have
occurred 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
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your reasonable judgment, make the offering or delivery of the Shares
impracticable; (v) 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 shall have occurred which in the Underwriter's reasonable
opinion materially and adversely affects or will materially or adversely affect
the business or operations of the Company; (vi) a banking moratorium shall have
been declared by New York or United States authorities; or (vii) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs shall have occurred which in your reasonable judgment
has a material adverse effect on the securities markets in the United States.
(b) If this Agreement is terminated pursuant to this Section
12, 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 (g) and (h) of Section 6. Notwithstanding any
termination of this agreement, the provisions of Section 9 hereof shall survive
and remain in full force and effect.
13. NOTICES. All communications hereunder shall be in writing and if
sent to the Underwriters shall be mailed or delivered or telegraphed and
confirmed by letter or telecopied and confirmed by letter to XX Xxxxxxxxx + Co.,
LLC at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 or, if sent to the
Company, shall be mailed or delivered or telegraphed and confirmed to the
Company at 00 Xxxxx Xxxx, Xxxxx, XX 00000.
14. SUCCESSORS. This agreement shall incur to the benefit of and be
binding upon the Company and the Underwriters and, with respect to the
provisions of Section 9 hereof, the several parties (in addition to the Company
and the Underwriters) indemnified under the provisions of said Section 9, and
their respective personal representatives successors and assigns. Nothing in
this agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this agreement,
or any provisions herein contained. The term "successors and assigns" as herein
used shall not include any purchaser, as such purchaser, of any of the Shares
from the Underwriters.
15. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
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If the foregoing correctly sets forth our understanding, please
indicate the Underwriters' acceptance thereof in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement between
us.
Very truly yours,
XXXXXXX.XXX, INC.
By:_____________________________________
Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer and President
Accepted as of the date first above written:
XX XXXXXXXXX + CO., LLC
DLJ DIRECT INC.
ADVEST, INC.
By: XX Xxxxxxxxx + Co., LLC
By:_________________________________________________
Title:______________________________________________
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SCHEDULE I
UNDERWRITERS
Underwriters Number of Shares
------------ to be Purchased
----------------
XX Xxxxxxxxx + Co., LLC.....................................
DLJ direct Inc.
Advest, Inc.................................................
