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EXHIBIT 1.1
DRAFT 1/20/00
4,500,000 SHARES
eMERGE INTERACTIVE, INC.
CLASS A COMMON STOCK, PAR VALUE $.008 PER SHARE
UNDERWRITING AGREEMENT
DATED FEBRUARY __, 2000
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February __, 2000
Xxxxx, Xxxxxxxx & Xxxx, Inc.
First Union Capital Markets Corp.
FAC/Equities, a division of First Albany Corporation
As Representatives of the several Underwriters
x/x Xxxxx, Xxxxxxxx & Xxxx, Xxx.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
Introduction. eMerge Interactive, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to the several underwriters named in
Schedule A hereto (the "UNDERWRITERS"), and certain stockholders of the Company
(the "SELLING STOCKHOLDERS") named in Schedule B hereto severally propose to
sell to the several Underwriters, an aggregate of 4,500,000 shares of the class
A common stock, par value $.008 per share, of the Company (the "FIRM Shares"),
of which 3,694,000 shares are to be issued and sold by the Company and 806,000
shares are to be sold by the Selling Stockholders, with each Selling Stockholder
selling the number of shares set forth opposite such Selling Stockholder's name
in Schedule B hereto.
The Company also proposes to issue and sell to the several
Underwriters not more than an additional 675,000 shares of its class A common
stock, par value $.008 per share (the "ADDITIONAL SHARES"), if and to the extent
that you shall have determined to exercise, on behalf of the Underwriters, the
right to purchase such shares of common stock granted to the Underwriters in
Section 3 hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "SHARES". The shares of class A common stock,
par value $.008 per share, of the Company to be outstanding after giving effect
to the sales contemplated hereby are hereinafter referred to as the "COMMON
STOCK". The Company and the Selling Stockholders are hereinafter sometimes
collectively referred to as the "SELLERS". Xxxxx, Xxxxxxxx & Xxxx, Inc., First
Union Capital Markets Corp., and FAC/Equities, a division of First Albany
Corporation have agreed to act as representatives of the several Underwriters
(in such capacity, the "REPRESENTATIVES") in connection with the offering and
sale of the Shares.
In addition to the Firm Shares, the Company proposes to issue
and sell, and a certain stockholder of the Company proposes to sell, an
aggregate of 3,500,000 shares (the "SSP SHARES") of Common Stock directly to
certain stockholders of Safeguard Scientifics, Inc. (or, if all such shares are
not so purchased, to Safeguard Scientifics, Inc.).
The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement on Form S-1 (file no.
333-89815), including a prospectus, relating to the Shares. The registration
statement as amended at the time it becomes effective, including the information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended
(the "SECURITIES ACT") is hereinafter referred to as the "REGISTRATION
STATEMENT"; the prospectus in the form first used to confirm sales of Shares is
hereinafter referred to as the "PROSPECTUS". If the Company has filed a
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"),
then any reference herein to the term "REGISTRATION STATEMENT" shall be deemed
to include such Rule 462 Registration Statement. All
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references in this Agreement to the Registration Statement, the Rule 462
Registration Statement, a preliminary prospectus, the Prospectus, or any
amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX").
As part of the offering contemplated by this Agreement, Xxxxx
Xxxxxxxx & Xxxx, Inc. has agreed to reserve, out of the Shares set forth
opposite its name on Schedule A to this Agreement, up to 350,000 Shares, for
sale to the Company's employees, officers and directors and other parties
associated with the Company (collectively, "PARTICIPANTS"), as set forth in the
Prospectus under the heading "Plan of Distribution" (the "COMPANY FRIENDS
Program"). Xxxxx Xxxxxxxx & Xxxx, Inc. has also agreed to reserve, out of the
Shares set forth opposite its name on Schedule A to this Agreement, up to
700,000 Shares, for sale to certain identified investors (the "IDENTIFIED
INVESTORS"), as set forth in the Prospectus under the heading "Plan of
Distribution". The Shares to be sold by Xxxxx, Xxxxxxxx & Xxxx, Inc. pursuant to
the Company Friends Program (the "COMPANY FRIENDS SHARES") and the Shares to be
sold by Xxxxx, Xxxxxxxx & Xxxx, Inc. to the Identified Investors (the
"IDENTIFIED INVESTORS SHARES") will be sold by Xxxxx, Xxxxxxxx & Xxxx, Inc.
pursuant to this Agreement at the Public Offering Price (as defined below). Any
Company Friends Shares and Identified Investors Shares not orally confirmed for
purchase by any Participants or Identified Investors by the end of the first
business day after the date on which this Agreement is executed will be offered
to the public by Xxxxx, Xxxxxxxx & Xxxx, Inc. as set forth in the Prospectus.
The Company Friends Program and the sales of Identified Investors Shares are
separate and apart from the Safeguard Subscription Program (i.e., the program
used by the Company to issue and sell the SSP Shares) described in the
Prospectus under the heading "Plan of Distribution" and the sub-heading
"Safeguard Subscription Program".
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
1.1. Effective Registration Statement. The Registration
Statement has become effective; no stop order suspending the effectiveness of
the Registration Statement is in effect, and no proceedings for such purpose are
pending before or threatened by the Commission.
1.2. Contents of Registration Statement. (i) The Registration
Statement, when it became effective, did not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) the Registration Statement
and the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions under the
heading "Plan of Distribution" in (i) the list of Underwriters and their
respective participation in the sale of Shares, (ii) the sentences related to
concessions and reallowances and (iii) the paragraphs related to stabilization,
syndicate covering transactions and penalty bids in the Registration Statement
or Prospectus.
1.3. Due Incorporation. The Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries.
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1.4. Subsidiaries. Each subsidiary of the Company has been
duly incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries. All of the issued shares of
capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable, have been issued in
compliance with federal and state securities laws, and are owned directly by the
Company, free and clear of all liens, encumbrances, equities or claims.
1.5. No Prohibition on Subsidiaries Paying Dividends or Making
Other Distributions. No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company or any
other subsidiary of the Company, except as described in or contemplated by the
Prospectus.
1.6. Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by the Company, and is a valid and binding
agreement of the Company, enforceable in accordance with its terms, except as
rights to indemnification hereunder may be limited by applicable law and except
as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
1.7. Description of Capital Stock. The authorized capital
stock of the Company conforms to the description thereof contained in the
Prospectus. The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under the caption "Capitalization" (other than
for subsequent issuances, if any, pursuant to employee benefit plans described
in the Prospectus or upon exercise of outstanding options described in the
Prospectus). None of the outstanding Common Shares were issued in violation of
any preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of its
subsidiaries other than those described in the Prospectus. The description of
the Company's stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, set forth in the Prospectus
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
1.8. Authorized Stock. The shares of Common Stock (including
the Shares to be sold by the Selling Stockholders) outstanding prior to the
issuance of the Shares and the SSP Shares to be sold by the Company have been
duly authorized and are validly issued, fully paid and non-assessable and have
been issued in compliance with federal and state securities laws.
1.9. Validly Issued Shares. The Shares and the SSP Shares to
be sold by the Company have been duly authorized and, when issued and delivered
in accordance with the terms of this Agreement, will be validly issued, fully
paid and non-assessable, and will be issued in compliance with federal and state
securities laws, and the issuance of such Shares will not be subject to any
preemptive or similar rights that have not been waived.
1.10. No Conflict. The execution and delivery by the Company
of, and the performance by the Company of its obligations under, this Agreement
will not conflict with, result in a breach or violation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its
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subsidiaries pursuant to any provision of applicable law or the charter or
by-laws of the Company or any of its subsidiaries or any agreement or other
instrument binding upon the Company or any of its subsidiaries, or any judgment,
order or decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is required for
the performance by the Company of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of the various states
in connection with the offer and sale of the Shares.
1.11. No Defaults or Violations. Neither the Company nor any
subsidiary is in violation or default of (i) any provision of its charter or
by-laws, (ii) the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its property
is subject or (iii) any statute, law, rule, regulation, judgment, order or
decree of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or such
subsidiary or any of its properties, as applicable, except any such violation or
default which would not, singly or in the aggregate, result in a material
adverse change and except as otherwise disclosed in the Prospectus.
1.12. No Material Adverse Change. There has not occurred any
material adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries from that set forth
in the Prospectus (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement).
1.13. Independent Accountants. KPMG LLP, who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) and supporting schedules
filed with the Commission as a part of the Registration Statement and included
in the Prospectus, are independent public or certified public accountants as
required by the Securities Act.
1.14. Preparation of the Financial Statements. The financial
statements filed with the Commission as a part of the Registration Statement and
included in the Prospectus present fairly the consolidated financial position of
the Company and its subsidiaries as of and at the dates indicated and the
results of their operations and cash flows for the periods specified. The
supporting schedules included in the Registration Statement present fairly the
information required to be stated therein. Such financial statements and
supporting schedules have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes thereto. No
other financial statements or supporting schedules are required to be included
in the Registration Statement. The financial data set forth in the Prospectus
under the captions "Prospectus Summary--Summary Consolidated Financial Data",
"Selected Consolidated Financial Data" and "Capitalization" fairly present the
information set forth therein on a basis consistent with that of the audited
financial statements contained in the Registration Statement.
1.15. Legal Proceedings; Exhibits. There are no legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
1.16. Compliance with Securities Act. Each preliminary
prospectus filed as part of the registration statement as originally filed or as
part of any amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, complied when so filed in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder.
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1.17. Not an Investment Company. The Company is not and, after
giving effect to the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
1.18. Compliance with Laws. The Company and its subsidiaries
(i) are in compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("ENVIRONMENTAL Laws"), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, individually or in the
aggregate, have a material adverse effect on the Company and its subsidiaries.
1.19. No Environmental Costs. There are no costs or
liabilities associated with Environmental Laws (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) which would, individually or in the aggregate,
have a material adverse effect on the Company and its subsidiaries.
1.20. No Registration Rights. There are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company or to require
the Company to include such securities with the Shares registered pursuant to
the Registration Statement other than as described in the Registration Statement
and as have been waived in writing in connection with the offering contemplated
hereby.
1.21. Cuban Business Statute. The Company has complied with
all provisions of Section 517.075, Florida Statutes relating to doing business
with the Government of Cuba or with any person or affiliate located in Cuba.
1.22. Absence of Material Charges. Subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, (1) the Company and its subsidiaries have not incurred any
material liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (2) the Company and
the subsidiaries have not repurchased or redeemed any of their outstanding
capital stock, nor declared, paid or otherwise made any dividend or distribution
of any kind on their capital stock, except for dividends paid to the Company;
and (3) there has not been any material change in the capital stock, short-term
debt or long-term debt of the Company and its subsidiaries, except in each case
as described in the Prospectus.
1.23. Good Title to Properties. The Company and its
subsidiaries have good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, in each case free
and clear of all liens, encumbrances and defects except such as are described in
the Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
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1.24. Tax Law Compliance. The Company and its subsidiaries
have filed all necessary federal, state and foreign income and franchise tax
returns and have paid all taxes required to be paid by any of them and, if due
and payable, any related or similar assessment, fine or penalty levied against
any of them. The Company has made adequate charges, accruals and reserves in the
applicable financial statements referred to in Section 1.14 above in respect of
all federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its subsidiaries has not been
finally determined. The Company is not aware of any tax deficiency that has been
or might be asserted or threatened against the Company that could result in a
material adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries from that
set forth in the Prospectus.
1.25. Intellectual Property Rights. The Company and its
subsidiaries own or possess adequate rights to or under all patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently in
connection with the business now operated by them or proposed to be operated by
them as described in the Prospectus, and neither the Company nor any of its
subsidiaries is infringing or is in conflict with, or has received any notice of
infringement of or conflict with, asserted rights of others with respect to any
of the foregoing. The Company has no knowledge of any infringement of or
conflict with asserted rights of the Company or its subsidiaries by others with
respect to any patents, patent rights, copyrights, know-how, trademarks, service
marks or trade names. There is no claim being made against the Company or any
subsidiary regarding patents, patent rights, licenses, inventions, copyrights,
know-how, trademarks, service marks or trade names. The Company and its
subsidiaries will not in the conduct the business proposed to be operated by
them as described in the Prospectus infringe or conflict with patents, patent
rights, licenses, inventions, copyrights, know-how, trademarks, service marks or
trade names of any other party.
1.26. No Labor Disputes. No material labor dispute with the
employees of the Company or any of its subsidiaries exists, or, to the knowledge
of the Company, is imminent; and the Company is not aware of any existing,
threatened or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that could have a material
adverse effect on the Company and its subsidiaries.
1.27. Insurance. The Company and its subsidiaries are insured
by the insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in
which they are engaged; and neither the Company nor any of its subsidiaries has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a material adverse effect on the Company and its subsidiaries.
1.28. Governmental Permits. The Company and its subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective business, and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a material adverse effect on the Company and its subsidiaries.
1.29. Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (1) transactions are executed in accordance
with management's general or specific authorizations; (2) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (3) access to assets is permitted only in accordance with
management's
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general or specific authorization; and (4) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
1.30. Year 2000 Compliance. The Company has reviewed its
operations and that of its subsidiaries and any third parties with which the
Company or any of its subsidiaries has a material relationship to evaluate the
extent to which the business or operations of the Company or its subsidiaries
will be affected by the Year 2000 Problem. As a result of such review, the
Company has no reason to believe, and does not believe, that the Year 2000
Problem will have a material adverse effect on the Company and its subsidiaries,
or result in any material loss or interference with the Company's business or
operations. The "Year 2000 Problem" as used herein means any significant risk
that computer hardware or software used in the receipt, transmission,
processing, manipulation, storage, retrieval, retransmission or other
utilization of data or in the operation of mechanical or electrical systems of
any kind will not, in the case of dates or time periods occurring after December
31, 1999, function at least as effectively as in the case of dates or time
periods occurring prior to January 1, 2000.
1.31. Lock-up Agreements. Each person listed on Schedule C
hereto has signed an agreement substantially in the form attached hereto as
Exhibit A (the "Lock-up Agreements"). The Company has provided to counsel for
the Underwriters a complete and accurate list of all securityholders of the
Company and the number and type of securities held by each securityholder. The
Company has provided to counsel for the Underwriters true, accurate and complete
copies of all of the Lock-up Agreements presently in effect or effected hereby.
The Company hereby represents and warrants that it will not release any of its
officers, directors or other stockholders from any Lock-up Agreements currently
existing or hereafter effected without the prior written consent of Xxxxx,
Xxxxxxxx & Xxxx, Inc.
1.32. Related Party Transactions. There are no business
relationships or related-party transactions involving the Company or any
subsidiary or any other person required to be described in the Prospectus that
have not been described as required.
1.33. Company Friends Program. The Company represents and
warrants to Xxxxx, Xxxxxxxx & Xxxx, Inc. that (i) the Registration Statement,
the Prospectus and any preliminary prospectus comply, and any further amendments
or supplements thereto will comply, with any applicable laws or regulations of
foreign jurisdictions in which the Prospectus or any preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection with the
Company Friends Program, and that (ii) no authorization, approval, consent,
license, order, registration or qualification of or with any government,
governmental instrumentality or court, other than such as have been obtained, is
necessary under the securities laws and regulations of foreign jurisdictions in
which the Company Friends Shares are offered outside the United States.
1.34. Compliance with Certain Laws. To the Company's
knowledge, the Company and its subsidiaries are conducting their business in
compliance with the Fair Labor Standards Act, the rules and regulations of the
federal Food and Drug Administration, and all applicable federal, state and
local laws, rules and regulations of the jurisdictions in which it is conducting
business, including, without limitation, all applicable local, state and federal
laws and regulations governing health, sanitation, safety, the purchase and sale
of alcoholic beverages (including, but not limited to, liquor licenses, "tied
house" statutes and "dram shop" statutes), environmental matters, zoning and
land use, except where the failure to be so in compliance would not have a
material adverse effect on the Company and its subsidiaries.
2. Representations and Warranties of the Selling Stockholders.
Each of the Selling Stockholders represents and warrants to and agrees with each
of the Underwriters that:
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2.1. Due Authorization. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling Stockholder
and is a valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
2.2. Selling Stockholder Documents. The Custody Agreement and
the Power of Attorney have been duly authorized, executed and delivered by such
Selling Stockholder and are valid and binding agreements of such Selling
Stockholder enforceable in accordance with their respective terms, except as
rights to indemnification thereunder may be limited by applicable law and except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
2.3. No Conflict. The execution and delivery by such Selling
Stockholder of, and the performance by such Selling Stockholder of its
obligations under, this Agreement, the Custody Agreement signed by such Selling
Stockholder and ____________, as Custodian, relating to the deposit of the
Shares to be sold by such Selling Stockholder (the "CUSTODY AGREEMENT") and the
Power of Attorney appointing certain individuals as such Selling Stockholder's
attorneys-in-fact to the extent set forth therein, relating to the transactions
contemplated hereby and by the Registration Statement (the "POWER OF ATTORNEY")
will not contravene any provision of applicable law, or the applicable charter
documents or by-laws of such Selling Stockholder (if such Selling Stockholder is
an entity), or any agreement or other instrument binding upon such Selling
Stockholder or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over such Selling Stockholder, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by such Selling Stockholder of
its obligations under this Agreement or the Custody Agreement or Power of
Attorney of such Selling Stockholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Shares.
2.4. Validly Issued Shares. The Shares to be sold by such
Selling Stockholder pursuant to this Agreement have been duly authorized and are
validly issued, fully paid and non-assessable.
2.5. Good Title to Shares. Such Selling Stockholder has, and
on each Closing Date will have, valid title to the Shares to be sold by such
Selling Stockholder and the legal right and power, and all authorization and
approval required by law, to enter into this Agreement, the Custody Agreement
and the Power of Attorney and to sell, transfer and deliver the Shares to be
sold by such Selling Stockholder.
2.6. Delivery of Common Shares. Delivery of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement will pass title to
such Shares free and clear of any security interests, claims, liens, equities
and other encumbrances.
2.7. No Registration Rights. Such Selling Stockholder does not
have any registration or other similar rights to have any equity or debt
securities registered for sale by the Company under the Registration Statement
or included in the offering contemplated by this Agreement, other than as
described in the Registration Statement and as have been waived in writing in
connection with the offering contemplated hereby.
2.8. No Price Stabilization or Manipulation. Such Selling
Stockholder has not taken and will not take, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.
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2.9. Confirmation of Company Representations and Warranties.
Such Selling Stockholder has no reason to believe that the representations and
warranties of the Company contained in Section 1 hereof are not true and
correct, is familiar with the Registration Statement and the Prospectus and has
no knowledge of any material fact, condition or information not disclosed in the
Registration Statement or the Prospectus which has had or may have a material
adverse effect on the Company and its subsidiaries, and is not prompted to sell
any of the Shares by any information concerning the Company which is not set
forth in the Registration Statement and the Prospectus.
3. Purchase and Sale Agreements.
3.1. Firm Shares. Each Seller, severally and not jointly,
hereby agrees to sell to the several Underwriters, and each Underwriter, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees, severally and not jointly, to
purchase from such Seller at $______ a share (the "PURCHASE PRICE") the number
of Firm Shares (subject to such adjustments to eliminate fractional shares as
you may determine) that bears the same proportion to the number of Firm Shares
to be sold by such Seller as the number of Firm Shares set forth in Schedule A
hereto opposite the name of such Underwriter bears to the total number of Firm
Shares.
3.2. Additional Shares. On the basis of the representations
and warranties contained in this Agreement, and subject to its terms and
conditions, the Company agrees to sell to the Underwriters, and the Underwriters
shall have a one-time right to purchase, up to 675,000 Additional Shares at the
Purchase Price. If you, on behalf of the Underwriters, elect to exercise such
option, you shall so notify the Company in writing not later than thirty (30)
days after the date of this Agreement, which notice shall specify the number of
Additional Shares to be purchased by the Underwriters and the date on which such
shares are to be purchased. Such date may be the same as the Closing Date (as
defined below) but not earlier than the Closing Date nor later than ten (10)
business days after the date of such notice. Additional Shares may be purchased
as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule A hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
3.3. Market Standoff Provision. Each Seller hereby agrees
that, without the prior written consent of Xxxxx, Xxxxxxxx & Xxxx, Inc., it will
not, during the period ending 180 days after the date of the Prospectus, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Shares to be sold hereunder or (B) the issuance by the Company of
shares of Common Stock upon the exercise of options or warrants or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing and which is described in the
Prospectus. In addition, each Selling Stockholder, agrees that, without the
prior written consent of Xxxxx, Xxxxxxxx & Xxxx, Inc., it will not, during the
period ending 180 days after the date of the Prospectus, make any demand for, or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
3.4. Terms of Public Offering. The Sellers are advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration
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Statement and this Agreement have become effective as in your judgment is
advisable. The Sellers are further advised by you that the Shares are to be
offered to the public initially at $_____________ a share (the "PUBLIC OFFERING
PRICE") and to certain dealers selected by you at a price that represents a
concession not in excess of $______ a share under the Public Offering Price, and
that any Underwriter may allow, and such dealers may reallow, a concession, not
in excess of $_____ a share, to any Underwriter or to certain other dealers.
3.5. Management Fee. On the Closing Date (as defined below),
the Company shall pay the Representatives a management fee (the "SSP MANAGEMENT
FEE") in respect of the Safeguard Subscription Program described in the
Prospectus equal to 2.8% of the product of (x) 3,500,000 and (y) $______.
4. Payment and Delivery.
4.1. Firm Shares. Payment for the Firm Shares to be sold by
each Seller shall be made to such Seller in immediately available funds against
delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on ________, 2000, or at such
other time on the same or such other date, not later than _________, 2000, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "CLOSING DATE". The Representatives shall deduct
from the payment for the Firm Shares made to the Company the SSP Management Fee
specified in Section 3.5.
4.2. Additional Shares. Payment for any Additional Shares
shall be made to the Company in immediately available funds in New York City
against delivery of such Additional Shares for the respective accounts of the
several Underwriters at 10:00 a.m., New York City time, on the date specified in
the notice described in Section 3(b) or at such other time on the same or on
such other date, in any event not later than _______, 2000, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "OPTION CLOSING DATE".
4.3. Delivery of Certificates. Certificates for the Firm
Shares and Additional Shares shall be in definitive form and registered in such
names and in such denominations as you shall request in writing not later than
one (1) full business day prior to the Closing Date or the Option Closing Date,
as the case may be. The certificates evidencing the Firm Shares and Additional
Shares shall be delivered to you on the Closing Date or the Option Closing Date,
as the case may be, for the respective accounts of the several Underwriters,
with any transfer taxes payable in connection with the transfer of the Shares to
the Underwriters duly paid, against payment of the Purchase Price therefor.
5. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
5.1. Furnish Copies of Registration Statement and Prospectus.
To furnish to you, without charge, four signed copies of the Registration
Statement (including exhibits thereto) and for delivery to each other
Underwriter a conformed copy of the Registration Statement (without exhibits
thereto) and to furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in Section 5(c) below, as many copies
of the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
5.2. Notification of Amendments or Supplements. Before
amending or supplementing the Registration Statement or the Prospectus, to
furnish to you a copy of each such proposed amendment or supplement and not to
file any such proposed amendment or supplement to which you reasonably object,
and
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to file with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed pursuant to
such rule.
5.3. Filings of Amendments or Supplements. If, during such
period after the first date of the public offering of the Shares as in the
opinion of counsel for the Underwriters the Prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer (the "PROSPECTUS
DELIVERY PERIOD"), any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers (whose names
and addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon request,
either amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
5.4. Blue Sky Laws. To endeavor to qualify the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions as
you shall reasonably request.
5.5. Earnings Statement. To make generally available to its
securityholders as soon as practicable, but in any event not later than eighteen
(18) months after the effective date of the Registration Statement (as defined
in Rule 158(c) under the Securities Act), an earnings statement of the Company
and its subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the rules and regulations thereunder (including, at the
option of the Company, Rule 158).
5.6. Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Shares sold by it substantially in the manner described
under the caption "Use of Proceeds" in the Prospectus.
5.7. Transfer Agent. The Company shall engage and maintain, at
its expense, a registrar and transfer agent for the Common Stock.
5.8. Periodic Reporting Obligations. During the Prospectus
Delivery Period, the Company shall file, on a timely basis, with the Commission
and the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act. Additionally, the Company shall file with the Commission
such information on Form 10-Q or Form 10-K as may be required by Rule 463 under
the Securities Act.
5.9. Company Friends Program. That in connection with the
Company Friends Program, the Company will ensure that the Company Friends Shares
will be restricted to the extent required by the National Association of
Securities Dealers, Inc. (the "NASD") or the NASD rules from sale, transfer,
assignment, pledge or hypothecation for a period of three (3) months following
the date of the effectiveness of the Registration Statement. Xxxxx, Xxxxxxxx &
Xxxx, Inc. will notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time. Furthermore, the
Company covenants with Xxxxx, Xxxxxxxx & Xxxx, Inc. that the Company will comply
with all applicable securities and other applicable laws, rules and regulations
in each foreign jurisdiction in which the Company Friends Shares are offered in
connection with the Company Friends Program.
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5.10. Exchange Act Compliance. During the Prospectus Delivery
Period, the Company will file all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Age in the manner
and within the time periods required by the Exchange Act.
6. Conditions to the Underwriters' Obligations. The
obligations of the Sellers to sell the Shares to the several Underwriters and
the several obligations of the Underwriters to purchase and pay for the Shares
on the Closing Date are subject to the following conditions:
6.1. Effective Registration Statement. The Registration
Statement shall have become effective not later than 10:00 a.m. (New York City
time) on the date hereof.
6.2. Rule 462 Registration Statement. If the Company elects to
rely upon Rule 462(b), the Company shall file a Rule 462 Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for the Rule 462 Registration
Statement or give irrevocable instructions for the payment of such fee pursuant
to Rule 111(b) under the Securities Act.
6.3. Prospectus Filed with Commission. The Company shall have
filed the Prospectus with the Commission (including the information required by
Rule 430A under the Securities Act) in the manner and within the time period
required by Rule 424(b) under the Securities Act; or the Company shall have
filed a post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective amendment shall
have become effective.
6.4. No Stop Order. No stop order suspending the effectiveness
of the Registration Statement, any Rule 462 Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and
no proceedings for such purpose shall have been instituted or threatened by the
Commission.
6.5. No NASD Objection. The NASD shall have raised no
objection to the fairness and reasonableness of the underwriting terms and
arrangements.
6.6. No Debt Downgrading. There shall not have occurred any
downgrading, nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
6.7. No Material Adverse Change. There shall not have occurred
any change, or any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries from that set forth in the Prospectus (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement)
that, in your judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
6.8. Officer's Certificate. The Underwriters shall have
received on the Closing Date a certificate, dated the Closing Date and signed by
the Chief Executive Officer or President of the Company, to the effect set forth
in Sections 6.4 and 6.7 above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and correct as of
the Closing Date and that the Company has complied with all of the agreements
and satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
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6.9. Opinion of Company Counsel. The Underwriters shall have
received on the Closing Date an opinion of Xxxxxx, Xxxxx & Bockius LLP, counsel
for the Company, dated the Closing Date, in a form acceptable to the
Representatives. The opinion shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
6.10. Opinion of Selling Stockholders Counsel. The
Underwriters shall have received on the Closing Date an opinion of Xxxxxx, Xxxxx
& Xxxxxxx LLP, counsel for the Selling Stockholders, dated the Closing Date, in
a form acceptable to the Representatives. The opinion shall be rendered to the
Underwriters at the request of the Selling Stockholders and shall so state
therein.
6.11. Opinion of Underwriters Counsel. The Underwriters shall
have received on the Closing Date an opinion of Xxxx and Xxxx LLP, counsel for
the Underwriters, dated the Closing Date, in a form acceptable to the
Representatives.
6.12. Accountant's Comfort Letter. The Underwriters shall have
received, on each of the date hereof and the Closing Date, a letter dated the
date hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from KPMG LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus; provided that the letter delivered on the Closing
Date shall use a "cut-off date" not earlier than the date hereof.
6.13. Lock-Up Agreements. The Lock-up Agreements shall be in
full force and effect on the Closing Date.
6.14. Selling Stockholders Certificate. The Underwriters shall
have received on the Closing Date a certificate, dated the Closing Date and
signed by the Attorney-in-Fact of each Selling Stockholder, to the effect that
the representations and warranties of such Selling Stockholders contained in
this Agreement are true and correct as of the Closing Date and that such Selling
Stockholders have complied with all of the agreements and satisfied all of the
conditions on their part to be performed or satisfied hereunder on or before the
Closing Date.
6.15. Selling Stockholder Documents. On the date hereof, the
Company and the Selling Stockholders shall have furnished for review by the
Representatives copies of the Powers of Attorney and Custody Agreements executed
by each of the Selling Stockholders and such further information, certificates
and documents as the Representatives may reasonably request.
6.16. Additional Documents. On the Closing Date, the
Representatives and counsel for the Underwriters shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Shares as
contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
6.17. Payment for the SSP Shares. The Company shall have
received payment in full for the SSP Shares at the Public Offering Price prior
to the purchase of the Firm Stock.
The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the satisfaction of each of the above
conditions on or prior to the Option Closing Date and to the delivery to you on
the Option Closing Date of such documents as you may reasonably request with
respect to the good standing of the Company, the due authorization and issuance
of the Additional Shares and other matters related to the issuance of the
Additional Shares.
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7. Expenses. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Sellers
agree to pay or cause to be paid all expenses incident to the performance of
their obligations under this Agreement, including: (i) the fees, disbursements
and expenses of the Company's counsel, the Company's accountants and counsel for
the Selling Stockholders in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or legal investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
contemplated by Section 5(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the NASD, (v) all fees and
expenses in connection with the preparation and filing of the registration
statement on Form 8-A relating to the Common Stock and all costs and expenses
incident to listing the Shares on the Nasdaq National Market, (vi) the cost of
printing certificates representing the Shares, (vii) the costs and charges of
any transfer agent, registrar or depositary, (viii) the costs and expenses of
the Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Shares, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, (ix) all expenses in connection with any offer and sale of the Shares
outside of the United States, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with offers and
sales outside of the United States, (x) all reasonable fees and disbursements of
counsel incurred by the Underwriters in connection with the Company Friends
Program and stamp duties, similar taxes or duties or other taxes, if any,
incurred by the Underwriters in connection with the Company Friends Program and
(xi) all other costs and expenses incident to the performance of the obligations
of the Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this Section,
Section 8 entitled "Indemnity and Contribution", and the last paragraph of
Section 11 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel and any advertising expenses
connected with any offers they may make.
The provisions of this Section shall not supersede or
otherwise affect any agreement that the Sellers may otherwise have for the
allocation of such expenses among themselves.
8. Indemnity and Contribution.
8.1. Indemnification of the Underwriters. The Company agrees
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue
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statement or omission or alleged untrue statement or omission contained under
the heading "Plan of Distribution" in (i) the list of Underwriters and their
respective participation in the sale of Shares, (ii) the sentences related to
concessions and reallowances and (iii) the paragraphs related to stabilization,
syndicate covering transactions and penalty bids in such Registration Statement,
amendment, preliminary prospectus or Prospectus (as amended or supplemented, if
applicable).
8.2. Indemnification of Company by the Selling Stockholders.
Each Selling Stockholder agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only with
reference to information relating to such Selling Stockholder furnished in
writing by or on behalf of such Selling Stockholder expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
8.3. Indemnification of Underwriters by Selling Stockholders.
Each Selling Stockholder agrees, severally and not jointly, to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Selling Stockholder furnished in writing by or on behalf of such Selling
Stockholder expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
8.4. Indemnification by the Underwriters. Each Underwriter
agrees, severally and not jointly, to indemnify and hold harmless the Company,
the Selling Stockholders, the directors of the Company, the officers of the
Company who sign the Registration Statement and each person, if any, who
controls the Company or any Selling Stockholder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to information relating to such Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or supplements
thereto. Each of the Company and the Selling Stockholders hereby acknowledge
that the only information that the Underwriters have furnished to the Company
and the Selling Stockholders expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or supplements
thereto is the information under the heading "Plan of Distribution" in (i) the
list
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of Underwriters and their respective participation in the sale of Shares, (ii)
the sentences related to concessions and reallowances and (iii) the paragraphs
related to stabilization, syndicate covering transactions and penalty bids in
such Registration Statement, preliminary prospectus, Prospectus or amendments or
supplements thereto.
8.5. Indemnification Procedures. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to this Section 8,
such person (the "INDEMNIFIED PARTY") shall promptly notify the person against
whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section and
(iii) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Selling Stockholders and all persons, if any, who control
any Selling Stockholder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by Xxxxx, Xxxxxxxx &
Xxxx, Inc. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Stockholders and such control persons of any Selling Stockholders,
such firm shall be designated in writing by the persons named as
attorneys-in-fact for the Selling Stockholders under the Powers of Attorney. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to Section 8.7 hereof in respect of such action
or proceeding, then in addition to such separate firm for the indemnified
parties, the indemnifying party shall be liable for the reasonable fees and
expenses of not
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more than one separate firm (in addition to any local counsel) for Xxxxx,
Xxxxxxxx & Xxxx, Inc. for the defense of any losses, claims, damages and
liabilities arising out of the Company Friends Program, and all persons, if any,
who control Xxxxx, Xxxxxxxx & Xxxx, Inc. within the meaning of either Section 15
of the Act or Section 20 of the Exchange Act.
8.6. Limitation of Selling Stockholder Liability. The
liability of each Selling Stockholder under the indemnity and contribution
provisions of this Section 8 shall be limited to an amount equal to the initial
Public Offering Price of the Shares sold by such Selling Stockholder, less the
underwriting discount, as set forth on the front cover page of the Prospectus.
The Company and the Selling Stockholders may agree, as among themselves and
without limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible.
8.7. Indemnification for Company Friends Program. The Company
agrees to indemnify and hold harmless Xxxxx, Xxxxxxxx & Xxxx, Inc. and each
person, if any, who controls Xxxxx, Xxxxxxxx & Xxxx, Inc. within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
("XXXXX, XXXXXXXX & XXXX Entities"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in the prospectus wrapper material
prepared by or with the consent of the Company for distribution in foreign
jurisdictions in connection with the Company Friends Program attached to the
Prospectus or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein, when considered in conjunction with the
Prospectus or any applicable preliminary prospectus, not misleading; (ii) caused
by the failure of any Participant to pay for and accept delivery of the shares
which, immediately following the effectiveness of the Registration Statement,
were subject to a properly confirmed agreement to purchase; or (iii) related to,
arising out of, or in connection with the Company Friends Program, provided
that, the Company shall not be responsible under this subparagraph (iii) for any
losses, claim, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of Xxxxx, Xxxxxxxx & Xxxx Entities.
8.8. Indemnification for Safeguard Subscription Program. The
Company agrees to indemnify and hold harmless the Underwriters and each person,
if any, who controls any Underwriter within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by any untrue statement or
alleged untrue statement of a material fact contained in any written material
prepared by or with the consent of the Company or Safeguard Scientifics, Inc.
for distribution in connection with the Safeguard Subscription Program, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement therein not
misleading or (ii) related to, arising out of, or in connection with the
Safeguard Subscription Program.
8.9. Contribution Agreement. To the extent the indemnification
provided for in this Section 8 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such Section, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause 8.7 above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8.7 above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
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resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Sellers
on the one hand and the Underwriters on the other hand in connection with the
offering of the Shares shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Shares (before deducting expenses)
received by each Seller and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Shares. The relative fault of the Sellers on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Sellers or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 8 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.
8.10. Contribution Amounts. The Sellers and the Underwriters
agree that it would not be just or equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
Section 8.7. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, 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 Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
8.11. Survival of Provisions. The indemnity and contribution
provisions contained in this Section 8 and the representations, warranties and
other statements of the Company and the Selling Stockholders contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, any Selling
Stockholder or any person controlling any Selling Stockholder, or the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares. A successor to any Underwriter,
or to the Company, its directors or officers, or any person controlling the
Company, shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 8.
9. Effectiveness. This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.
10. Termination. This Agreement shall be subject to
termination by notice given by you to the Company, if (a) after the execution
and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York, Delaware or California shall have
been declared by either federal or New York, Delaware or California state
authorities or (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or
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any calamity or crisis that, in your judgment, is material and adverse, or (v)
in the judgment of the Representatives, there shall have occurred any material
adverse change, or any development that could reasonably be expected to result
in a material adverse change, in the condition, financial or otherwise, or in
the earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries and (b) in the case of any of the events specified in clauses
10(a)(i) through 10(a)(v), such event, individually or together with any other
such event, makes it, in your judgment, impracticable to market the Shares on
the terms and in the manner contemplated in the Prospectus.
11. Defaulting Underwriters. If, on the Closing Date or the
Option Closing Date, as the case may be, any one or more of the Underwriters
shall fail or refuse to purchase Shares that it has or they have agreed to
purchase hereunder on such date, and the aggregate number of Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of the Shares to be purchased
on such date, the other Underwriters shall be obligated severally in the
proportions that the number of Firm Shares set forth opposite their respective
names in Schedule A bears to the aggregate number of Firm Shares set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as you may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Shares that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 11 by an amount in excess of one-ninth of such number of Shares without
the written consent of such Underwriter. If, on the Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the
aggregate number of Firm Shares with respect to which such default occurs is
more than one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you, the Company and the Selling Stockholders for
the purchase of such Firm Shares are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders. In any such
case either you or the relevant Sellers shall have the right to postpone the
Closing Date, but in no event for longer than seven (7) days, in order that the
required changes, if any, in the Registration Statement and in the Prospectus or
in any other documents or arrangements may be effected. If, on the Option
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Additional Shares and the aggregate number of Additional Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Additional Shares to be purchased, the non-defaulting Underwriters shall have
the option to (i) terminate their obligation hereunder to purchase Additional
Shares or (ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of any Seller to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason any Seller shall be unable to perform its obligations under
this Agreement, the Sellers will reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
12. Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Headings; Table of Contents. The headings of the sections
of this Agreement and the table of contents have been inserted for convenience
of reference only and shall not be deemed a part of this Agreement.
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14. Notices. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representatives:
Xxxxx, Xxxxxxxx & Xxxx, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (617) -
Attention:
with a copy to:
Xxxxx, Xxxxxxxx & Xxxx, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (617)
Attention: General Counsel
If to the Company:
eMerge Interactive, Inc.
00000 000xx Xxxxxxx
Xxxxxxxxx Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
If to the Selling Stockholders:
[Custodian]
[address]
Facsimile: [___________]
Attention: [___________]
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
15. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 11 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 8, and in each case their
respective successors, and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of the Shares
as such from any of the Underwriters merely by reason of such purchase.
16. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
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18. Consent to Jurisdiction. Any legal suit, action or
proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby ("RELATED PROCEEDINGS") may be instituted in the federal
courts of the United States of America located in the City of Boston and County
of Suffolk or the courts of the Commonwealth of Massachusetts in each case
located in the City of Boston and County of Suffolk (collectively, the
"SPECIFIED COURTS"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a "RELATED JUDGMENT"), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum. Each party not located in the United States
irrevocably appoints CT Corporation System, which currently maintains a Boston
office at 0 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Xxxxxx Xxxxxx of
America, as its agent to receive service of process or other legal summons for
purposes of any such suit, action or proceeding that may be instituted in any
state or federal court in the City of Boston and County of Suffolk.
19. Waiver of Immunity. With respect to any Related
Proceeding, each party irrevocably waives, to the fullest extent permitted by
applicable law, all immunity (whether on the basis of sovereignty or otherwise)
from jurisdiction, service of process, attachment (both before and after
judgment) and execution to which it might otherwise be entitled in the Specified
Courts, and with respect to any Related Judgment, each party waives any such
immunity in the Specified Courts or any other court of competent jurisdiction,
and will not raise or claim or cause to be pleaded any such immunity at or in
respect of any such Related Proceeding or Related Judgement, including, without
limitation, any immunity pursuant to the United States Foreign Sovereign
Immunities Act of 1976, as amended.
20. Failure of the Selling Stockholders to Sell and Deliver
Shares. If one or more of the Selling Stockholders shall fail to sell and
deliver to the Underwriters the Shares to be sold and delivered by such Selling
Stockholders at the Closing Date pursuant to this Agreement, then the
Underwriters may at their option, by written notice from the Representatives to
the Company and the Selling Stockholders, either (i) terminate this Agreement
without any liability on the part of any Underwriter or, except as provided in
Sections 7 and 8 hereof, the Company or the Selling Stockholders, or (ii)
purchase the shares which the Company and other Selling Stockholders have agreed
to sell and deliver in accordance with the terms hereof. If one or more of the
Selling Stockholders shall fail to sell and deliver to the Underwriters the
Shares to be sold and delivered by such Selling Stockholders pursuant to this
Agreement at the Closing Date or the Option Closing Date, then the Underwriters
shall have the right, by written notice from the Representatives to the Company
and the Selling Stockholders, to postpone the Closing Date or the Option Closing
Date, as the case may be, but in no event for longer than seven (7) days in
order that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
21. Entire Agreement. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof.
22. Amendments. This Agreement may only be amended or modified
in writing, signed by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit.
23. Sophisticated Parties. Each of the parties hereto
acknowledges that it is a sophisticated business person who was adequately
represented by counsel during negotiations regarding the
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provisions hereof, including, without limitation, the indemnification and
contribution provisions of Section 8, and is fully informed regarding said
provisions. Each of the parties hereto further acknowledges that the provisions
of Section 8 hereto fairly allocate the risks in light of the ability of the
parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Registration Statement, any
preliminary prospectus and the Prospectus (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.
[Remainder of page intentionally left blank]
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
eMerge Interactive, Inc.
By:
Name:
Title:
The Selling Stockholders
named in Schedule B hereto,
acting severally
By:
Attorney-in-Fact
Accepted as of the date hereof
Xxxxx, Xxxxxxxx & Xxxx, Inc.
First Union Capital Markets Corp.
FAC/Equities, a division of First Albany Corporation
Acting severally on behalf
of themselves and the several
Underwriters named in
Schedule A hereto.
By: Xxxxx, Xxxxxxxx & Xxxx, Inc.
By:
Name:
Title:
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SCHEDULE A
UNDERWRITER NUMBER OF FIRM
SHARES
TO BE PURCHASED
Xxxxx, Xxxxxxxx & Xxxx, Inc.
First Union Capital Markets Corp.
FAC Equities, a division of First Albany Corporation
Total
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SCHEDULE B
SELLING STOCKHOLDER NUMBER OF FIRM SHARES
TO BE SOLD
XL Vision, Inc. 500,000
Technology Leaders II 150,000
Technology Leaders I 150,000
Xxxxxxx Xxxxxxx 6,000
Total 806,000
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SCHEDULE C
[LIST OF PERSONS EXECUTING LOCK-UP AGREEMENTS]
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EXHIBIT A
FORM OF LOCK-UP AGREEMENT
October __, 1999
Xxxxx, Xxxxxxxx & Xxxx, Inc.
First Union Capital Markets Corp.
FAC/Equities, a division of First Albany Corporation
As Representatives of the several Underwriters
x/x Xxxxx, Xxxxxxxx & Xxxx, Xxx.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
RE: LOCK-UP AGREEMENT (THE "AGREEMENT")
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of
certain shares of the common stock, $.01 par value per share (the "COMMON
STOCK"), of eMerge Interactive, Inc., a Delaware corporation (the "Company"), or
securities convertible into or exchangeable or exercisable for Common Stock. The
undersigned understands that you, as representatives (the "REPRESENTATIVES"),
propose to enter into an Underwriting Agreement, on behalf of the several
Underwriters named in Schedule A to such agreement (collectively, the
"UNDERWRITERS"), with the Company providing for a public offering of Common
Stock pursuant to a Registration Statement on Form S-1 to be filed with the
Securities and Exchange Commission (the "PUBLIC OFFERING"). The undersigned
recognizes that the Public Offering will be of benefit to the undersigned and
will benefit the Company by, among other things, raising additional capital for
its operations. The undersigned acknowledges that you and the other Underwriters
are relying on the representations and agreements of the undersigned contained
in this letter in carrying out the Public Offering and in entering into
underwriting arrangements with the Company with respect to the Public Offering.
To induce the Underwriters that may participate in the Public
Offering to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxx,
Xxxxxxxx & Xxxx, Inc. (which consent may be withheld in its sole discretion), it
will not, during the period commencing on the date hereof and ending 180 days
after the date of the final prospectus relating to the Public Offering (the
"PROSPECTUS"), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (2) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. In addition, the
undersigned agrees that, without the prior written consent of Xxxxx, Xxxxxxxx &
Xxxx, Inc. (which consent may be withheld in its sole discretion), it will not,
during the period commencing on the date hereof and ending 180 days after the
date of the Prospectus, make any demand for, or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock. With respect to the Public
Offering, the undersigned waives any registration rights relating to
registration under the Securities Act of any Common Stock owned either of record
or beneficially by the undersigned, including any rights to receive notice of
the Public Offering.
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The foregoing restrictions are expressly agreed to preclude
the undersigned from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a sale or disposition
of the Common Stock even if such Common Stock would be disposed of by someone
other than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put option or put equivalent position or
call option or call equivalent position) with respect to any of the Common Stock
or with respect to any security that includes, relates to, or derives any
significant part of its value from such Common Stock.
Notwithstanding the foregoing, the undersigned may transfer
shares of Common Stock (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound by the restrictions set forth herein, (ii)
to any trust for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned, provided that the trustee of the trust
agrees to be bound by the restrictions set forth herein, and provided further
that any such transfer shall not involve a disposition for value or (iii) to the
Underwriters pursuant to the Underwriting Agreement. For purposes of this
Agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin. In addition, notwithstanding the
foregoing, if the undersigned is a corporation, the corporation may transfer the
capital stock of the Company to any wholly owned subsidiary of such corporation;
provided, however, that in any such case it shall be a condition to the transfer
that the transferee execute an agreement stating that the transferee is
receiving and holding such capital stock subject to the provisions of this
Agreement and there shall be no further transfer of such capital stock except in
accordance with this Agreement, and provided further that any such transfer
shall not involve a disposition for value.
The undersigned understands that whether or not the Public
Offering actually occurs depends on a number of factors, including stock market
conditions. The Public Offering will only be made pursuant to an Underwriting
Agreement, the terms of which are subject to negotiation among the Company and
the Underwriters.
The undersigned agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
This agreement is irrevocable and will be binding on the
undersigned and the respective successors, heirs, personal representatives, and
assigns of the undersigned.
Very truly yours,
_______________________________
(Name)
_______________________________
(Address)
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