4,000,000 Shares(1)
XXXXXX.XXX, INC.
Common Stock
UNDERWRITING AGREEMENT
___________, 1999
Xxxxx Xxxxx Xxxxxx & Company L.L.C.
Prudential Securities, Inc.
E*Trade Securities, Inc.
As Representatives of the several Underwriters
c/x Xxxxx Xxxxx Xxxxxx & Company
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs and Madams:
XxxxxX.xxx, Inc., a Washington corporation (the "Company"), proposes to
issue and sell 4,000,000 shares (the "Firm Shares") of its authorized but
unissued Common Stock, $.01 par value (the "Common Stock"). The Company proposes
to grant to the Underwriters (as defined below) an option to purchase up to
600,000 additional shares of Common Stock (the "Optional Shares" and, with the
Firm Shares, collectively, 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 several underwriters, for whom you are acting,
named in Schedule I hereto (collectively, the "Underwriters," which term shall
also include any underwriter purchasing Stock pursuant to Section 3(b) hereof).
You represent and warrant that you have been authorized by each of the other
Underwriters to enter into this Agreement on its behalf and to act for it in the
manner herein provided.
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the several Underwriters as of the date hereof
and as of each Closing Date (as defined below) that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No.
333-78271), 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
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(1) Plus an option to purchase from the Company up to 600,000 additional shares
to cover over-allotments.
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.
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 (a "Rule 462(b)
registration statement"), and, in the event of any amendment thereto after the
effective date of such registration statement (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.
(b) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation under the laws of the
jurisdiction of its incorporation, has full corporate power and authority to
own or lease its properties and conduct its business as described in the
Registration Statement and the Prospectus and as being conducted, and is duly
qualified as a foreign corporation and in good standing in all jurisdictions
in which the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary (except where the
failure to be so qualified would not have a material adverse effect on the
business, business prospects, properties, condition (financial or otherwise)
or results of operations of the Company and its subsidiaries, taken as a
whole).
(c) The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit 21 to the Registration Statement. The Company
owns all of the outstanding capital stock of its subsidiaries free and clear
of all claims, liens, charges and encumbrances, except that the Company has
pledged its shares of stock of its subsidiary to secure its obligations under
that certain Guaranty Agreement dated April 30, 1999, by and between the
Company and Seafirst Bank. The Company and each of its subsidiaries are in
possession of and operating in compliance with all material authorizations,
licenses, permits, consents, certificates and orders material to the conduct
of their respective businesses as described in the Prospectus, all of which
are valid and in full force and effect.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
any materially adverse change in the business, financial projections,
properties, condition (financial or otherwise) or results of operations of
the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, other than as set forth
in the Registration Statement and the Prospectus, and since such dates,
except in the ordinary course of business, neither the Company nor any of its
subsidiaries has entered into any material transaction not referred to in the
Registration Statement and the Prospectus.
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(e) The Registration Statement and the Prospectus comply, and
on the Closing Date (as hereinafter defined) and any later date on which
Optional Shares are 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; 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 Optional Shares are to be purchased, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that none of the representations and warranties in this subparagraph 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 through you expressly for use in the Registration Statement or
the Prospectus.
(f) The Company had authorized and outstanding capital stock
as set forth under the heading "Capitalization" in the Prospectus as of the
date indicated therein. The authorized capital stock of the Company has not
been increased, and the number of outstanding shares of capital stock of the
Company has not increased since the date of the Prospectus other than
pursuant to the exercise of options or warrants exercised in the ordinary
course of business. Such issued and outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws,
and were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities. All issued and
outstanding shares of capital stock of each subsidiary of the Company have
been duly authorized and validly issued and are fully paid and nonassessable.
Except as disclosed in or contemplated by the Prospectus and the financial
statements of the Company and the related notes thereto included in the
Prospectus, neither the Company nor any subsidiary had, as of the dates set
forth in the Prospectus, any outstanding options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations (collectively, "Rights"). Since the
dates set forth in the Prospectus, the Company has issued Rights with respect
to no more than [__________] shares of its capital stock. The description of
the Company's stock option, stock purchase and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents the
information required by the Securities Act and the Rules and Regulations to
be shown with respect to such plans, arrangements, options and rights.
(g) The Shares are duly authorized, will be, when issued and
sold to the Underwriters as provided herein, validly issued, fully paid and
nonassessable and conform to the description thereof 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 to be
sold by the Company as contemplated herein.
(h) Prior to the Closing Date, the Shares will be authorized
for listing on the Nasdaq National Market upon official notice of issuance.
(i) The Shares will be sold free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest, and will
conform to the description thereof contained in the Prospectus. No preemptive
right, co-sale right, registration right, right of first refusal or other
similar right to subscribe for or purchase securities of the Company exists
with respect to the issuance and sale of the Shares by the Company pursuant
to this Agreement. No shareholder of the Company has any right which has not
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been waived, or complied with, to require the Company to register the sale of
any shares owned by such shareholder under the Securities Act in the public
offering contemplated by this Agreement.
(j) The Company has full corporate power and authority to
enter into this Agreement and perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium laws affecting creditors' rights generally and
except as to those provisions relating to indemnity or contribution for
liabilities arising under federal and state securities laws. The making and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby (i) will not violate any provisions of the
Articles of Incorporation, Bylaws or other organizational documents of the
Company or any of its subsidiaries, and (ii) will not materially conflict
with, result in a material breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a material default
under (A) any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties may be bound or affected, or (B) any
statute or any authorization, judgment, decree, order, rule or regulation of
any court or any regulatory body, administrative agency or other governmental
body applicable to the Company or any of its subsidiaries or any of their
respective properties. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental body
that has not already been obtained is required for the execution and delivery
of this Agreement or the consummation of the transactions contemplated by
this Agreement, except for compliance with the Securities Act, the Blue Sky
laws applicable to the public offering of the Shares by the several
Underwriters and the clearance of such offering with the NASD.
(k) The consolidated and pro forma financial statements and
schedules of the Company and the related notes thereto included in the
Registration Statement and the Prospectus present fairly on a consolidated
and pro forma basis the financial position of the Company and its
subsidiaries as of the respective dates of such financial statements and
schedules, and the results of operations, cash flows and shareholders' equity
of the Company and its subsidiaries for the respective periods covered
thereby. Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods specified, as certified by the
independent accountants named in subsection (ee) below, except as indicated
in the Prospectus with respect to pro forma adjustments. No other financial
statements or schedules are required to be included in the Registration
Statement. The selected financial data set forth in the Prospectus under the
captions "Capitalization" and "Selected Consolidated Financial Information"
fairly present the information set forth therein on the basis stated in the
Prospectus.
(l) 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
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The representations and warranties
given by the Company and its officers to its independent public accountants
for the purpose of supporting the letters referred to in Section 9(f) are
true and correct.
(m) Neither the Company nor any of its subsidiaries is (i) in
violation or default of any provision of its Articles of Incorporation,
Bylaws or other organizational documents, or (ii) in a material
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breach of or material default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which it is a party or by which it
or any of its properties are bound; and there does not exist any state of
facts which, with notice or lapse of time or both would constitute such a
breach or default on the part of the Company or its subsidiaries.
(n) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
which have not been described or filed as required. The contracts so
described in the Prospectus are in full force and effect on the date hereof.
(o) Except as disclosed in the Prospectus, there are no legal
or governmental actions, suits or proceedings pending or, to the knowledge of
the Company, threatened to which the Company or any of its subsidiaries is or
is, to the knowledge of the Company, threatened to be made a party or of
which property owned or leased by the Company or any of its subsidiaries is
or is, to the knowledge of the Company, threatened to be made the subject,
which actions, suits or proceedings could reasonably be expected to,
individually or in the aggregate, prevent or adversely affect the
transactions contemplated by this Agreement or result in a material adverse
change in the business, financial projections, properties, condition
(financial or otherwise), or results of operations of the Company or its
subsidiaries; and no labor disturbance by the employees of the Company or any
of its subsidiaries exists or, to the knowledge of the Company, is imminent
which could reasonably be expected to materially adversely affect the
business, financial projections, properties, condition (financial or
otherwise), or results of operations of the Company or its subsidiaries.
Neither the Company nor any of its subsidiaries is a party or subject to the
provisions of any material injunction, judgment, decree or order of any
court, regulatory body, administrative agency or other governmental body.
Except as disclosed in the Prospectus, there are no material legal or
governmental actions, suits or proceedings pending or, to the Company's
knowledge, threatened against any executive officers or directors of the
Company.
(p) The Company or the applicable subsidiary has good and
marketable title to all the properties and assets which are material to its
business subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except (i) those, if any, reflected in the Prospectus, or (ii) those
which are not material in amount to the Company and its subsidiaries, taken
as a whole, and do not adversely affect the use made and proposed to be made
of such property by the Company and its subsidiaries. The Company or the
applicable subsidiary holds its leased properties under valid and binding
leases. Except as disclosed in the Prospectus, the Company owns or leases all
such properties as are necessary to its operations as now conducted or as
proposed to be conducted.
(q) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as described
in or specifically contemplated by the Prospectus: (i) the Company and its
subsidiaries have not paid or declared any dividends or other distributions
with respect to their respective capital stock and the Company and its
subsidiaries are not in default in the payment of principal or interest on
any outstanding debt obligations; and (ii) there has not been any material
increase in the short- or long-term debt of the Company and its subsidiaries.
(r) The Company is and its subsidiaries are conducting
business in compliance with all applicable laws, rules and regulations of the
jurisdictions in which they are conducting business, except where the failure
to be so in compliance would not have a material adverse effect on the
business, financial projections, properties, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole.
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(s) The Company and its subsidiaries have filed all material
federal, state and foreign income and franchise tax returns, and all such tax
returns are ocmplete and correct in all material respects, and the Company
and its subsidiaries have not failed to pay any excise, franchise or other
state corporate taxes which were payable pursuant to said returns or any
assessments with respect thereto. The Company has no knowledge of any tax
deficiency which has been or is likely to be threatened or asserted against
the Company or its subsidiaries.
(t) The Company has not distributed, and will not distribute
prior to the later to occur of (i) completion of the distribution of the
Shares, or (ii) the expiration of any time period within which a dealer is
required under the Securities Act to deliver a prospectus relating to the
Shares, any offering material in connection with the offering and sale of the
Shares other than the Prospectus, the Registration Statement and any other
materials permitted by the Securities Act and consented to by the
Underwriters.
(u) Each of the Company and its subsidiaries maintains
insurance of the types and in the amounts generally deemed adequate for their
business, including, but not limited to, directors' and officers' insurance,
insurance covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against, all of which insurance is in
full force and effect. The Company has not been refused any insurance
coverage sought or applied for, and the Company has no reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not materially
adversely affect the business, financial projections, properties, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries, taken as a whole.
(v) Neither the Company nor any of its subsidiaries nor, to
the best of the Company's knowledge, any of their employees or agents has at
any time since the Company's inception (i) made any unlawful contribution to
any candidate for foreign office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any foreign,
federal or state governmental officer or official or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
(w) The Company has not taken and will not take, directly or
indirectly, any action designed to or that could 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.
(x) Except as described in the Prospectus, all outstanding
shares of Common Stock, and all securities convertible into or exercisable or
exchangeable for Common Stock, are subject to agreements in the Form attached
hereto as Annex B (herein called the "Lock-up Agreements") that restrict the
holders thereof from selling, making any short sale of, granting any option
for the purchase of, or otherwise transferring or disposing of, any of such
shares of Common Stock, or any such securities convertible into or
exercisable or exchangeable for Common Stock, for a period of 180 days after
the date of the Prospectus without the prior written consent of Xxxxx Xxxxx
Xxxxxx & Company, and nothing has come to your attention that would
reasonably lead you to believe that any such Agreement is not valid, binding
and enforceable.
(y) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate located
in Cuba.
(z) The Company and its subsidiaries have sufficient
trademarks, trade names, patent rights, copyrights, licenses, approvals and
governmental authorizations to conduct their businesses as now conducted and
as proposed to be conducted in the Prospectus without, to the Company's
knowledge, any
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violation of similar rights of others; the expiration of any trademarks (other
than the "ImageX" trademark), trade names, patent rights, copyrights, licenses,
approvals or governmental authorizations would not have a material adverse
effect on the business, business prospects, properties, condition (financial or
otherwise) or results of operations have been of the Company or its
subsidiaries; the Company has no knowledge of any infringement by the Company or
its subsidiaries of trademark, trade name rights, patent rights, copyrights,
licenses, trade secret or other similar rights of others; and no claims have
been made or are, to the knowledge of the Company, threatened against the
Company or its subsidiaries regarding trademark, trade name, patent, copyright,
license, trade secret or other infringement which could have a material adverse
effect on the business, financial projections, properties, condition (financial
or otherwise) or results of operations or prospects of the Company and its
subsidiaries, taken as a whole.
(aa) (i) the Company and its subsidiaries are in compliance in all
material respects with all rules, laws and regulations relating to the use,
treatment, storage and disposal of toxic substances and protection of health or
the environment ("Environmental Laws") which are applicable to their business,
(ii) neither the Company nor any of its subsidiaries has received any notice
from any governmental authority or third party of an asserted claim under
Environmental Laws, other than certain notices received by the Company's
subsidiary previously disclosed to you, (iii) no facts currently exist that will
require the Company or any of its subsidiaries to make future material capital
expenditures to comply with Environmental Laws, and (iv) to the knowledge of the
Company, no property which is or has been owned, leased or occupied by the
Company or any of its subsidiaries has been designated as a Superfund site
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Section 9601, ET SEQ.), or otherwise
designated as a contaminated site under applicable state or local law.
(bb) The Company is not and will not, as a result of the sale
of the Shares and the application of the proceeds therefrom, become, an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
(cc) The Company and its subsidiaries have complied and are in
compliance with all federal, state, local and foreign statutes, executive
orders, proclamations, regulations, rules, directives, decrees, ordinances
and similar provisions having the force or effect of law and all judicial and
administrative orders, rulings, determinations and common law concerning the
importation of merchandise, the export or reexport of products, services and
technology, and the terms and conduct of international transactions
applicable to the Company and its subsidiaries in connection with the conduct
of the Company's or any subsidiary's business (including as the same relates
to record keeping requirements) ("International Trade Laws and Regulations"),
in each case except as would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; neither the Company nor any
of its subsidiaries has made or provided any material false statement or
material omission to any agency of any federal, state or local government,
purchasers of products, or foreign government or foreign agency, in
connection with the exportation of merchandise (including with respect to
export licenses, exceptions and other export authorizations and any filings
required for or related to exportation of any item), the importation of
merchandise or other approvals required by a foreign government or agency or
any other requirement relating to any International Trade Laws and
Regulations; neither the Company nor any of its subsidiaries has made any
payment, offer, gift, promise to give, or authorized or otherwise
participated in, assisted or facilitated any payment or gift related to the
Company's or any subsidiary's business that is prohibited by the United
States Foreign Corrupt Practices Act.
(dd) 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, except
for such certificates, authorizations and permits, the failure of which to
possess would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, and neither the Company
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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, singly 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, taken as a whole, except as described the in
Prospectus.
(ee) PricewaterhouseCoopers LLP are independent public
accountants with respect to the Company and its subsidiaries as required by
the Securities Act.
(ff) Except as disclosed in the Prospectus, 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.
(gg) The Company has reviewed its operations and the operations
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 any of 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 taken
as a whole. The "Year 2000 Problem" as used herein means any significant risk
that the computer hardware or software used in the receipt, transmission,
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.
The terms "Knowledge" and "to the Company's Knowledge" and similar
references in this Section 1 shall mean actual knowledge of the executive
officers of the Company.
SECTION 2. 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 agrees to
issue and sell the Firm Shares to the several Underwriters, and each of the
Underwriters agrees to purchase from the Company the respective aggregate
number of Firm Shares set forth opposite its name in Schedule I. The price at
which such Firm Shares shall be sold by the Company and purchased by the
several Underwriters shall be $___ per share. In making this Agreement, each
Underwriter is contracting severally and not jointly; except as provided in
paragraphs (b) and (c) of this Section 2, the agreement of each Underwriter
is to purchase only the respective number of shares of the Firm Shares
specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall
fail or refuse (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 8 or 9 hereof)
to purchase and pay for the number of Shares agreed to be purchased by such
Underwriter or Underwriters, the Company shall immediately give notice
thereof to you, and the non-defaulting Underwriters shall have the right
within 24 hours after the receipt by you of such notice to purchase, or
procure one or more other Underwriters to purchase, in such proportions as
may be agreed upon between you and such purchasing Underwriter or
Underwriters and upon the terms herein set forth, all or any part of Shares
which such defaulting Underwriter or Underwriters agreed to purchase. If the
non-defaulting Underwriters fail so to make such arrangements with respect to
all such shares, the number of Shares which each non-defaulting Underwriter
is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares
and portion which the defaulting Underwriter or Underwriters agreed to
purchase; PROVIDED, HOWEVER, that the non-defaulting Underwriters shall not
be obligated to purchase the
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portion which the defaulting Underwriter or Underwriters agreed to purchase
if the aggregate number of such Shares exceeds 10% of the total number of
Shares which all Underwriters agreed to purchase hereunder. If the total
number of Shares which the defaulting Underwriter or Underwriters agreed to
purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company shall have the right, within 24 hours next
succeeding the 24-hour period above referred to, to make arrangements with
other underwriters or purchasers 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 4 hereof for not more than seven business
days after the date originally fixed as the Closing Date pursuant to Section
4 in order that any necessary changes in the Registration Statement, the
Prospectus or any other documents or arrangements may be made. If neither the
non-defaulting Underwriters nor the Company shall make arrangements within
the 24-hour periods stated above for the purchase of all of the Shares which
the defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter and
without any liability on the part of any non-defaulting Underwriter to the
Company. Nothing in this paragraph (b), and no action taken hereunder, shall
relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and
covenants herein contained, and subject to the terms and conditions herein
set forth, the Company grants an option to the several Underwriters to
purchase, severally and not jointly, up to 600,000 Optional Shares from the
Company at the same price per share as the Underwriters shall pay for the
Firm Shares. Said option may be exercised only to cover over-allotments in
the sale of the Firm Shares by the Underwriters and may be exercised in whole
or in part at any time on or before the thirtieth day after the date of this
Agreement upon written or telegraphic notice by you to the Company setting
forth the aggregate number of Optional Shares as to which the several
Underwriters are exercising the option. Delivery of certificates for the
Optional Shares, and payment therefor, shall be made as provided in Section 4
hereof. The number of Optional Shares to be purchased by each Underwriter
shall be the same percentage of the total number of Optional Shares to be
purchased by the several Underwriters as such Underwriter is purchasing of
the Firm Shares, as adjusted by you in such manner as you deem advisable to
avoid fractional shares.
SECTION 3. OFFERING BY UNDERWRITERS.
(A) The terms of the initial public offering by the
Underwriters of the Shares to be purchased by them shall be as set forth in
the Prospectus. The Underwriters may from time to time change the public
offering price after the closing of the initial public offering and increase
or decrease the concessions and discounts to dealers as they may determine.
(b) The information (insofar as such information relates to
the Underwriters) set forth in the last paragraph on the front cover page and
under "Underwriting" in the Registration Statement, any Preliminary
Prospectus and the Prospectus constitutes the only information furnished by
the Underwriters to the Company for inclusion in the Registration Statement,
any Preliminary Prospectus, and the Prospectus, and you on behalf of the
respective Underwriters represent and warrant to the Company that the
statements made therein are correct and do not omit to state any fact
necessary to make such statements, in light of the circumstances in which
they are made, not misleading.
SECTION 4. DELIVERY OF AND PAYMENT FOR THE SHARES.
(A) Delivery of certificates for the Firm Shares and the Optional
Shares (if the option granted by Section 2(c) hereof shall have been exercised
not later than 7:00 A.M., San Francisco time, on the
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date two business days preceding the Closing Date), and payment therefor,
shall be made at the office of Xxxxxxx Coie LLP in Seattle, Washington, at
7:00 a.m., San Francisco time, on the fourth business day after the date of
this Agreement, or at such time on such other day, not later than seven full
business days after such fourth business day, as shall be agreed upon in
writing by the Company and you. The date and hour of such delivery and
payment (which may be postponed as provided in Section 2(b) hereof) are
herein called the "Closing Date".
(b) If the option granted by Section 2(c) hereof shall be
exercised after 7:00 a.m., San Francisco time, on the date two business days
preceding the Closing Date, delivery of certificates for the shares of
Optional Shares, and payment therefor, shall be made at the office of Xxxxxxx
Coie LLP, at 7:00 a.m., San Francisco time, on the third business day after
the exercise of such option.
(c) Payment for the shares purchased from the Company shall be
made to the Company or its order, by (i) one or more certified or official
bank check or checks in same day funds or (ii) federal funds wire transfer in
same day funds. Such payment shall be made upon delivery of certificates for
the shares to you for the respective accounts of the several Underwriters
(including without limitation by "full-fast" electronic transfer by
Depository Trust Company) against receipt therefor signed by you.
Certificates for the shares to be delivered to you shall be registered in
such name or names and shall be in such denominations as you may request at
least one business day before the Closing Date, in the case of Firm Shares,
and at least one business day prior to the purchase thereof, in the case of
the Optional Shares. Such certificates will be made available to the
Underwriters for inspection, checking and packaging at the offices of agent
of Xxxxx Xxxxx Xxxxxx & Company's clearing agent, Bear Xxxxxxx Securities
Corp., on the business day prior to the Closing Date or, in the case of the
Optional Shares, by 3:00 p.m., New York time, on the business day preceding
the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or any later date on which Optional Shares
are purchased for the account of such Underwriter. Any such payment by you shall
not relieve such Underwriter from any of its obligations hereunder.
SECTION 5. 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 any amendment to the Registration
Statement or supplement to the Prospectus of which you shall not previously
have been advised and furnished with a copy or to which you shall have
reasonably objected in writing or which is not in compliance with the
Securities Act or the rules and regulations of the Commission.
(b) The Company will promptly notify each Underwriter in the
event of (i) the request by the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, (ii) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, (iii) the institution or
notice of intended institution of any action or proceeding for that purpose,
(iv) the receipt by the Company of any notification with respect to the
suspension of the qualification of the shares for sale in any jurisdiction,
or (v) the receipt by it of notice of the initiation or threatening of any
proceeding for such purpose. The Company will make every reasonable effort to
prevent the issuance of such a stop order and, if such an order shall at any
time be issued, to obtain the withdrawal thereof at the earliest possible
moment.
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(c) The Company will (i) on or before the Closing Date,
deliver to you a signed copy of the Registration Statement as originally
filed and of each amendment thereto filed prior to the 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
furnished to you) and will also deliver to you, for distribution to the
Underwriters, a sufficient number of additional conformed copies of each of
the foregoing (but without exhibits) so that one copy of each may be
distributed to each Underwriter, (ii) as promptly as possible deliver to you
and send to the several Underwriters, at such office or offices as you may
designate, as many copies of the Prospectus as you may reasonably request,
and (iii) thereafter from time to time during the period in which a
prospectus is required by law to be delivered by an Underwriter or dealer,
likewise send to the Underwriters as many additional copies of the Prospectus
and as many copies of any supplement to the Prospectus and of any amended
prospectus, filed by the Company with the Commission, as you may reasonably
request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer (the "Prospectus
Delivery Period") any event relating to or affecting the Company, or of which
the Company shall be advised in writing by you, shall occur as a result of
which it is necessary, in the reasonable opinion of counsel for the Company
or in the reasonable opinion 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 promptly 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 the Prospectus Delivery Period, the Underwriters
shall propose to vary the terms of offering thereof by reason of changes in
general market conditions or otherwise, you will advise the Company in
writing of the proposed variation, and, if in the reasonable opinion either
of counsel for the Company or in the reasonable opinion of counsel for the
Underwriters such proposed variation requires that the Prospectus be
supplemented or amended, the Company will promptly 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 several 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 dealer, in keeping such qualifications in good standing under
said securities or blue sky laws; PROVIDED, HOWEVER, that the Company shall
not be obligated to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified. The Company will, from time to time, prepare and file such
statements, reports, and other documents as are or may be required to
continue such qualifications in effect for so long a period as you may
reasonably request for distribution of the shares.
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(g) During a period of five years commencing with the date
hereof, the Company will furnish to you, and to each Underwriter who may so
request in writing, copies of all periodic and special reports furnished to
shareholders of the Company and of all information, documents and reports
filed with the Commission, other than documents filed after completion of
this offering as to which confidential treatment is granted by the
Commission, which shall be provided in redacted form.
(h) Not later than the 45th day following the end of the
fiscal quarter first occurring after the first anniversary of the Effective
Date, the Company will make generally available to its security holders an
earnings statement in accordance with Section 11(a) of the Securities Act and
Rule 158 thereunder.
(i) For a period of one year commencing with the date hereof,
the Company agrees, at the Company's expense, to cause the Company's
regularly engaged independent certified public accountant to review (but not
audit) the Company's financial statements in accordance with the procedures
specified by the American Institute of Certified Public Accountants for a
review of interim financial information as described in Statement on Auditing
Standards No. 71 "Interim Financial Information" for each of the three fiscal
quarters prior to the announcement of quarterly financial information, the
filing of the Company's Quarterly Report on Form 10-Q with the Commission and
the mailing of quarterly financial information to shareholders of the Company.
(j) The Company agrees to pay all costs and expenses incident
to the performance of its obligations under this Agreement, including all
costs and expenses incident to (i) the preparation, printing and filing with
the Commission and the National Association of Securities Dealers, Inc.
("NASD") of the Registration Statement, any Preliminary Prospectus and the
Prospectus, (ii) the furnishing to the Underwriters and the persons
designated by them of copies of any Preliminary Prospectus and of the several
documents required by paragraph (c) of this Section 5 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
5, (v) the furnishing to you and the Underwriters of the reports and
information referred to in paragraph (g) of this Section 5 and (vi) the
printing and issuance of stock certificates, including the transfer agent's
fees.
(k) The Company agrees to reimburse you, for the account of
the several Underwriters, for blue sky fees and related disbursements
(including related counsel fees not to exceed $_______ and disbursements and
costs 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.
(l) The Company hereby agrees that, without the prior written
consent of Xxxxx Xxxxx Xxxxxx & Company L.L.C. on behalf of the Underwriters,
the Company will not, for a period of 180 days following the date the
Registration Statement becomes effective, (i) offer, sell, contract to sell,
make any short sale (including without limitation short against the box),
pledge, or otherwise dispose of, directly or indirectly, any shares of Common
Stock or any options to acquire shares of Common Stock or securities
convertible into or exchangeable or exercisable for or any other rights to
purchase or acquire Common Stock (including without limitation, Common Stock
of the Company which may be deemed to be beneficially owned in accordance
with the rules and regulations of the Commission) or (ii) enter into any swap
or other agreement that transfers, in whole or in part, any of the economic
consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the shares to be sold to the Underwriters pursuant to
this Agreement, (B) shares of Common Stock issued by the Company upon the
conversion of convertible securities outstanding as of the date hereof or
upon the exercise of options granted
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under the option plans of the Company (the "Option Plans") or upon the
exercise of warrants outstanding as of the date hereof, all as described in
footnote 1 to the table under the caption "Capitalization" in the Preliminary
Prospectus, (C) options to purchase Common Stock granted under the Option
Plans in the ordinary course after the date hereof, (D) shares of Common
Stock issued under the Company's 1999 Employee Stock Purchase Plan after the
date hereof, (E) up to 4,000,000 shares of Common stock issued in connection
with strategic acquisitions or alliances approved by the Company's Board of
Directors and (F) warrants to purchase up to 200,000 shares of Common Stock
issued to consultants and approved by the Company's Board of Directors;
PROVIDED that prior to issuance of any securities pursuant to the foregoing
clauses (E) and (F), (1) the Company shall have provided you with at least
ten (10) days advance written notice of the material terms of the issuance
(provided that you shall have executed and delivered reasonably satisfactory
confidentiality agreements with respect to such information), and (2) the
holders of any securities so issued shall have entered into Lock-Up
Agreement; provided further that your consent to an issuance of securities in
connection with a strategic acquisition or alliance approved by the Company's
Board of Directors in excess of the amount specified in the foregoing clause
(E) shall not be unreasonably withheld.
(m) If at any time during the 25-day period after the
Registration Statement becomes effective any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
reasonable opinion the market price for the Shares has been or is likely to
be materially affected (regardless of whether such rumor, publication or
event necessitates a supplement to or amendment of the Prospectus), the
Company will, after written notice from you advising the Company to the
effect set forth above, promptly prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event.
(n) The Company agrees: (i) to enforce the terms of each
Lock-up Agreement and (ii) issue stop-transfer instructions to the transfer
agent for the Common Stock with respect to any transaction or contemplated
transaction that would constitute a breach of or default under the applicable
Lock-up Agreement. In addition, except with the prior written consent of
Xxxxx Xxxxx Xxxxxx & Company, the Company agrees (i) not to amend or
terminate, or waive any right under, any Lock-up Agreement, or take any other
action that would directly or indirectly have the same effect as an amendment
or termination, or waiver of any right under, any Lock-up Agreement, that
would permit any holder of shares of Common Stock, or securities convertible
into or exercisable or exchangeable for Common Stock, to sell, make any short
sale of, grant any option for the purchase of, or otherwise transfer or
dispose of, any such shares of Common Stock or other securities prior to the
expiration of 180 days after the date of the Prospectus, and (ii) not to
consent to any sale, short sale, grant of any option for the purchase of, or
other disposition or transfer of shares of Common Stock, or securities
convertible into or exercisable or exchangeable for Common Stock, subject to
a Lock-up Agreement.
(o) The Company agrees to maintain directors' and officers'
insurance in amounts customary for the size and nature of the Company's
business for a period of two years from the date of this Agreement.
SECTION 6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person (including each partner or officer thereof) who
controls any Underwriter within the meaning of Section 15 of the Securities
Act from and against any and all losses, claims, damages or liabilities,
joint or several, to which such indemnified parties, or any of them, may
become subject under the Securities Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or the common law or otherwise, and the
Company agrees to reimburse each such Underwriter and controlling person for
any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred
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by the respective indemnified parties in connection with defending against
any such losses, claims, damages or liabilities or in connection with any
investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as
part thereof and any Rule 462(b) registration statement) or any
post-effective amendment thereto (including any Rule 462(b) registration
statement), or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus or the
Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the
omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that (1) the
indemnity agreements of the Company contained in this paragraph (a) shall not
apply to any such losses, claims, damages, liabilities or expenses if such
statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing to
the Company by or on behalf of any Underwriter through you expressly for use
in any Preliminary Prospectus or the Registration Statement or the Prospectus
or any such amendment thereof or supplement thereto, and (2) the indemnity
agreement contained in this paragraph (a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages, liabilities or expenses
purchased the Shares which is the subject thereof (or to the benefit of any
person controlling such Underwriter) if at or prior to the written
confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such
person and the untrue statement or omission of a material fact contained in
such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented) unless the failure is the result of
noncompliance by the Company with paragraph (c) of Section 5 hereof. The
indemnity agreements of the Company contained in this paragraph (a) and the
representations and warranties of the Company contained in Section 2 hereof
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Shares.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its officers who signs the Registration
Statement on his own behalf or pursuant to a power of attorney, each of its
directors, each other Underwriter and each person (including each partner or
officer thereof) who controls the Company or any such other Underwriter
within the meaning of Section 15 of the Securities Act, from and against any
and all losses, claims, damages or liabilities, joint or several, to which
such indemnified parties, or any of them, may become subject under the
Securities Act, the Exchange Act, or the common law or otherwise and to
reimburse each of them for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as
part thereof and any Rule 462(b) registration statement) or any
post-effective amendment thereto (including any Rule 462(b) registration
statement) or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any
amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, if such statement or omission
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was made in reliance upon and in conformity with information furnished as
herein stated or otherwise furnished in writing to the Company by or on
behalf of such indemnifying Underwriter through you expressly for use in the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto. The indemnity agreement of each Underwriter contained in
this paragraph (b) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery of and payment for the shares.
(c) Each party indemnified under the provision of paragraphs
(a) and (b) of this Section 6 agrees that, upon the service of a summons or
other initial legal process upon it in any action or suit instituted against
it or upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in
such paragraphs, it will promptly give written notice (the "Notice") of such
service or notification to the party or parties from whom indemnification may
be sought hereunder. No indemnification provided for in such paragraphs shall
be available to any party who shall fail so to give the Notice if the party
to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related
and was prejudiced by the failure to give the Notice, but the omission so to
notify such indemnifying party or parties of any such service or notification
shall not relieve such indemnifying party or parties from any liability which
it or they may have to the indemnified party for contribution or otherwise
than on account of such indemnity agreement except to the extent the
indemnifying party was prejudiced by the failure to notify. Any indemnifying
party shall be entitled at its own expense to participate in the defense of
any action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(the "Notice of Defense") to the indemnified party, to assume (alone or in
conjunction with any other indemnifying party or parties) the entire defense
of such action, suit, investigation, inquiry or proceeding, in which event
such defense shall be conducted, at the expense of the indemnifying party or
parties, by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties; PROVIDED,
HOWEVER, that (i) if the indemnified party or parties reasonably determine
that there may be a conflict between the positions of the indemnifying party
or parties and of the indemnified party or parties in conducting the defense
of such action, suit, investigation, inquiry or proceeding or that there may
be legal defenses available to such indemnified party or parties different
from or in addition to those available to the indemnifying party or parties,
then counsel for the indemnified party or parties shall be entitled to
conduct the defense to the extent reasonably determined by such counsel to be
necessary to protect the interests of the indemnified party or parties and
(ii) in any event, the indemnified party or parties shall be entitled to have
counsel chosen by such indemnified party or parties participate in, but not
conduct, the defense. If, within 30 days after receipt of the Notice, an
indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
paragraphs (a) through (c) of this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with
the defense of the action, suit, investigation, inquiry or proceeding, except
that (A) the indemnifying party or parties shall bear the reasonable legal
and other expenses incurred in connection with the conduct of the defense as
referred to in clause (i) of the proviso to the preceding sentence and (B)
the indemnifying party or parties shall bear such other reasonable expenses
as it or they have authorized to be incurred by the indemnified party or
parties. If, within 30 days after receipt of the Notice, no Notice of Defense
has been given, the indemnifying party or parties shall be responsible for
any reasonable 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 6 is
unavailable or insufficient to hold harmless an indemnified party to the
extent provided under paragraph (a) or (b) of this Section 6 (other
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than due to a failure to provide Notice in accordance with paragraph (c) of
this Section 6), then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in paragraph (a) or (b) of this Section 6 (i) in such proportion
as is appropriate to reflect the relative benefits received by each
indemnifying party 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
indemnifying party in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, or actions in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering of the shares received by the Company
bear to the total underwriting discount and commissions received by the
Underwriters, as set forth in the table on the cover page of the Prospectus.
Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Shares purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 6).
(e) No indemnifying party shall, 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
indemnified party 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.
SECTION 7. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to its other
obligations under Section 6 of this Agreement, each indemnifying party hereby
agrees to reimburse on a monthly basis the indemnified part(ies) for all
reasonable legal and other expenses incurred in connection with investigating or
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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 6 of this Agreement (unless the
indemnifying party shall have assumed the defense of such action, investigation,
inquiry or proceeding pursuant to Section 6(c) hereof), notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the obligations under this Section 7 and the possibility that such payments
might later be held to be improper; PROVIDED, HOWEVER, that (i) to the extent
any such payment is ultimately held to be improper, the indemnified party
receiving such payments shall promptly refund them and (ii) such indemnified
party shall provide to the indemnifying party, upon request, reasonable
assurances of their ability to effect any refund, when and if due.
SECTION 8. TERMINATION. This Agreement may be terminated by you at any
time prior to the Closing Date by giving written notice to the Company in
accordance with Section 9, or if after the date of this Agreement trading in the
Common Stock shall have been suspended, or if there shall have occurred (i) 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, (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change in economic or
political conditions in the financial markets of the United States or the
Company's industry sector would, in the Underwriters' reasonable judgment, make
the offering or delivery of the shares impracticable, (iii) suspension of
trading in securities generally or a material adverse decline in value of
securities generally on the New York Stock Exchange, or The Nasdaq Stock Market,
or limitations on prices (other than limitations on hours or numbers of days of
trading) for securities on either such exchange or system, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of, or commencement of any proceeding or investigation
by, any court, legislative body, agency or other governmental authority which in
the Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company,
(v) declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company to the Underwriters
and no liability of the Underwriters to the Company; PROVIDED, HOWEVER, that in
the event of any such termination the Company agrees to indemnify and hold
harmless the Underwriters from all costs or expenses incident to the performance
of the obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (j) and (k) of Section 5 hereof.
SECTION 9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters to purchase and pay for the Shares shall be subject to
the performance by the Company of all its obligations to be performed hereunder
at or prior to the Closing Date or any later date on which Optional Shares are
to be purchased, as the case may be, and to the following further conditions:
(a) The Registration Statement shall have become effective;
and no stop order suspending the effectiveness thereof shall have been issued
and no proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Shares
hereunder and the validity and form of the certificates representing the
shares, all corporate proceedings and other legal matters incident to the
foregoing, and the form of the Registration Statement and of the Prospectus
(except as to the financial statements contained therein), shall have been
approved at or prior to the Closing Date by Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx;
Professional Corporation, counsel for the Underwriters.
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(c) You shall have received from Xxxxxxx Coie LLP, counsel for
the Company, an opinion, addressed to the Underwriters and dated the Closing
Date, covering the matters set forth in Annex A hereto, and if Optional
Shares are purchased at any date after the Closing Date, additional opinions
from such counsel, addressed to the Underwriters and dated such later date,
confirming that the statements expressed as of the Closing Date in such
opinions remain valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date,
the statements made in the Registration Statement and the Prospectus were
true and correct, and neither the Registration Statement nor the Prospectus
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein, respectively, not misleading; (ii)
since the Effective Date, no event has occurred which should have been set
forth in a supplement or amendment to the Prospectus which has not been set
forth in such a supplement or 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 or affecting the business, properties,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, and, since such dates, except in the
ordinary course of business, neither the Company nor any of its subsidiaries
has entered into any material transaction not referred to in the Registration
Statement in the form in which it originally became effective and the
Prospectus contained therein; (iv) the Commission has not issued any order
preventing or suspending the use of the Prospectus or any Preliminary
Prospectus filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness of the Registration
Statement has been issued; and to the knowledge of the Company, no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act; (v) neither the Company nor any of
its subsidiaries has any material contingent obligations which are not
disclosed in the Registration Statement and the Prospectus; (vi) there are
not any pending or known threatened legal proceedings to which the Company or
any of its subsidiaries is a party or of which property of the Company or any
of its subsidiaries is the subject which are material and which are not
disclosed in the Registration Statement and the Prospectus; (vii) there are
not any franchises, contracts, leases or other documents which are required
to be filed as exhibits to the Registration Statement which have not been
filed as required; (viii) 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 Optional Shares are to be purchased, as the case
may be; and (ix) there has not been any material change in the market for
securities in general or in political, financial or economic conditions from
those reasonably foreseeable as to render it impracticable in your reasonable
judgment to make a public offering of the Shares, or a material adverse
change in market levels for securities in general (or those of companies in
particular) or financial or economic conditions which render it inadvisable
to proceed.
(e) You shall have received on the Closing Date and on any
later date on which Optional Shares are purchased a certificate, dated the
Closing Date or such later date, as the case may be, and signed by the
President and the Chief Financial Officer of the Company, stating that the
respective signers of said certificate have carefully examined the
Registration Statement in the form in which it originally became effective
and the Prospectus contained therein and any supplements or amendments
thereto, and that the statements included in clauses (i) through (viii) of
paragraph (d) of this Section 9 are true and correct.
(f) You shall have received from PricewaterhouseCoopers LLP, a
letter or letters, addressed to the Underwriters and dated the Closing Date
and any later date on which Optional Shares are purchased, confirming that
they are 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 you concurrently with the execution of this Agreement
(the
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"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 Optional Shares
are 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 which are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information. The letters shall not disclose any change, or any development
involving a prospective change, in or affecting the business or properties of
the Company or any of its subsidiaries which, in your sole judgment, makes it
impractical or inadvisable to proceed with the public offering of the shares
or the purchase of the Optional Shares as contemplated by the Prospectus.
(g) You shall have received from PricewaterhouseCoopers LLP a
letter stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's financial statements as at
December 31, 1998 and March 31, 1999, did not disclose any weakness in
internal controls that they considered to be material weaknesses.
(h) Prior to the Closing Date, the shares to be issued and
sold by the Company shall have been duly authorized for listing by the Nasdaq
National Market upon official notice of issuance.
(i) On or prior to the Closing Date, you shall have received
from all directors and officers and holders of substantially all of the
Company's outstanding Common Stock agreements, in the form of Annex B or form
reasonably satisfactory to Xxxxx Xxxxx Xxxxxx & Company, to the effect that
without the prior written consent of Xxxxx Xxxxx Xxxxxx & Company on behalf
of the Underwriters, such person or entity will not, for a period of 180 days
following the commencement of the public offering of the Stock by the
Underwriters, directly or indirectly, sell, offer, contract to sell, transfer
the economic risk of ownership in, make any short sale, pledge or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exchangeable for or any other rights to purchase or acquire Common Stock.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, counsel for the Underwriters, shall be satisfied that they comply
in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving written notice to
the Company in accordance with Section 12 hereof. Any such termination shall be
without liability of the Company to the Underwriters and without liability of
the Underwriters to the Company; PROVIDED, HOWEVER, that (i) in the event of
such termination, the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (j) and (k) of Section 5 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 (other than the conditions set forth in paragraphs 9(b) or
9(d)(ix)), 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.
SECTION 10. CONDITIONS OF THE OBLIGATION OF THE COMPANY. The obligation
of the Company to deliver the shares shall be subject to the conditions that
(a) the Registration Statement shall have become
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effective and (b) no stop order suspending the effectiveness thereof shall be
in effect and no proceedings therefor shall be pending or threatened by the
Commission.
In case either of the conditions specified in this Section 10 shall
not be fulfilled, this Agreement may be terminated by the Company by giving
notice to you. Any such termination shall be without liability of the Company to
the Underwriters and without liability of the Underwriters to the Company;
PROVIDED, HOWEVER, that in the event of any such termination the Company agrees
to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company under this
Agreement, including all costs and expenses referred to in paragraphs (j) and
(k) of Section 5 hereof.
SECTION 11. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of the Company and the several Underwriters and, with
respect to the provisions of Section 6 hereof, the several parties (in addition
to the Company and the several Underwriters) indemnified under the provisions of
said Section 6, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the shares from any of the several Underwriters.
SECTION 12. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to Xxxxx Xxxxx Xxxxxx &
Company L.L.C., Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxx; and if to the Company, shall be mailed, telegraphed
or delivered to it at its office, 00000 X.X. 0xx Xxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx, President and Chief Executive
Officer with a copy to Xxxxxxx Coie LLP, 0000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx. All notices given by telegraph
shall be promptly confirmed by letter.
SECTION 13. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or their respective directors or officers, and (c)
delivery and payment for the shares under this Agreement; PROVIDED, HOWEVER,
that if this Agreement is terminated prior to the Closing Date, the provisions
of paragraphs (j) and (k) of Section 5 hereof shall be of no further force or
effect.
SECTION 14. 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.
SECTION 15. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 16. GENERAL. 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. This Agreement may be executed in several
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counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and you.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon, when
confirmed and accepted by the underwriters as evidenced by the signature of
Xxxxx Xxxxx Xxxxxx & Company L.L.C. below, it will become a binding agreement
among the Company and the several Underwriters, including you, all in accordance
with its terms.
Very truly yours,
XXXXXX.XXX, INC.
By:
----------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
The foregoing Underwriting
Agreement is hereby confirmed
and accepted by us in San
Francisco, California as of
the date first above written.
XXXXX XXXXX XXXXXX & COMPANY L.L.C.
PRUDENTIAL SECURITIES, INC.
E*TRADE SECURITIES, INC.
BY XXXXX XXXXX XXXXXX & COMPANY L.L.C.
Acting for ourselves and as
Representatives of the several
Underwriters named in the
attached Schedule A
By:
-----------------------------
Authorized Signatory
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SCHEDULE I
UNDERWRITERS
NUMBER OF
UNDERWRITERS SHARES
TO BE
PURCHASED
Xxxxx Xxxxx Xxxxxx & Company L.L.C. . . . . . . . . . . . .
Prudential Securities, Inc. . . . . . . . . . . . . . . . .
E*Trade Securities, Inc. . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . .
---------
---------
I-1.
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF XXXXXXX COIE LLP
COUNSEL FOR THE COMPANY
A-1.
ANNEX B
FORM OF LOCK-UP AGREEMENT
B-1.
