Exhibit 1.1
2,000,000 Shares/1/
BRIAZZ, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
_______________, 2001
XX Xxxxxxxxx & Co., LLC
As representative of the several Underwriters
c/o XX Xxxxxxxxx & Co., LLC
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
BRIAZZ, Inc. (the "Company"), proposes to issue and sell up to an aggregate
of 2,000,000 shares of its authorized but unissued common stock, no par value
(the "Common Stock") (said 2,000,000 shares of Common Stock being herein called
the "Underwritten Stock") to the Underwriters (as hereinafter defined) and to
grant the Underwriters an option to purchase up to an aggregate of 300,000
additional shares of Common Stock (the "Option Stock" and collectively with the
Underwritten Stock, the "Shares"). The Common Stock is more fully described in
the Registration Statement and the Prospectus hereinafter mentioned.
The Company hereby confirms the agreements made with respect to the
purchase of the Shares by the underwriters, for whom you are acting as
representative, named in Schedule I hereto (herein collectively called the
"Underwriters," which term shall also include any underwriter purchasing Shares
pursuant to Section (b) hereof). You represent and warrant that you have been
authorized by each of the other
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/1/ Plus an option to purchase from the Company up to an aggregate of
300,000 additional shares to cover over-allotments.
Underwriters to enter into this Underwriting Agreement (this "Agreement") on its
behalf and to act for it in the manner herein provided.
1. Registration Statement
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-54922), including
the related preliminary prospectus, for the registration under the Securities
Act of 1933, as amended (the "Securities Act"), of the Shares. Copies of such
registration statement and of each amendment thereto, if any, including the
related preliminary prospectus (meeting the requirements of Rule 430A of the
rules and regulations of the Commission) heretofore filed by the Company with
the Commission have been delivered to you.
(a) The term "Registration Statement" as used in this Agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Shares (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the "Effective
Date"), shall also mean (from and after the effectiveness of such amendment)
such registration statement as so amended (including any Rule 462(b)
registration statement). The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Shares first filed with the Commission
pursuant to Rule 424(b) and Rule 430A (or if no such filing is required, as
included in the Registration Statement) and, in the event of any supplement or
amendment to such prospectus after the Effective Date, shall also mean (from and
after the filing with the Commission of such supplement or the effectiveness of
such amendment) such prospectus as so supplemented or amended. The term
"Preliminary Prospectus" as used in this Agreement shall mean each preliminary
prospectus included in such Registration Statement prior to the time it becomes
effective.
The Registration Statement has been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Securities Act.
2. Representations and Warranties of the Company
The Company hereby represents and warrants to the Underwriters as follows:
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(a) Neither the Commission nor any state securities commission has issued
any order preventing or suspending the use of any Preliminary Prospectus or has
instituted or, to the Company's knowledge, threatened to institute any
proceedings with respect to such an order. The Registration Statement and the
Prospectus comply, and on the Closing Date (as hereinafter defined) and any
later date on which the Option Stock is to be purchased, the Prospectus will
comply, in all material respects, with the provisions of the Securities Act and
the rules and regulations of the Commission thereunder (the "Rules"). On the
Effective Date, the Registration Statement did not contain any untrue statement
of a material fact and did not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, and on the Effective Date the Prospectus did not and, on the Closing
Date and any later date on which the Option Stock is to be purchased, will not
contain any untrue statement of a material fact and will not omit to state any
material fact required to be stated therein, or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
warranties in this paragraph (a) shall apply to statements in, or omissions
from, the Registration Statement or the Prospectus made in reliance upon and in
conformity with information herein or otherwise furnished in writing to the
Company by or on behalf of the Underwriters expressly for use in the
Registration Statement or Prospectus.
(b) The Company (i) has been duly organized and is validly existing and in
good standing under the laws of its jurisdiction of incorporation or formation,
as the case may be, having full power and corporate authority to own or lease
its properties and to conduct its business as described in the Registration
Statement and the Prospectus; and (ii) is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
character of the property owned or leased or the nature of the business
transacted by it makes qualification necessary (except where the failure to be
so qualified would not have a material adverse effect on the business,
properties, financial condition or results of operations of the Company). The
Company has no subsidiaries. The Company has employees located solely in
California, Washington and Illinois, and in no other jurisdiction in the United
States, and, notwithstanding anything in (b)(ii) to the contrary, the Company is
duly qualified to do business as a foreign corporation and is in good standing
in California and Illinois, which are the only jurisdictions where the Company
is required to be so qualified except where the failure to be so qualified would
not have a material adverse effect on the business, properties, financial
condition or results of operations of the Company. The Company does not own any
capital stock or other equity securities in any entity.
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(c) The Company has the duly authorized and validly issued outstanding
capitalization set forth under the caption "Capitalization" in the Prospectus
and will have the adjusted capitalization (giving effect to the closing of the
initial public offering contemplated by this Agreement) set forth therein on the
Closing Date and any later date on which the Option Stock is to be purchased,
based on the assumptions set forth therein. The securities of the Company
conform to the descriptions thereof contained in the Prospectus. The form of
certificates for the Shares conforms to the requirements of the Washington
Business Corporation Act. The outstanding shares of Common Stock (other than
the Shares) have been duly authorized and validly issued by the Company and are
fully paid and nonassessable, and were issued in transactions that were exempt
from the registration requirements of the Securities Act, without violation of
any preemptive rights, rights of first refusal or similar rights. Except as
created hereby or referred to in the Prospectus, there are no outstanding
options, warrants, rights or other arrangements requiring the Company at any
time to issue any capital stock. No holders of outstanding shares of capital
stock of the Company are entitled as such to any preemptive or other rights to
subscribe for any of the Shares, and neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other than those that have been waived or
satisfied, for or relating to, the registration of any securities of the
Company. The Shares are duly authorized, and will be, when sold to the
Underwriters as provided herein, validly issued, fully paid and nonassessable
and conform to the description thereof contained in the Prospectus. No further
approval or authority of the shareholders or the Board of Directors of the
Company will be required for the issuance and sale of the Shares as contemplated
herein.
(d) The Company has full legal right, power and authority to enter into
this Agreement and to consummate the transactions provided for herein. This
Agreement has been duly authorized, executed and delivered by the Company and,
assuming it is a binding agreement of the Underwriters, constitutes a legal,
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting the enforcement of creditors'
rights and the application of equitable principles relating to the availability
of remedies and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy underlying such laws),
and none of the Company's execution or delivery of this Agreement, its
performance hereunder, its consummation of the transactions contemplated herein,
its application of the net proceeds of the offering in the manner set forth
under the caption "Use of Proceeds" or the conduct of its business as described
in the Prospectus, conflicts or will conflict with or results or will result in
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any breach or violation of any of the terms or provisions of, or constitutes or
will constitute a default under, causes or will cause (or permits or will
permit) the maturation or acceleration of any liability or obligation or the
termination of any right under, or results in the creation or imposition of any
lien, charge or encumbrance upon, any property or assets of the Company pursuant
to the terms of (i) the articles of incorporation or bylaws of the Company; (ii)
any indenture, mortgage, deed of trust, voting trust agreement, shareholders'
agreement, note agreement or other agreement or instrument to which the Company
is a party or by which it is bound or to which its property is subject; or (iii)
any statute, judgment, decree, order, rule or regulation applicable to the
Company of any government, arbitrator, court, regulatory body or administrative
agency or other governmental agency or body, domestic or foreign, having
jurisdiction over the Company, or its activities or properties, which would
materially and adversely affect the business or properties of the Company.
(e) The Common Stock is approved for quotation on The Nasdaq National
Market and, prior to the Closing Date, (i) the Common Stock shall be listed and
duly admitted to trading on The Nasdaq National Market and (ii) the Shares will
be authorized for inclusion in The Nasdaq National Market.
(f) The financial statements of the Company and the related notes and
schedules thereto included in the Registration Statement and the Prospectus
fairly present the financial position, results of operations, shareholders'
equity and cash flows of the Company at the dates and for the periods specified
therein. Such financial statements and the related notes and schedules thereto
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise noted
therein) and all adjustments necessary for a fair presentation of results for
such periods have been made. The summary and selected financial and statistical
data included in the Registration Statement and the Prospectus present fairly
the information shown therein and such data have been prepared on a basis
consistent with the financial statements contained therein and in the books and
records of the Company.
(g) PricewaterhouseCoopers LLP, who have certified the financial
statements and schedule as of March 20, 2001, filed with the Commission as part
of the Registration Statement, are independent public accountants as required by
the Securities Act and the rules and regulations promulgated thereunder.
(h) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with
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generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(i) The Company has filed all necessary federal, state and local income,
franchise and other material tax returns and has paid all taxes shown as due
thereunder, and the Company has no tax deficiency that has been or, to its
knowledge, that might be assessed against the Company that, if so assessed,
would materially and adversely affect the business or properties of the Company.
All tax liabilities accrued through the date hereof have been adequately
provided for on the books of the Company.
(j) The Company maintains insurance underwritten by insurers of recognized
financial responsibility of the types and in amounts and with such deductibles
as is customary for companies in the same or similar business, all of which
insurance is in full force and effect.
(k) Except as disclosed in the Prospectus, there is no action, suit,
claim, proceeding or investigation pending or, to the Company's knowledge,
threatened against the Company before or by any individual, court, regulatory
body or administrative agency or any other governmental agency or body, domestic
or foreign, that (i) questions the validity of the capital stock of the Company
or this Agreement or of any action taken or to be taken by the Company pursuant
to or in connection with this Agreement; (ii) is required to be disclosed in the
Registration Statement, which is not so disclosed (and such proceedings, if any,
as are summarized in the Registration Statement are accurately summarized in all
material respects); or (iii) may have a material adverse effect upon the
business, properties, financial condition or results of operations of the
Company.
(l) All executed agreements or copies of executed agreements filed or
incorporated by reference as exhibits to the Registration Statement to which the
Company is a party or by which it is or may be bound or to which its assets,
properties or businesses are or may be subject have been duly and validly
authorized, executed and delivered by the Company and constitute the legal,
valid and binding agreements of the Company enforceable by and against it in
accordance with their respective terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to enforcement of creditors' rights generally, and general
equitable principles relating to the availability of remedies, and except as
rights to indemnity or contribution may be limited by federal
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or state securities laws and the public policy underlying such laws). The
descriptions in the Registration Statement of contracts and other documents are
accurate and fairly present the information required to be shown with respect
thereto by the Securities Act and Rules, and there are no contracts or other
documents that are required by the Securities Act or Rules to be described in
the Registration Statement or filed as exhibits to the Registration Statement
that are not described or filed as required and the exhibits that have been
filed are complete and correct copies of the documents of which they purport to
be copies. Except for such rights as described in the Registration Statement and
the Prospectus, no party has any right to require the Company to register any
securities for sale under the Securities Act.
(m) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as expressly contemplated
therein, the Company has not incurred, other than in the ordinary course of its
business, any material liabilities or obligations, direct or contingent,
purchased any of its outstanding capital stock, paid or declared any dividends
or other distributions on its capital stock or entered into any material
transactions, and there has been no material change in capital stock or debt or
any material adverse change in the business, properties, assets, net worth,
condition (financial or otherwise) or results of operations of the Company,
whether or not arising from transactions in the ordinary course of business.
(n) The Company is not, nor with the giving of notice or lapse of time or
both, will be, in violation of or in default under, any term or provision of (i)
its articles of incorporation, bylaws or operating agreement; (ii) any
indenture, mortgage, deed of trust, voting trust agreement, shareholders'
agreement, note agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property is subject, or any
indebtedness, the effect of which breach or default singly or in the aggregate
may have a material adverse effect on the business, management, properties,
assets, rights, operations, or condition (financial or otherwise) of the
Company; or (iii) any statute, judgment, decree, order, rule or regulation
applicable to the Company or of any arbitrator, court, regulatory body,
administrative agency or any other governmental agency or body, domestic or
foreign, having jurisdiction over the Company or its activities or properties
and the effect of which breach or default singly or in the aggregate may have a
material adverse effect on the business, management, properties, assets, rights,
operations or condition (financial or otherwise) of the Company.
(o) The Company has not incurred any liability for a fee, commission, or
other compensation on account of the employment of a broker or finder in
connection
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with the transactions contemplated by this Agreement other than as contemplated
hereby.
(p) No labor disturbance by the employees of the Company or principal
suppliers or customers exists or, to the Company's knowledge, is imminent.
(q) Except as disclosed in the Prospectus, the Company owns, is licensed
or otherwise possesses all rights to use all patents, patent rights, inventions,
know-how (including trade secrets and other unpatented or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks, trade names, copyrights and other intellectual property rights
(collectively, the "Rights") necessary for the conduct of its business as
described in the Prospectus. Except as disclosed in the Prospectus, to the
Company's knowledge, no claims have been asserted against the Company by any
person with respect to the use of any such Rights or challenging or questioning
the validity or effectiveness of any such Rights. The continued use of the
Rights in connection with the business and operations of the Company does not,
to the knowledge of the Company, infringe on the rights of any person, which, if
the subject of an unfavorable decision, ruling or filing, would have a material
adverse effect on the financial condition, business or properties of the
Company.
(r) The Company is conducting its business in compliance with all
applicable laws, ordinances or governmental rules or regulations of the
jurisdictions in which it is conducting business, except where the failure to be
so in compliance would not materially and adversely affect the business,
properties, financial condition or results of operations of the Company. Each
approval, consent, order, authorization, designation, declaration or filing by
or with any regulatory, administrative or other governmental body necessary in
connection with the execution and delivery by the Company of this Agreement and
the consummation of the transactions herein contemplated (except such additional
steps as may be required by the National Association of Securities Dealers, Inc.
(the "NASD"), the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or to qualify or exempt the Shares for public
offering by the Underwriters under state securities or Blue Sky laws) has been
obtained or made and is in full force and effect.
(s) Neither the Company nor, to the Company's knowledge, any of its
officers, directors or affiliates (within the meaning of the rules and
regulations promulgated under the Securities Act) has taken or may take,
directly or indirectly, any action designed to cause or result in, or that has
constituted or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of
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the shares of Common Stock of the Company, to facilitate the sale or resale of
the Shares or otherwise.
(t) The Company is not, nor after giving effect to the issuance and sale
of the Shares by the Company will be, an "investment company" within the meaning
of such term under the Investment Company Act of 1940, as amended, and the rules
and regulations of the Commission promulgated thereunder.
(u) There are no transfer taxes or similar fees or charges under federal
law or the laws of any state or foreign jurisdiction, or any political
subdivision thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance and sale by the Company of the
Shares.
(v) The Company has good and marketable title to all properties and assets
described in the Prospectus as owned by it, free and clear of all liens,
encumbrances, security interests, equities, claims and defects, except such as
are described in the Registration Statement and Prospectus, or such as are not
materially important in relation to the business of the Company. The Company
has valid and enforceable leases for the properties described in the Prospectus
as leased by it, including, without limitation, all properties where the
Company's cafes or central kitchens are located, free and clear of all liens,
encumbrances, security interests, equities, claims and defects, except such as
are not material and do not interfere with the use made by the Company thereof.
The Company leases all such properties as are necessary to its operations as now
conducted, as set forth in the Registration Statement and the Prospectus and the
properties and business of the Company conform in all material respects to the
descriptions thereof contained in the Registration Statement and the Prospectus.
(w) The Company holds all franchises, licenses, permits, approvals,
certificates and other authorizations from federal, state and other governmental
or regulatory authorities necessary to the ownership, leasing and operation of
its properties or required for the present conduct of its business, and such
franchises, licenses, permits, approvals, certificates and other governmental
authorizations are in full force and effect and the Company is in compliance
therewith in all material respects, except where the failure so to obtain,
maintain or comply with would not have a materially adverse effect on the
business, properties, financial condition or results of operations of the
Company.
(x) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder (herein
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called "ERISA"); no "reportable event" (as defined in ERISA) has occurred with
respect to any "pension plan" (as defined in ERISA) for which the Company would
have any liability; the Company has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan"; or (ii) Section 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "Pension Plan" for which the
Company would have liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(y) No relationship, direct or indirect, exists between or among the
Company, on the one hand, and the current or prior directors, officers,
shareholders, customers or suppliers of the Company, on the other hand, which is
required to be described in the Prospectus that is not so described.
(z) Neither the Company nor to the Company's knowledge any director,
officer, agent, employee or other person associated with or acting on behalf of
the Company has used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provisions of the Foreign Corrupt Practices Act of 1972; or made any bribe,
rebate, payoff, influence, payment, kickback or other unlawful payment.
(aa) The business, operations and facilities of the Company have been and
are being conducted or operated in compliance with all applicable laws,
ordinances, rules, regulations, licenses, permits, approvals, plans,
authorizations or requirements relating to occupational safety and health,
pollution, protection of health or the environment (including, without
limitation, those relating to emissions, discharges, release or threatened
releases of pollutants, contaminants or hazardous or toxic substances, materials
or wastes into ambient air, surface water, groundwater or land, or relating to
the manufacture, processing, distribution, use treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) or otherwise relating to remediating real property in which
the Company has or has had any interest, whether owned or leased, of any
governmental department, commission, board, bureau, agency or instrumentality of
the United States, any state or political subdivision thereof and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and
orders relating thereto, except for such failures to so comply as would not,
individually or in the aggregate, have a material
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adverse effect on the business, properties, financial condition or results of
operations of the Company, and the Company has not received any notice from a
governmental instrumentality or any third party alleging any violation thereof
or liability thereunder (including, without limitation, liability for costs of
investigating or remediating sites containing hazardous substances or damage to
natural resources).
(bb) Neither the Company nor to the Company's knowledge any officer or
employee of the Company is a party to any contract or commitment that restricts
in any material respect the ability of the Company or such individual to engage
in the business of the Company as described in the Registration Statement and
the Prospectus.
3. Purchase of the Shares by the Underwriters
(a) On the basis of the representations and warranties and subject to the
terms and conditions herein set forth, the Company shall issue and sell the
Underwritten Stock to the Underwriters, and the Underwriters agree to purchase
from the Company the Underwritten Stock. The price at which such shares of
Underwritten Stock shall be sold by the Company and purchased by the
Underwriters shall be $______ per share (the "Purchase Price"). In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraphs (b) and (c) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) If for any reason one of the Underwriters shall fail or refuse (other
than for a reason sufficient to justify the termination of this Agreement under
the provisions of Section 7 or 12 hereof) to purchase and pay for the number of
Shares agreed to be purchased by such Underwriter, the non-defaulting
Underwriters shall have the right within 24 hours after the receipt by you of
notice of such failure or refusal to so purchase to purchase, or procure one or
more other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter and upon the terms herein set forth,
all or any part of the Shares that such defaulting Underwriter agreed to
purchase. If the non-defaulting Underwriters fail so to make such arrangements
with respect to all such Shares and portion, the number of Shares that the non-
defaulting Underwriters are otherwise obligated to purchase under this Agreement
shall be automatically increased on a pro rata basis to absorb the remaining
Shares and portion that the defaulting Underwriter agreed to purchase; provided,
however, that the non-defaulting Underwriters shall not be obligated to purchase
the Shares and portion that the defaulting Underwriter agreed to purchase if the
aggregate number of such Shares exceeds 10% of the total number
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of Shares that the Underwriters agreed to purchase under this Agreement. If the
total number of Shares that the defaulting Underwriter agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
referred to above, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such Shares and portion on the terms herein
set forth. In any such case, either you or the Company shall have the right to
postpone the Closing Date determined as provided in Section 5 hereof for not
more than seven business days after the date originally fixed as the Closing
Date pursuant to said Section 5 in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made. If the non-defaulting Underwriters do not make arrangements within
the 24-hour periods stated above for the purchase of all the Shares that the
defaulting Underwriter agreed to purchase hereunder, this Agreement shall be
terminated without further act or deed and without any liability on the part of
the Company to the non-defaulting Underwriters and without any liability on the
part of the non-defaulting Underwriters to the Company. Nothing in this
paragraph (b), and no action taken hereunder, shall relieve the defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
grants an option to the Underwriters to purchase, severally and not jointly, the
Option Stock at the Purchase Price. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Stock by the Underwriters and
may be exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of this agreement upon written or telegraphic
notice by the Underwriters to the Company setting forth the aggregate number of
shares of Option Stock as to which the Underwriters are exercising the option.
Delivery of the certificates for the shares of Option Stock, and payment
therefor shall be made as provided in Section 5 hereof. The number of shares of
the Option Stock to be purchased by each Underwriter shall be in such amounts as
the Underwriters shall agree upon prior to the exercise of the option set forth
hereunder.
4. Offering by the Underwriters
(a) The terms of the initial public offering by the Underwriters of the
Shares to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
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(b) The information set forth in the large box on the right-hand side of
the front cover page of the Preliminary Prospectus and the Prospectus and under
the caption "Plan of Distribution" in the Registration Statement, any
Preliminary Prospectus and the Prospectus relating to the Shares filed by the
Company (insofar as such information relates to the Underwriters or related
persons) constitutes the only information furnished by the Underwriters to the
Company for inclusion in the Registration Statement, any Preliminary Prospectus
and the Prospectus, and you on behalf of the Underwriters represent and warrant
to the Company that the statements made therein (insofar as they relate to the
Underwriters or related persons) are correct and do not omit any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5. Delivery of and Payment for the Shares
(a) Delivery of certificates for the shares of the Underwritten Stock and
the Option Stock (if the option granted by Section 3(c) hereof shall have been
exercised not later than 10:00 a.m., Seattle time, on the date two business days
preceding the Closing Date), and payment therefor, shall be made at the office
of Xxxxxx & Xxxxxxx LLP, U.S. Bank Centre, Suite 3400, 0000 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxx, 00000, at 7:00 a.m., Seattle time, on the third business
day after the date of this Agreement, or at such time on such other day, not
later than seven full business days after such third business day, as shall be
agreed upon in writing by the Company and you. The date and hour of such
delivery and payment are herein called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised after
10:00 a.m., Seattle time, on the date two business days preceding the Closing
Date, delivery of certificates for the shares of Option Stock, and payment
therefor, shall be made at the office of Xxxxxx & Whitney LLP, U.S. Bank Centre,
Suite 3400, 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx, 00000, at 7:00 a.m., Seattle
time, on the third business day after the exercise of such Option, or at such
time on such other day, not later than seven full business days after such third
business day, as shall be agreed upon in writing by the Company and you.
(c) Payment for the Shares purchased from the Company shall be made to the
Company or its order by wire transfer or one or more certified or official bank
check or checks in same day funds. Such payment shall be made upon delivery of
certificates for the Shares to you against receipt therefor signed by you.
Certificates for the Shares to be delivered to you shall be registered in the
name or names and shall be in such denominations as you may request at least one
business day before the
-13-
Closing Date, in the case of Underwritten Stock, and at least one business day
prior to the purchase thereof, in the case of Option Stock. Such certificates
will be made available to the Underwriters for inspection, checking and
packaging on the business day preceding the Closing Date or, in the case of
Option Stock, by 12:00 p.m., Seattle time, on the business day preceding the
date of purchase.
6. Covenants of the Company
The Company covenants and agrees as follows:
(a) The Company will (i) prepare and timely file with the Commission under
Rule 424(b) a Prospectus containing information previously omitted at the time
of effectiveness of the Registration Statement in reliance on Rule 430A; and
(ii) not file with the Commission any amendment to the Registration Statement or
supplement to the Prospectus (A) of which the Underwriters shall not previously
have been advised and furnished with a copy a reasonable period of time prior to
the proposed filing and as to which filing the Underwriters shall not have given
their consent or (B) which is not in compliance with the Securities Act or the
rules and regulations of the Commission thereunder.
(b) As soon as the Company is advised or obtains knowledge thereof, the
Company will advise the Underwriters (i) of any request made by the Commission
for amendment of the Registration Statement, for supplement to the Prospectus or
for additional information; (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, or the
institution or threat of any action, investigation or proceeding for that
purpose; or (iii) the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in any jurisdiction,
or the receipt by it of notice of the initiation or threatening of any
proceeding for that purpose. The Company will use its best efforts to prevent
the issuance of any such order and, if issued, to obtain the lifting or
withdrawal thereof as soon as possible.
(c) The Company will (i) on or before the Closing Date, deliver to the
Underwriters a signed copy of the Registration Statement as originally filed and
of each amendment thereto filed prior to the time the Registration Statement
becomes effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any, to the Registration Statement (together with,
in each case, all exhibits thereto unless previously delivered to the
Underwriter); (ii) as promptly as possible deliver to the Underwriters, at such
office as the Underwriters may designate, as many copies of the Prospectus as
the Underwriters may reasonably request; and (iii) thereafter from time to time
during the period in which a prospectus is required by law
-14-
to be delivered by an Underwriter or dealer, likewise send to the Underwriters
as many additional copies of the Prospectus and as many copies of any supplement
to the Prospectus and of any amended prospectus, filed by the Company with the
Commission, as the Underwriters may reasonably request for the purposes
contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
the Underwriters, shall occur as a result of which it is necessary, in the
opinion of counsel for the Company or of counsel for the Underwriters, to
supplement or amend the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser of the Shares, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus or an amended prospectus
so that the Prospectus as so supplemented or amended will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances existing
at the time such Prospectus is delivered to such purchaser, not misleading. If,
after the initial public offering of the Shares by the Underwriters and during
such period, the Underwriters shall propose to vary the terms of the offering
thereof by reason of changes in general market conditions or otherwise, you will
advise the Company in writing of the proposed variation, and, if in the opinion
either of counsel for the Company or of counsel for the Underwriters such
proposed variation requires that the Prospectus be supplemented or amended, the
Company will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended prospectus setting forth such variation. The Company
authorizes the Underwriters and all dealers to whom any of the Shares may be
sold by the Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Shares in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Shares for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or a dealer,
in keeping such qualifications in good standing under said securities or blue
sky laws; provided,
-15-
however, that the Company shall not be required to qualify as a foreign
corporation or file any general consent to service of process in any
jurisdiction in which it is not so qualified. The Company will, from time to
time, prepare and file such statements, reports and other documents as are or
may be required to continue such qualifications in effect for so long a period
as you may reasonably request for distribution of the Shares.
(g) The Company agrees to pay all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including,
without limitation, all costs and expenses incident to (i) the preparation,
printing and filing with the Commission and the NASD of the Registration
Statement, any Preliminary Prospectus and the Prospectus; (ii) the furnishing to
the Underwriters of copies of any Preliminary Prospectus and of the several
documents required by paragraph (c) of this Section 6 to be so furnished; (iii)
the printing of this Agreement and related documents delivered to the
Underwriters; (iv) the preparation, printing and filing of all supplements and
amendments to the Prospectus referred to in paragraph (d) of this Section 6; (v)
the furnishing to you of the reports and information referred to in paragraph
(j) of this Section 6; and (vi) the printing and issuance of stock certificates,
including the transfer agent's fees.
(h) The Company agrees to reimburse you, for the account of the several
Underwriters, for blue sky fees and related disbursements (including counsel
fees and disbursements and cost of printing memoranda for the Underwriters) paid
by or for the account of the Underwriters or their counsel in qualifying the
Shares under state securities or blue sky laws and in the review of the offering
by the NASD.
(i) As soon as practicable, but in any event not later than 45 days after
the end of the fiscal quarter first occurring after the first anniversary of the
Effective Date, the Company will make generally available to its security
holders, in the manner specified in Rule 158(b) of the rules and regulations
promulgated under the Securities Act, an earnings statement that will be in the
detail required by, and will otherwise comply with, the provisions of Section
11(a) of the Securities Act and Rule 158(a) of the rules and regulations
promulgated thereunder.
(j) During a period of three years after the date hereof, the Company will
furnish to you, and to each Underwriter who may so request in writing, copies of
all periodic and special reports furnished to shareholders of the Company and of
all information, documents and reports filed with the Commission.
-16-
(k) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar (which may be the same
entity as the transfer agent) for its Common Stock.
(l) The Company will not, directly or indirectly, without the prior
written consent of XX Xxxxxxxxx & Co., LLC on behalf of the Underwriters, issue,
offer, sell, grant any option to purchase or otherwise dispose (or announce any
issuance, offer, sale, grant of any option to purchase or other disposition) of
any shares of Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Common Stock for a period of 180 days following
the date of the Prospectus, except pursuant to this Agreement and except for
issuances pursuant to the conversion of shares of the Company's Series A, Series
B and Series C Convertible Preferred Stock outstanding on the date hereof, the
exercise of stock options outstanding on or granted subsequent to the date
hereof, pursuant to a stock option or other employee benefit plan in existence
on the date hereof, the exercise of warrants outstanding on the date hereof, and
except as contemplated by the Prospectus.
(m) The Company will cause the Shares to be duly included for quotation on
the Nasdaq National Market prior to the Closing Date.
(n) The Company will not take, directly or indirectly, and will use its
best efforts to cause its officers, directors or affiliates not to take,
directly or indirectly, any action designed to, or that might in the future
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any securities of the Company.
(o) The Company will apply the net proceeds of the offering received by it
in the manner set forth under the caption "Use of Proceeds" in the Prospectus.
(p) The Company will timely file all such reports, forms or other
documents as may be required from time to time, under the Securities Act, the
Rules, the Exchange Act and the rules and regulations promulgated thereunder,
and all such reports, forms and documents filed will comply as to form and
substance with the applicable requirements under the Securities Act, the Rules,
the Exchange Act and the rules and regulations promulgated thereunder.
(q) The Company is familiar with the Investment Company Act of 1940, as
amended, and has in the past conducted its affairs, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not and
will not be an "investment company" or a "company" controlled by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
-17-
(r) The Company either has caused to be delivered to you or will cause to
be delivered to you prior to the effective date of the Registration Statement a
letter (the "Lock-Up Agreement") from each of the Company's directors, officers
and a significant majority of the shareholders of the Company stating, among
other things, that such person agrees that he, she or it will not, without the
prior written consent of XX Xxxxxxxxx & Co., LLC, for a period of 180 days after
the date of the Prospectus, offer, sell, contract to sell, pledge, grant any
option to purchase, make any short sale or otherwise dispose of any shares of
Common Stock, or any options or warrants to purchase any shares of Common Stock,
or any securities convertible into, exchangeable for or that represent the right
to receive shares of Common Stock, whether now owned or hereinafter acquired,
owned directly by the undersigned (including holding as a custodian) or with
respect to which the undersigned has beneficial ownership within the rules and
regulations of the Securities and Exchange Commission.
7. Conditions of the Underwriter's Obligations
The obligations of the several Underwriters under this Agreement are
subject to the performance by the Company on and as of the Closing Date or any
later date on which Option Stock is to be purchased, as the case may be, of its
covenants and agreements hereunder, and the following additional conditions:
(a) The Registration Statement shall have become effective, and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued, and no proceedings for that purpose shall have been instituted or
threatened or, to the knowledge of the Company or the Underwriter, shall be
contemplated by the Commission.
(b) The Underwriters shall be satisfied that (i) as of the Effective Date,
the statements made in the Registration Statement and the Prospectus were true
and correct and neither the Registration Statement nor the Prospectus omitted to
state a fact required to be stated therein or is necessary to make the
statements therein not misleading; (ii) since the Effective Date, no event has
occurred that should have been set forth in a supplement or amendment to the
Prospectus that has not been set forth in an effective supplement or amendment;
(iii) since the respective dates as of which information is given in the
Registration Statement in the form in which it originally became effective and
the Prospectus contained therein, there has not been any material adverse change
or any development involving a prospective material adverse change in the
business, properties, financial condition or results of operations of the
Company, whether or not arising from transactions in the ordinary course of
business, and since such dates, except in the ordinary course of business, the
Company has not
-18-
entered into any material transaction not referred to in the Registration
Statement in the form in which it originally became effective and the Prospectus
contained therein; (iv) the Company has no material contingent obligations that
are not disclosed in the Registration Statement and the Prospectus; (v) there
are no pending or, to the Company's knowledge, threatened legal proceedings to
which the Company is a party or of which property of the Company is subject that
are material and that are not disclosed in the Registration Statement and the
Prospectus; (vi) there are not any franchises, contracts, leases or other
documents that are required to be filed as exhibits to the Registration
Statement that have not been filed as required; and (vii) the representations
and warranties of the Company herein are true and correct in all material
respects as of the Closing Date or any later date on which Option Stock is to be
purchased, as the case may be.
(c) On or prior to the Closing Date, the legality and sufficiency of the
sale of the Shares hereunder and the validity and form of the certificates
representing the Shares, all corporate proceedings and other legal matters
incident to the foregoing, and the form of the Registration Statement and of the
Prospectus (except as to the financial statements contained therein), shall have
been approved by Xxxxxxx Coie LLP, counsel for the Underwriters. On or prior to
the Closing Date, and if Option Stock is purchased at any date after the Closing
Date, on such later date, you shall have received from counsel to the
Underwriters such opinion or opinions with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other related
matters as the Underwriters reasonably may request and such counsel shall have
received such documents and other information as they request to enable them to
pass upon such matters.
(d) On the Closing Date, and if Option Stock is purchased at any date
after the Closing Date, on such later date, you shall have received an opinion
addressed to the Underwriters, dated the Closing Date or, if related to the
later sale of Option Stock, such later date, of Xxxxxx & Whitney LLP, counsel to
the Company, to the effect set forth in Exhibit A hereto. In rendering any such
opinion, such counsel may rely, as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the Company and
public officials, and with respect to certain governmental and regulatory
matters, on the opinion of Xxxxx & Xxxxxxx L.L.P., regulatory counsel to the
Company. References to the Registration Statement and the Prospectus in this
paragraph (d) shall include any amendment or supplement thereto at the date of
such opinion.
(e) You shall have received from PricewaterhouseCoopers LLP a letter
addressed to the Underwriters and dated the Closing Date and any later date on
which Option Stock is purchased, confirming that PricewaterhouseCoopers LLP are
-19-
independent public accountants with respect to the Company within the meaning of
the Securities Act and the applicable published rules and regulations thereunder
and based upon the procedures described in their letter delivered to the
Underwriters concurrently with the execution of this Agreement (the "Original
Letter"), but carried out to a date not more than three business days prior to
the Closing Date or such later date on which Option Stock is purchased (i)
confirming, to the extent true, that the statements and conclusions set forth in
the Original Letter are accurate as of the Closing Date or such later date, as
the case may be; and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter that are necessary
to reflect any changes in the facts described in the Original Letter since the
date of the Original Letter or to reflect the availability of more recent
financial statements, data or information. The letters shall not disclose any
change, or any development involving a prospective change, in or affecting the
business or properties of the Company, which, in your sole judgment, makes it
impractical or inadvisable to proceed with the public offering of the Shares or
the purchase of the Option Stock as contemplated by the Prospectus.
(f) You shall have received from PricewaterhouseCoopers LLP a letter
stating that their review of the Company's internal accounting controls, to the
extent they deemed necessary in establishing the scope of their examination of
the Company's financial statements as of December 31, 2000, did not disclose any
weakness in internal controls that they considered to be material weaknesses.
(g) On the Closing Date, and on any later date on which Option Stock is
purchased, you shall have received a certificate, dated the Closing Date or such
later date, as the case may be, signed by the Chief Executive Officer and Chief
Financial Officer of the Company stating that the respective signers of said
certificate have carefully examined the Registration Statement in the form in
which it originally became effective and the Prospectus contained therein and
any amendments or supplements thereto and this Agreement, and that the
statements included in paragraph (b) of this Section 7 are true and correct.
(h) You shall have been furnished evidence in usual written or telegraphic
form from the appropriate authorities of the several jurisdictions, or other
evidence satisfactory to you, of the qualification referred to in paragraph (f)
of Section 6 hereof.
(i) Prior to the Closing Date, the Shares shall have been duly authorized
for inclusion on the Nasdaq National Market upon official notice of issuance.
In case any of the conditions specified in this Section 7 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such
-20-
termination shall be without liability of the Company to the Underwriters and
without liability of the Underwriters to the Company; provided, however, that
(i) in the event of such termination, the Company agrees to indemnify and hold
harmless the Underwriters from all costs or expenses incident to the performance
of the obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (g) and (h) of Section 6 hereof; and (ii) if
this Agreement is terminated by you because of any refusal, inability or failure
on the part of the Company to perform any agreement herein, to fulfill any of
the conditions herein, or to comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the transactions contemplated hereby.
8. Conditions of the Obligations of the Company
(a) The obligations of the Company to deliver the Shares shall be subject
to the conditions that (i) the Registration Statement shall have become
effective and (ii) no stop order suspending the effectiveness thereof shall be
in effect and no proceedings therefor shall be pending or threatened by the
Commission.
(b) In case either of the conditions specified in paragraph (a) of this
Section 8 shall not be fulfilled, this Agreement may be terminated by the
Company by giving notice to you. Any such termination shall be without
liability of the Company to the Underwriters and without liability of the
Underwriters to the Company; provided, however, that in the event of any such
termination the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all costs and expenses referred to in
paragraphs (g) and (h) of Section 6 hereof.
9. Indemnification and Contribution
(a) Subject to the provisions of paragraph (d) of this Section 9, the
Company agrees to indemnify and hold harmless each Underwriter (and any person
participating in the distribution who is deemed to be an underwriter (as defined
in Section 2(11) of the Securities Act) and each person (including each member
or officer thereof), if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages or liabilities, joint or several
(and actions in respect thereof), to which such indemnified parties or any of
them may become subject, under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise, and
the Company agrees to reimburse
-21-
each such Underwriter and controlling person for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities, or in connection with any investigation or inquiry of, or other
proceeding that may be brought against, the respective indemnified parties, in
each case arising out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
any material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstance under which they were
made, not misleading, (iii) any untrue statement or alleged untrue statement of
any material fact contained in any audio or visual materials provided by the
Company or based upon written information furnished by or on behalf of the
Company including, without limitation, slides, videos, films or tape recordings,
used in connection with the marketing of the Underwritten Stock, including
without limitation, untrue or alleged untrue statements communicated to
securities analysts employed by the Underwriters; provided, however, that (i)
the indemnity agreement of the Company contained in this paragraph (a) shall not
apply to any such loss, claim, damage, liability or action if such statement or
omission was made in reliance upon and in conformity with information furnished
as herein stated or otherwise furnished in writing to the Company by or on
behalf of any Underwriter expressly for use in any Preliminary Prospectus or the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, and (ii) that the indemnity agreement contained in this
paragraph (a) with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter (or such persons) if the person asserting any such
loss, claim, damage, liability or action purchased Shares that are the subject
thereof to the extent that any such loss, claim, damage, liability or action (A)
results from the fact that such Underwriter failed to send or give a copy of the
Prospectus (as amended or supplemented) to such person at or prior to the
confirmation of the sale of such Shares to such person in any case where such
delivery is required by the Securities Act and (B) arises out of or is based
upon an untrue statement or omission of a material fact contained in such
Preliminary Prospectus that was corrected in the Prospectus (as amended and
supplemented), unless such failure resulted from non-compliance by the
-22-
Company with paragraph (c) of Section 6 hereof. The indemnity agreements of the
Company contained in this paragraph (a) and the representations and warranties
of the Company contained in Section 2 hereof shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery and payment for the Shares.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
Registration Statement, each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and the other Underwriters against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject, under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise and to
reimburse each of them for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding that may be brought
against, the respective indemnified parties, in each case arising out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(ii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstance under which they were made, not
misleading, in each case to the extent, but only to the extent, that such
statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing by or
on behalf of such indemnifying Underwriter to the Company expressly for use in
the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, and will reimburse, as incurred, all legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action. The indemnity agreement of each Underwriter
contained in this paragraph (b) shall remain operative and in full
-23-
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery and payment for the Shares.
(c) Each party indemnified under the provisions of paragraph (a) or (b) of
this Section 9 agrees that, upon the service of a summons or other initial legal
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceeding against it, in respect of which indemnity may be sought on account
of any indemnity agreement contained in such paragraphs, such indemnified party
will promptly notify any party or parties from whom indemnification may be
sought hereunder of the commencement thereof in writing. No indemnification
provided for in such paragraphs shall be available to any party who shall fail
so to give such notice if the party to whom such notice was not given was
unaware of the action, suit, investigation, inquiry or proceeding to which such
notice would have related and was prejudiced by the failure to give the notice,
but the omission so to notify such indemnifying party or parties of any such
service or notification shall not relieve such indemnifying party or parties
from any liability that it or they may have to the indemnified party for
contribution or otherwise than on account of such indemnity agreement. Any
indemnifying party or parties against which a claim is to be made will be
entitled, at its own expense, to participate in the defense of such action,
suit, investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of
notice from the indemnified party or parties of an action, suit, investigation
or inquiry to which indemnity may be sought, to assume the entire defense
thereof (alone or in conjunction with any other indemnifying party or parties),
at its own expense, in which case such defense shall be conducted by counsel
reasonably satisfactory to the indemnified party or parties; provided, however,
that (i) if the indemnified party or parties has reasonably concluded that there
may be a conflict between the positions of the indemnifying party or parties and
of the indemnified party or parties in conducting the defense of such action,
suit, investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct such defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties; and (ii) in any event, the
indemnified party or parties shall be entitled to have counsel chosen by such
indemnified party or parties participate in, but not conduct, the defense. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 9 for any legal or
-24-
other expenses (other than the reasonable costs of investigation) subsequently
incurred by such indemnified party in connection with the defense thereof unless
(i) the indemnified party has employed such counsel in connection with the
assumption of different or additional legal defenses in accordance with the
proviso to the immediately preceding sentence; or (ii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party. If no such notice to assume the defense
of such action has been given within a reasonable time of the indemnified
party's or parties' notice to such indemnifying party or parties, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 9 is unavailable
or insufficient to hold harmless an indemnified party under paragraph (a) or (b)
above in respect of any losses, claims, damages, expenses or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) referred to in paragraphs
(a) and (b) above (i) in such proportion as is appropriate to reflect the
relative benefits received by each of the contributing parties from the offering
of the Shares; or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of each of the contributing parties, on the one hand, and the party to be
indemnified, on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Shares (before deducting expenses) and the total underwriting discount received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus, bear to the aggregate public offering price of the Shares.
Relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
each indemnifying party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be determined by pro rata allocation or
by any other method of allocation that does not take into account the equitable
consideration referred to above. The amount paid or payable by an indemnified
party as a result of
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the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this paragraph (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this paragraph (d), no Underwriter shall be required to contribute
any amount in excess of the underwriting discount applicable to the Shares
purchased by the Underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this paragraph
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect to which a claim for contribution may be made against another
party or parties under this paragraph (d), it will promptly notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any other obligation it may have hereunder or otherwise
(except as specifically provided in paragraph (c) of this Section 9). The
contribution agreement set forth above shall be in addition to any liabilities
that any indemnifying party may have at common law or otherwise.
(e) No indemnifying party will, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such indemnified
party or any person who controls such Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act is a party to such
claim, action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of such indemnified party and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding.
10. Reimbursement of Certain Expenses
In addition to their other obligations under Section 9 of this Agreement,
the Company hereby agrees to reimburse on a quarterly basis the Underwriters for
all reasonable legal and other expenses incurred in connection with
investigating or defending any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in paragraph (a) of Section 9 of this
Agreement, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the
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obligations under this Section 10 and the possibility that such payments might
later be held to be improper; provided, however, that (i) to the extent that any
such payment is ultimately held to be improper, the Underwriters shall promptly
refund it; and (ii) the Underwriters shall provide to the Company, upon request,
reasonable assurances of their ability to effect any refund, when and if due.
11. Representations, etc. to Survive Delivery
The respective representations, warranties, agreements, covenants,
indemnities and statements of, and on behalf of, the Company and its officers,
and the Underwriters, respectively, set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Underwriters, and will survive delivery of and
payment for the Shares. Any successors to the Underwriters shall be entitled to
the indemnity, contribution and reimbursement agreements contained in this
Agreement.
12. Termination
(a) This Agreement (except for the provisions of Section 9 hereof) may be
terminated by you by notice to the Company at any time prior to the Closing Date
if: (i) the Company shall have sustained a loss by strike, fire, flood, accident
or other calamity of such a character as to interfere materially with the
conduct of the business and operations of the Company regardless of whether or
not such loss was insured; (ii) trading in the Common Stock shall have been
suspended or trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been suspended
or limitations on such trading shall have been imposed or limitations on prices
shall have been established on any such exchange or market system; (iii) the
engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States on
or after the date hereof shall have occurred; (iv) any outbreak of hostilities
or other national or international calamity or crisis or material adverse change
in economic or political conditions shall have occurred if the effect of such
outbreak, calamity, crisis or change in economic or political conditions in the
financial markets of the United States would, in your reasonable judgment, make
the offering or delivery of the Shares impracticable; (v) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of, or commencement of any proceeding or investigation
by, any court, legislative body, agency or other governmental authority shall
have occurred that in the Underwriter's reasonable opinion materially and
adversely affects or will materially or adversely affect the business or
operations of the Company; (vi) a banking moratorium shall have been declared by
New York or United States authorities; or (vii) the taking of
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any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs shall have occurred that in your reasonable judgment
has a material adverse effect on the securities markets in the United States.
(b) If this Agreement is terminated pursuant to this Section 12, there
shall be no liability of the Company to the Underwriters and no liability of the
Underwriters to the Company; provided, however, that in the event of any such
termination, the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all costs and expenses referred to in
paragraphs (g) and (h) of Section 6. Notwithstanding any termination of this
agreement, the provisions of Section 9 hereof shall survive and remain in full
force and effect.
13. Notices
All communications hereunder shall be in writing and if sent to the
Underwriters shall be mailed or delivered or telegraphed and confirmed by letter
or telecopied and confirmed by letter to XX Xxxxxxxxx & Co., LLC at 000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attn: Xxxxxxx Xxxxxxxx,
with copies to Xxxxxxx Coie LLP, 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxxxx, 00000, Attn: Xxxxxxx X. Xxxxxxxxx, Esq., or, if sent to the
Company, shall be mailed or delivered or telegraphed and confirmed to the
Company at 0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx, 00000,
Attn: Xxxxx X. Xxxxxx, with copies to Xxxxxx & Xxxxxxx LLP, U.S. Bank Centre,
Suite 3400, 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx, 00000, Attn: Xxxxx X.
Xxxxxxx, Xx., Esq.
14. Successors
This agreement shall be to the benefit of and be binding upon the Company
and the Underwriters and, with respect to the provisions of Section 9 hereof,
the several parties (in addition to the Company and the Underwriters)
indemnified under the provisions of said Section 9, and their respective
personal representatives, successors and assigns. Nothing in this agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this agreement, or any provisions
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Shares from the
Underwriters.
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15. Counterparts
This agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which together shall be deemed to
be one and the same instrument.
16. Governing Law
This agreement shall be governed by and construed in accordance with the
laws of the State of California. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby may
be instituted in the federal courts of the United States of America located in
the City and County of San Francisco or the courts of the State of California in
each case located in the City and County of San Francisco (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, 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.
If the foregoing correctly sets forth our understanding, please indicate
the Underwriters' acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
BRIAZZ, Inc.
By:
--------------------------------
Its
-----------------------------
Accepted as of the date first above
written:
XX Xxxxxxxxx & Co., LLC
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------------------------------------
As Representative of the Several
Underwriters
By: XX Xxxxxxxxx & Co., LLC
By:
---------------------------------
Its
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SCHEDULE I
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UNDERWRITERS
Number of Shares to
Underwriters Be Purchased
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XX Xxxxxxxxx & Co., LLC...............................
