Exhibit 1.1
4,250,000 Shares
XXXXXXX.XXX, INC.
Common Stock par value $0.001 per share
UNDERWRITING AGREEMENT
----------------------
, 2000
Credit Suisse First Boston Corporation,
Chase Securities Inc.,
Bear, Xxxxxxx & Co. Inc.
SoundView Technology Group, Inc.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Xxxxxxx.xxx, Inc., a Delaware corporation ("the Company"),
proposes to issue and sell 4,250,000 shares ("the Firm Securities") of its
Common Stock, par value $0.001 per share ("the Securities") and also proposes to
issue and sell to the Underwriters, at the option of the Underwriters, an
aggregate of not more than 637,500 additional shares ("the Optional Securities")
of its Securities as set forth below. The Firm Securities and the Optional
Securities are herein collectively called the "Offered Securities." As part of
the offering contemplated by this Agreement, Credit Suisse First Boston
Corporation and Chase Securities Inc. (the "Designated Underwriters") have
agreed to reserve out of the Firm Securities purchased by them under this
Agreement, up to 425,000 shares, for sale to the Company's directors, officers,
employees and other parties associated with the Company (collectively,
"Participants"), as set forth in the Prospectus (as defined herein) under the
heading "Underwriting" (the "Directed Share Program"). The Firm Securities to be
sold by the Designated Underwriters pursuant to the Directed Share Program (the
"Directed Shares") will be sold by the Designated Underwriters pursuant to this
Agreement at the public offering price. Any Directed Shares not subscribed for
by the end of the business day on which this Agreement is executed will be
offered to the public by the Underwriters as set forth in the Prospectus. The
Company hereby agrees with the several Underwriters named in Schedule A hereto
("the Underwriters") as follows:
2. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, the several Underwriters that:
(a) A registration statement (No. 333-30674) relating to the Offered
Securities ("the Underlying Shares"), including a form of prospectus, has been
filed with the Securities and Exchange Commission ("Commission") and either (i)
has been declared effective under the Securities Act of 1933 ("Act") and is not
proposed to be amended or (ii) is proposed to be amended by amendment or post-
effective amendment. If such registration statement ("initial registration
statement") has been declared effective, either (i) an additional registration
statement ("additional registration statement") relating to the Offered
Securities may have been filed with the Commission pursuant to Rule 462(b)
("Rule 462(b)") under the Act and, if so filed, has become effective upon filing
pursuant to such Rule and the Offered
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Securities all have been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional registration
statement or (ii) such an additional registration statement is proposed to be
filed with the Commission pursuant to Rule 462(b) and will become effective
upon filing pursuant to such Rule and upon such filing the Offered Securities
will all have been duly registered under the Act pursuant to the initial
registration statement and such additional registration statement. If the
Company does not propose to amend the initial registration statement or if an
additional registration statement has been filed and the Company does not
propose to amend it, and if any post-effective amendment to either such
registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent amendment (if any)
to each such registration statement has been declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c) ("Rule
462(c)") under the Act or, in the case of the additional registration
statement, Rule 462(b). For purposes of this Agreement, "Effective Time" with
respect to the initial registration statement or, if filed prior to the
execution and delivery of this Agreement, the additional registration
statement means (i) if the Company has advised the Representatives that it
does not propose to amend such registration statement, the date and time as of
which such registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this Agreement,
was declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (ii) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which such
registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission. If an
additional registration statement has not been filed prior to the execution
and delivery of this Agreement but the Company has advised the Representatives
that it proposes to file one, "Effective Time" with respect to such additional
registration statement means the date and time as of which such registration
statement is filed and becomes effective pursuant to Rule 462(b). "Effective
Date" with respect to the initial registration statement or the additional
registration statement (if any) means the date of the Effective Time thereof.
The initial registration statement, as amended at its Effective Time,
including all information contained in the additional registration statement
(if any) and deemed to be a part of the initial registration statement as of
the Effective Time of the additional registration statement pursuant to the
General Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration statement
as of its Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the
Act, is hereinafter referred to as the "Initial Registration Statement". The
additional registration statement, as amended at its Effective Time, including
the contents of the initial registration statement incorporated by reference
therein and including all information (if any) deemed to be a part of the
additional registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement". The Initial Registration Statement and the Additional Registration
Statement are herein referred to collectively as the "Registration Statements"
and individually as a "Registration Statement". The form of prospectus
relating to the Offered Securities, as first filed with the Commission
pursuant to and in accordance with Rule 424(b) ("Rule 424(b)") under the Act
or (if no such filing is required) as included in a Registration Statement, is
hereinafter referred to as the "Prospectus". No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement: (i) on the Effective Date of
the Initial Registration Statement, the Initial Registration Statement conformed
in all respects to the requirements of the Act and the rules and regulations of
the Commission ("Rules and Regulations") and did not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
on the Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not include, or
will not include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) on the date of
this Agreement, the Initial Registration
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Statement and, if the Effective Time of the Additional Registration Statement
is prior to the execution and delivery of this Agreement, the Additional
Registration Statement each conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b) or (if no such filing is required) at the
Effective Date of the Additional Registration Statement in which the
Prospectus is included, each Registration Statement and the Prospectus will
conform, in all material respects to the requirements of the Act and the Rules
and Regulations, and neither of such documents includes, or will include, any
untrue statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement and the Prospectus will conform in all material
respects to the requirements of the Act and the Rules and Regulations, neither
of such documents will include any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and no Additional Registration
Statement has been or will be filed. The two preceding sentences do not apply
to statements in or omissions from a Registration Statement or the Prospectus
based upon written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only such information is that described as such in Section
7(b) hereof.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of
its business requires such qualification, other than where the failure to be
so qualified or in good standing would not have a Material Adverse Effect (as
defined herein).
(d) The Company has no subsidiaries.
(e) The Offered Securities and all other outstanding shares of capital
stock of the Company have been duly authorized; all outstanding shares of
capital stock of the Company are, and, when the Offered Securities have been
delivered and paid for in accordance with this Agreement on each Closing Date
(as defined below), such Offered Securities will have been, validly issued,
fully paid and nonassessable and will conform as to legal matters to the
description thereof contained in the Prospectus; and the stockholders of the
Company have no preemptive rights with respect to the Securities.
(f) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would give
rise to a valid claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with this offering.
(g) 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 Act with respect to any securities of
the Company owned or to be owned by such person or, except as disclosed in the
Prospectus, to require the Company to include such securities in the securities
registered pursuant to a Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company
under the Act, other than those that have been waived.
(h) The Offered Securities have been approved for listing on The Nasdaq
Stock Market's National Market, subject to notice of issuance.
(i) No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required for the consummation of the
transactions contemplated by this Agreement in connection with the issuance and
sale of the Offered Securities by the Company, except such as have been obtained
and made under the Act and such as may be required under state securities laws.
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(j) The execution, delivery and performance of this Agreement, and the
issuance and sale of the Offered Securities will not result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any statute, any rule, regulation or order of any governmental agency or body or
any court, domestic or foreign, having jurisdiction over the Company or any of
its properties, or any agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the properties of the
Company is subject, or the charter or by-laws of the Company, and the Company
has full power and authority to authorize, issue and sell the Offered Securities
as contemplated by this Agreement.
(k) This Agreement has been duly authorized, executed and delivered by
the Company.
(l) Except as disclosed in the Prospectus, the Company has good and
marketable title to all real properties and all other properties and assets
owned by it, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the use made or
to be made thereof by them; and except as disclosed in the Prospectus, the
Company holds any leased real or personal property under valid and enforceable
leases with no exceptions that would materially interfere with the use made or
proposed to be made thereof by them.
(m) The Company possesses adequate certificates, authorities or permits
issued by appropriate governmental agencies or bodies necessary to conduct the
business now operated by it and has not received any notice of proceedings
relating to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company, would individually or in
the aggregate have a material adverse effect on the condition (financial or
other), business, properties or results of operations of the Company ("Material
Adverse Effect").
(n) No labor dispute with the employees of the Company exists or, to the
knowledge of the Company, is imminent that might have a Material Adverse Effect.
(o) The Company owns, possesses or can acquire on reasonable terms,
adequate trademarks, trade names and other rights to inventions, know-how,
patents, licenses, trade secrets, copyrights, confidential information and other
intellectual property (collectively, "intellectual property rights") necessary
to conduct the business now operated by it, or presently employed by it, and has
not received any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if determined
adversely to the Company, would individually or in the aggregate have a Material
Adverse Effect. The intellectual property rights of the Company referred to in
the prospectus do not, to the Company's knowledge, infringe or conflict with any
intellectual property right of any third party.
(p) Except as disclosed in the Prospectus, the Company is not in
violation of any statute, any rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "environmental laws"), owns or operates any
real property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation which might lead to such a claim.
(q) Except as disclosed in the Prospectus, there are no pending actions,
suits or proceedings against or affecting the Company, or any of its properties
that, if determined adversely to the Company, would individually or in the
aggregate have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement, or which are otherwise
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material in the context of the sale of the Offered Securities; and no such
actions, suits or proceedings are threatened or, to the Company's knowledge,
contemplated.
(r) The financial statements included in each Registration Statement and
the Prospectus present fairly the financial position of the Company as of the
dates shown and its results of operations and cash flows for the periods shown,
and such financial statements have been prepared in conformity with the
generally accepted accounting principles in the United States applied on a
consistent basis.
(s) Except as disclosed in the Prospectus, since the date of the latest
audited financial statements included in the Prospectus there has been no
material adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of the Company, and, except as disclosed in
or contemplated by the Prospectus, there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock.
(t) The Company is not and, after giving effect to the offering and sale
of the Offered Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940.
(u) The Company (i) has notified each holder of a currently outstanding
option issued under the Company's 1999 Stock Option Plan and 2000 Omnibus Equity
Incentive Plan (the "Option Plans"), and each person who has acquired Securities
pursuant to the exercise of any option granted under the Option Plans that
pursuant to the terms of the Option Plans, none of such options or shares may be
sold or otherwise transferred or disposed of for a period of 180 days after the
date of the initial public offering of the Offered Securities and (ii) has
imposed a stop-transfer instruction with the Company's transfer agent in order
to enforce the foregoing lock-up provision imposed pursuant to the Option Plans.
(v) Except as disclosed in the Prospectus, at least ___% of the
outstanding Securities, and securities convertible into or exercisable or
exchangeable for Securities, are subject to valid and binding agreements
(collectively, "Lock-up Agreements") that restrict the holders thereof from
offering to sell, selling, contracting to sell, pledging or otherwise disposing
of directly or indirectly, any Securities or any such Securities convertible
into or exercisable or exchangeable for Securities, entering into a transaction
which would have the same effect, or entering into any swap, hedge or other
arrangement that transfers, in whole or in part, the economic risk of ownership
of any Securities, or publicly disclosing any intention to do any of the
foregoing, for a period of 180 days after the date of the Prospectus without the
prior written consent of Credit Suisse First Boston Corporation.
(w) The Company (i) has notified each stockholder who is party to the
Amended and Restated Investors' Rights Agreement dated June 14, 2000 (the
"Rights Agreement"), that pursuant to the terms of the Rights Agreement, none of
the shares of the Company's capital stock held by such stockholder may be sold
or otherwise transferred or disposed of for a period of 180 days after the date
of the initial public offering of the Offered Securities and (ii) has imposed a
stop-transfer instruction with the Company's transfer agent in order to enforce
the foregoing lock-up provision imposed pursuant to the Rights Agreement.
(x) The Company represents and warrants to the Underwriters that (i) the
Registration Statement, the Prospectus and any preliminary prospectus comply,
and any further amendments or supplements thereto will comply, with any
applicable laws or regulations of foreign jurisdictions in which the Prospectus
or any preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the Directed Share Program, and that (ii) no
authorization, approval, consent, license, order, registration or qualification
of or with any government, governmental instrumentality or court, other
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than such as have been obtained, is necessary under the securities law and
regulations of foreign jurisdictions in which the Directed Shares are offered
outside the United States.
(y) The Company has not offered, or caused the Underwriters to offer, any
offered Securities to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of $ per share, the respective
numbers of shares of Firm Securities set forth opposite the names of the
Underwriters in Schedule A hereto.
The Company will deliver the Firm Securities to the Representatives for the
accounts of the Underwriters, against payment of the purchase price in Federal
(same day) funds by official bank check or checks or wire transfer to an account
at a bank acceptable to CSFBC drawn to the order of the Company at the office of
Pillsbury Madison & Sutro LLP ("Pillsbury Madison & Sutro"), 0000 Xxxxxxx
Xxxxxx, Xxxx Xxxx, XX 00000, at 10:00 A.M., New York time, on
, 2000, or at such other time not later than seven full business days thereafter
as CSFBC and the Company determine, such time being herein referred to as the
"First Closing Date". For purposes of Rule 15c6-1 under the Securities Exchange
Act of 1934, the First Closing Date (if later than the otherwise applicable
settlement date) shall be the settlement date for payment of funds and delivery
of securities for all the Offered Securities sold pursuant to the offering. The
certificates for the Firm Securities so to be delivered will be in definitive
form, in such denominations and registered in such names as CSFBC requests and
will be made available for checking and packaging at the office of CSFBC at
least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company from time
to time not more than 30 days subsequent to the date of the Prospectus, the
Underwriters may purchase all or less than all of the Optional Securities at the
purchase price per Security to be paid for the Firm Securities. The Company
agrees to sell to the Underwriters the number of shares of Optional Securities
specified in such notice and the Underwriters agree, severally and not jointly,
to purchase such Optional Securities. Such Optional Securities shall be
purchased for the account of each Underwriter in the same proportion as the
number of shares of Firm Securities set forth opposite such Underwriter's name
bears to the total number of shares of Firm Securities (subject to adjustment by
CSFBC to eliminate fractions) and may be purchased by the Underwriters only for
the purpose of covering over-allotments made in connection with the sale of the
Firm Securities. No Optional Securities shall be sold or delivered unless the
Firm Securities previously have been, or simultaneously are, sold and delivered.
The right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by CSFBC to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters against payment of
the purchase price therefor in Federal (same day) funds by official bank check
or checks or wire transfer to an account at a bank acceptable to CSFBC drawn to
the order of the Company, at the above office of Pillsbury Madison & Sutro.
The certificates for the Optional Securities being purchased on each Optional
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Closing Date will be in definitive form, in such denominations and registered in
such names as CSFBC requests upon reasonable notice prior to such Optional
Closing Date and will be made available for checking and packaging at the above
office of CSFBC at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) If the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement, the Company will file the
Prospectus with the Commission pursuant to and in accordance with subparagraph
(1) (or, if applicable and if consented to by CSFBC, subparagraph (4)) of Rule
424(b) not later than the earlier of (A) the second business day following the
execution and delivery of this Agreement or (B) the fifteenth business day after
the Effective Date of the Initial Registration Statement.
The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the Offered
Securities under the Act but the Effective Time thereof has not occurred as of
such execution and delivery, the Company will file the additional registration
statement or, if filed, will file a post-effective amendment thereto with the
Commission pursuant to and in accordance with Rule 462(b) on or prior to 10:00
P.M., New York time, on the date of this Agreement or, if earlier, on or prior
to the time the Prospectus is printed and distributed to any Underwriter, or
will make such filing at such later date as shall have been consented to by
CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to amend or
supplement the initial or any additional registration statement as filed or the
related prospectus or the Initial Registration Statement, the Additional
Registration Statement (if any) or the Prospectus and will not effect such
amendment or supplementation without CSFBC's consent; and the Company will also
advise CSFBC promptly of the effectiveness of each Registration Statement (if
its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration Statement
or the Prospectus and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its best efforts
to prevent the issuance of any such stop order and to obtain as soon as possible
its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered Securities
is required to be delivered under the Act in connection with sales by any
Underwriter or dealer, any event occurs as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Company will promptly notify CSFBC of such event and will
promptly prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither CSFBC's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date (as
defined below), the Company will make generally available to its securityholders
an earnings statement covering a period of at least 12 months beginning after
the Effective Date of the Initial Registration Statement (or, if later, the
Effective Date of the Additional Registration Statement) which will satisfy the
provisions of Section 11(a) of the Act. For the purpose of the preceding
sentence, "Availability Date" means the 45th day after the
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end of the fourth fiscal quarter following the fiscal quarter that includes
such Effective Date, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "Availability Date" means the 90th day
after the end of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement five of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a prospectus
relating to the Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case in such quantities as
CSFBC requests. The Prospectus shall be so furnished on or prior to 3:00 P.M.,
New York time, on the business day following the later of the execution and
delivery of this Agreement or the Effective Time of the Initial Registration
Statement. All other documents shall be so furnished as soon as available. The
Company will pay the expenses of printing and distributing to the Underwriters
all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC designates and
will continue such qualifications in effect so long as required for the
distribution.
(g) During the period of five years hereafter, the Company will furnish
to the Representatives and, upon request, to each of the other Underwriters, as
soon as practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to the
Representatives (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Securities Exchange Act of 1934 or mailed to stockholders, and (ii) from time to
time, such other information concerning the Company as CSFBC may reasonably
request.
(h) The Company will pay all expenses incident to the performance of its
obligations under this Agreement, for any filing fees and other expenses
(including fees and disbursements of counsel) incurred in connection with
qualification of the Offered Securities for sale under the laws of such
jurisdictions as CSFBC designates and the printing of memoranda relating
thereto, for the filing fee incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. (the "NASD") of the Offered
Securities, for any travel expenses of the Company's officers and employees and
any other expenses of the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities and for expenses
incurred in distributing preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto) to the Underwriters.
(i) For a period of 180 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell, contract
to sell, pledge or otherwise dispose of, directly or indirectly, or file with
the Commission a registration statement under the Act relating to, any
additional shares of its Securities or securities convertible into or
exchangeable or exercisable for any shares of its Securities, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of CSFBC, except issuances of
Securities pursuant to the conversion or exchange of convertible or exchangeable
securities or the exercise of warrants or options, in each case outstanding on
the date hereof, or grants of employee stock options pursuant to the terms of a
plan in effect on the date hereof, including but not limited to the Option Plans
or issuances of Securities pursuant to the exercise of such options.
(j) The Company agrees to use its best efforts to cause (i) each of its
directors, officers and stockholders and (ii) each person who acquires
Securities of the Company pursuant to the exercise of any option or right
granted under the Option Plans, to sign an agreement that restricts such person
from selling, making any short sale of, granting any option for the purchase of,
or otherwise transferring or disposing of,
8
any of such Securities, or any such securities convertible into or exercisable
or exchangeable for Securities, for a period of 180 days after the date of the
Prospectus without the prior written consent of CSFBC; and, unless otherwise
instructed by CSFBC, the Company will (i) enforce the terms of each such
agreement and (ii) issue and impose a stop-transfer instruction with the
Company's transfer agent in order to enforce the foregoing lock-up agreements.
(k) Unless otherwise instructed by CSFBC, the Company will (i) enforce
the terms of each Lock-up Agreement, and (ii) issue stop-transfer instructions
to the transfer agent for the Securities 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 CSFBC, 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 Securities, or any securities convertible into, or exercisable or
exchangeable for, Securities, to make any short sale of, grant any option for
the purchase of, or otherwise transfer or dispose of, any such Securities or
other securities, prior to the expiration of the 180 days after the date of
the Prospectus and (ii) not to consent to any sale, short sale, grant of an
option for the purchase of, or other disposition or transfer of shares of
Securities, or securities convertible into or exercisable or exchangeable for
Securities, subject to a Lock-up Agreement.
(l) In connection with the Directed Share Program, the Company will
ensure that the Directed Shares will be restricted to the extent required by
the NASD or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. The Designated Underwriters will
notify the Company as to which Participants will need to be so restricted. The
Company will direct the transfer agent to place stop transfer restrictions
upon such securities for such period of time.
(m) The Company will pay all fees and disbursements of counsel incurred
by the Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
underwriters in connection with the Directed Share Program.
Furthermore, the Company covenants with the Underwriters that the
Company will comply with all applicable securities and other applicable laws,
rules and regulations in each foreign jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company herein, to the accuracy of the statements
of Company officers made pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall be on
or prior to the date of this Agreement or, if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, shall be prior to the filing of the amendment or post-effective
amendment to the registration statement to be filed shortly prior to such
Effective Time), of Ernst & Young LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect that:
9
(i) in their opinion the financial statements examined by
them and included in the Registration Statements comply as to form in all
material respects with the applicable accounting requirements of the Act and
the related published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards No. 71,
Interim Financial Information, on the unaudited financial statements included
in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements of the
Company, inquiries of officials of the Company who have responsibility for
financial and accounting matters and other specified procedures, nothing came
to their attention that caused them to believe that:
(A) the unaudited financial statements included in
the Registration Statements do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
published Rules and Regulations or any material modifications should be made
to such unaudited financial statements for them to be in conformity with
generally accepted accounting principles;
(B) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date not more than
three business days prior to the date of this Agreement, there was any change
in the capital stock or any increase in short-term indebtedness or long-term
debt of the Company and its consolidated subsidiaries or, at the date of the
latest available balance sheet read by such accountants, there was any
decrease in total assets or stockholders' equity, as compared with amounts
shown on the latest balance sheet included in the Prospectus; or
(B) for the period from the closing date of the
latest income statement included in the Prospectus to the closing date of the
latest available income statement read by such accountants there were any
decreases, as compared with the corresponding period of the previous year and
with the period of corresponding length ended the date of the latest income
statement included in the Prospectus, in consolidated net revenues or in the
total or per share amounts of consolidated net loss;
except in all cases set forth in clause (A) above for changes, increases or
decreases which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent that such
dollar amounts, percentages and other financial information are derived from
the general accounting records of the Company and its subsidiaries subject to
the internal controls of the Company's accounting system or are derived
directly from such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with such
results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statement is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration is
subsequent to such execution and delivery, "Registration Statements" shall mean
the Initial Registration Statement and the additional registration statement as
proposed to be filed or as proposed to be
10
amended by the post-effective amendment to be filed shortly prior to its
Effective Time, and (iii) "Prospectus" shall mean the prospectus included in
the Registration Statements.
(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time
shall have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or such later date as shall have been consented to by CSFBC. If
the Effective Time of the Additional Registration Statement (if any) is not
prior to the execution and delivery of this Agreement, such Effective Time
shall have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later date as
shall have been consented to by CSFBC. If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, the Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this Agreement.
Prior to such Closing Date, no stop order suspending the effectiveness of a
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving
a prospective change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries taken
as one enterprise which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and makes
it impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities; (ii) any
downgrading in the rating of any debt securities or preferred stock of the
Company by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act), or any public announcement
that any such organization has under surveillance or review its rating of any
debt securities or preferred stock of the Company (other than an announcement
with positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (iii) any material suspension or
material limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such exchange, or
any suspension of trading of any securities of the Company on any exchange or
in the over-the-counter market; (iv) any banking moratorium declared by U.S.
Federal or New York authorities; or (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the Underwriters
including the Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment for
the Offered Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of Pillsbury Madison & Sutro LLP, counsel for the Company, to
the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business as
described in the Prospectus; and the Company is duly qualified to do business as
a foreign corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires such
qualification other than where the failure to be so qualified or in good
standing would not have a Material Adverse Effect on the Company;
(ii) The Offered Securities delivered on such Closing Date
have been duly authorized and when issued, delivered and paid for by the
Underwriters in accordance with the terms of this Agreement will be validly
issued, fully paid and nonassessable and conform as to legal matters to the
description thereof contained in the Prospectus, all other outstanding shares
of the capital stock of the
11
Company have been duly authorized and validly issued and are fully paid and
nonassessable and the stockholders of the Company have no preemptive rights
with respect to the Securities;
(iii) There are no contracts, agreements or understandings
known to such counsel between the Company and any person granting such person
the right to require the Company to file a registration statement under the
Act with respect to any securities of the Company owned or to be owned by such
person or except as described in the Prospectus, to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Act, other than
such rights as have been waived;
(iv) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in connection
with the issuance or sale of the Offered Securities by the Company, except
such as have been obtained and made under the Act and such as may be required
under state securities laws;
(v) The execution, delivery and performance of this
Agreement and the issuance and sale of the Offered Securities will not result
in a breach or violation of any of the terms and provisions of, or constitute
a default under, any statute, any rule, regulation or order of any
governmental agency or body or any court having jurisdiction over the Company
or any of its properties, or, to our knowledge, any agreement or instrument to
which the Company is a party or by which the Company is bound or to which any
of the properties of the Company is subject, or the charter or by-laws of the
Company, and the Company has the full corporate power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement;
(vi) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in such opinion, the
Additional Registration Statement (if any) was filed and became effective
under the Act as of the date and time (if determinable) specified in such
opinion, the Prospectus either was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date specified
therein or was included in the Initial Registration Statement or the
Additional Registration Statement (as the case may be), and, to the best of
the knowledge of such counsel, no stop order suspending the effectiveness of a
Registration Statement or any part thereof has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Act, and each Registration Statement and the Prospectus, and each amendment or
supplement thereto, as of their respective effective or issue dates, complied
as to form in all material respects with the requirements of the Act and the
Rules and Regulations; such counsel have no reason to believe that any part of
a Registration Statement or any amendment thereto, as of its effective date or
as of such Closing Date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto, as of its issue date or as of such Closing
Date, contained any untrue statement of a material fact or omitted 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; the
descriptions in the Registration Statements and Prospectus of statutes, legal
and governmental proceedings and contracts and other documents are accurate
and fairly present the information required to be shown; and such counsel do
not know of any legal or governmental proceedings required to be described in
a Registration Statement or the Prospectus which are not described as required
or of any contracts or documents of a character required to be described in a
Registration Statement or the Prospectus or to be filed as exhibits to a
Registration Statement which are not described and filed as required; it being
understood that such counsel need express no opinion as to the financial
statements or other financial data contained in the Registration Statements or
the Prospectus; and
12
(vii) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Underwriters shall have received on the Closing Date an opinion
of Fish and Xxxxxxxxxx, LLP, special patent counsel to the Company, dated the
Closing Date, to the effect that:
(i) the Company is listed in the records of the United
States Patent and Trademark Office ("PTO") as the holder of record of the
patent (the "Patent") and the four patent applications listed in Exhibit A
hereto (the "Applications"). [#] of such Patent Applications, listed on
Exhibit B hereto, have been allowed or indicated as containing allowable
subject matter. To such counsel's knowledge, written assignments to the
Company of all ownership interests in the Patent and Applications have been
duly authorized, executed and delivered by all of the inventors in accordance
with their terms. To such counsel's knowledge, there is no claim of any party
other than the Company to any ownership interest or lien with respect to any
of the Patent Applications;
(ii) the statements in the Prospectus under the captions "Risk
Factors - Our pending patents may never be issued and, even if issued, may
provide us with little protection," "Risk Factors - we may face intellectual
property infringement claims that could be costly to defend and result in our
loss of significant rights," "Business-Products" and "Business - Intellectual
Property" (the "Intellectual Property Portions"), to our knowledge, insofar as
such statements relate to the Patent and Applications or any legal matters,
documents and proceedings relating thereto fairly present the information called
for with respect to such legal matters, documents and proceedings and fairly
summarize the matters referred to therein;
(iii) to such counsel's knowledge, other than in connection
with assertions or inquiries made by patent office examiners in the ordinary
course of the prosecution of the Company's Patent and Applications, there is
not pending or threatened in writing any action, suit, proceeding or claim by
others (A) challenging the validity or scope of the Patent or Applications or
any other material patent or patent applications held by or licensed to the
Company, or (B) other than as disclosed to the Underwriters in writing,
asserting that any patent is infringed by the activities of the Company
described in the Prospectus or by the manufacture, use or sale of any of the
Company's products or other items made and used according to the Patent and
Applications held by or licensed to the Company;
(iv) to such counsel's knowledge, there is not pending or
threatened in writing any action, suit, proceeding or claim by the Company
asserting infringement on the part of any third party of the Patent or
Applications or any other patents or patent applications held by or licensed
to the Company;
(v) such counsel does not know of any contracts or other
documents relating to patents or proprietary information of a character
required to be filed as exhibits to the Registration Statement or the
Prospectus or required to be described in the Registration Statement or the
Prospectus that are not filed or described as required; and,
(vi) such counsel has participated in conferences with
employees of the Company at which the Patent and Applications of the Company
as disclosed in the Intellectual Property Portions of the Registration
Statement were discussed, and although such counsel is not passing upon and
does not assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement (except to the
extent stated in paragraph (ii) above), on the basis of such conferences and
such representation of the Company, nothing has come to such counsel's
attention which leads them to believe that the Intellectual Property Portions
of the Registration Statement and the Prospectus included therein at the time
the Registration Statement became effective did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary
13
to make the statements therein not misleading and believes that (except for
financial statements and schedules and other financial and statistical data
derived therefrom, as to which such counsel need not express any belief) the
Prospectus, as amended or supplemented, if applicable, does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(f) The Representatives shall have received from Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, counsel for the Underwriters, such opinion or opinions,
dated such Closing Date, with respect to the incorporation of the Company, the
validity of the Offered Securities delivered on such Closing Date, the
Registration Statements, the Prospectus and other related matters as the
Representatives may require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(g) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal financial
or accounting officer of the Company in which such officers, to the best of
their knowledge after reasonable investigation, shall state that: the
representations and warranties of the Company in this Agreement are true and
correct; the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of subparagraphs
(1) and (3) of Rule 462(b) was filed pursuant to Rule 462(b), including
payment of the applicable filing fee in accordance with Rule 111(a) or (b)
under the Act, prior to the time the Prospectus was printed and distributed to
any Underwriter; and, subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse change, nor
any development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except as set
forth in or contemplated by the Prospectus or as described in such
certificate.
(h) The Representatives shall have received a letter, dated such Closing
Date, of Ernst & Young LLP which meets the requirements of subsection (a) of
this Section, except that the specified date referred to in such subsection will
be a date not more than three days prior to such Closing Date for the purposes
of this subsection.
(i) On or prior to the date of this Agreement, the Representatives
shall have received lockup letters from the holders of at least __% of the
outstanding Securities and securities convertible into or exercisable or
exchangeable for Securities.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. CSFBC may in its sole discretion waive on behalf of the Underwriters
compliance with any conditions to the obligations of the Underwriters hereunder,
whether in respect of an Optional Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon 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, and will reimburse
each Underwriter
14
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement in or omission or alleged omission from any of
such documents in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that the only
such information furnished by any Underwriter consists of the information
described as such in subsection (b) below.
The Company agrees to indemnify and hold harmless the Designated Underwriters
and each person, if any, who controls either of the Designated Underwriters
within the meaning of either Section 15 of the Act or Section 20 of the Exchange
Act (the "Designated Entities"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in any material prepared by or with the
consent of the Company for distribution to Participants in connection with the
Directed Share Program or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) caused by the failure of any Participant
to pay for and accept delivery of Directed Shares that the Participant agreed to
purchase; or (iii) related to, arising out of, or in connection with the
Directed Share Program, other than losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith or gross negligence of the Designated Entities.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any who
controls the Company within the meaning of Section 15 of the Act, against any
losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action
as such expenses are incurred, it being understood and agreed that the only
such information furnished by any Underwriter consists of the following
information in the Prospectus furnished on behalf of each Underwriter: the
concession and reallowance figures appearing in the fourth paragraph under the
caption "Underwriting" and the information contained in the 15th and 16th
paragraphs under the caption "Underwriting".
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to
15
such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. Notwithstanding anything contained herein to the
contrary, if indemnity may be sought pursuant to the last paragraph in Section
7 (a) hereof in respect of such action or proceeding, then in addition to such
separate firm for the indemnified parties, the indemnifying party shall be
liable for the reasonable fees and expenses of not more than one separate firm
(in addition to any local counsel) for the Designated Underwriters for the
defense of any losses, claims, damages and liabilities arising out of the
Directed Share Program, and all persons, if any, who control either of the
Designated Underwriters within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement (i) includes an unconditional release
of such indemnified party from all liability on any claims that are the
subject matter of such action and (ii) does not include a statement as to, or
an admission of, fault, culpability or a failure to act by or on behalf of an
indemnified party.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying 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 subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Securities
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
the Company on the one hand and the Underwriters on the other in connection with
the statements or omissions which 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 (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters.
The 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 the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each director of the Company, to each
16
officer of the Company who has signed a Registration Statement and to each
person, if any, who controls the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of shares of Offered Securities
with respect to which such default or defaults occur exceeds 10% of the total
number of shares of Offered Securities that the Underwriters are obligated to
purchase on such Closing Date and arrangements satisfactory to CSFBC and the
Company for the purchase of such Offered Securities by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company, except
as provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Underwriters pursuant to Section 7 shall
remain in effect, and if any Offered Securities have been purchased hereunder
the representations and warranties in Section 2 and all obligations under
Section 5 shall also remain in effect. If the purchase of the Offered Securities
by the Underwriters is not consummated for any reason other than solely because
of the termination of this Agreement pursuant to Section 8 or the occurrence of
any event specified in clause (iii), (iv) or (v) of Section 6(c), the Company
will reimburse the Underwriters for all out-of-pocket expenses (including fees
and disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters, will be mailed, delivered or telegraphed and confirmed to the
Representatives c/o Credit Suisse First Boston Corporation, at Eleven Madison
Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking Department--
Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 000 Xxxxxxxx, Xxxxxxx Xxxx, XX
00000, Attention: Xxxxx Xxxxxxxxx Basu, with a copy to Xxxxx del Xxxxx, Esq. c/o
Pillsbury Madison & Sutro LLP, at 0000 Xxxxxxx Xxxxxx, Xxxx Xxxx, XX 00000, or
such other counsel to the Company as the Company has notified the
Representatives in writing shall receive such notice; provided, however, that
any notice to an Underwriter pursuant to Section 7 will be mailed, delivered or
telegraphed and confirmed to such Underwriter.
17
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.
12. Representation of Underwriters. The Representatives will act for the
several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representatives jointly or by Credit Suisse First
Boston Corporation will be binding upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
18
If the foregoing is in accordance with the Representatives' understanding of
our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
XXXXXXX.XXX, INC.
XXXXX XXXXXXXXX BASU,
Chief Executive Officer
By
--------------------------------
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above
written.
Credit Suisse First Boston Corporation
Chase Securities, Inc.
Bear Xxxxxxx & Co., Inc.
SoundView Technology Group, Inc.
Acting on behalf of themselves and as the
Representatives of the several
Underwriters
By Credit Suisse First Boston Corporation
By
------------------------------
Managing Director
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SCHEDULE A
Number of
Underwriter Firm Securities
----------- ---------------
Credit Suisse First Boston Corporation..............................
Chase Securities, Inc...............................................
Bear Xxxxxxx & Co...................................................
Soundview Technology Group, Inc.....................................
---------------
Total................................................
===============
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