Exhibit 1.1
_____________ Shares
Common Stock
($0.001 Par Value)
UNDERWRITING AGREEMENT
_________ , 2004
UNDERWRITING AGREEMENT
_____________, 2004
XX Xxxxx & Co., LLC
RBC Capital Markets Corporation
XX Xxxxxxxxx + Co, LLC
As Representatives of the several Underwriters ("Representatives")
c/o XX Xxxxx & Co., LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
PlanetOut Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to the underwriters named in Schedule A annexed hereto (the
"Underwriters"), for whom you are acting as representatives, an aggregate of
___________ shares (the "Firm Shares") of Common Stock, $0.001 par value (the
"Common Stock"), of the Company. In addition, solely for the purpose of covering
over-allotments, the Company proposes to grant to the Underwriters the option to
purchase from the Company up to an additional ____________ shares of Common
Stock (the "Additional Shares"). The Firm Shares and the Additional Shares are
hereinafter collectively sometimes referred to as the "Shares." The Shares are
described in the Prospectus referred to below.
The Company hereby acknowledges that in connection with the proposed
offering of the Shares, it has requested XX Xxxxxxxxx + Co, LLC ("WRH") to
administer a directed share program (the "Directed Share Program") under which
up to _______ Firm Shares, or 5% of the Firm Shares to be purchased by the
Underwriters (the "Reserved Shares"), shall be reserved for sale by WRH at the
initial public offering price to the Company's officers, directors, employees
and consultants and other persons having a relationship with the Company as
designated by the Company, (the "Directed Share Participants") as part of the
distribution of the Shares by the Underwriters, subject to the terms of this
Agreement, the applicable rules, regulations and interpretations of the National
Association of Securities Dealers ("NASD") and all other applicable laws, rules
and regulations. The number of Shares available for sale to the general public
will be reduced to the extent that Directed Share Participants purchase Reserved
Shares. The Underwriters may offer any Reserved Shares not purchased by Directed
Share Participants to the general public on the same basis as the other Shares
being issued and sold hereunder. The Company has supplied WRH with names,
addresses and telephone numbers of the individuals or other entities which the
Company has designated to be participants in the Directed Share Program. It is
understood that any number of those designated to participate in the Directed
Share Program may decline to do so.
The Company hereby acknowledges that in addition to the Directed
Share Program, it has requested WRH to administer an affinity marketing campaign
(the "Affinity Marketing Campaign") under which up to _______ Firm Shares to be
purchased by the
Underwriters (the "Affinity Reserved Shares"), shall be reserved for sale by WRH
at the initial public offering price to the Company's members and subscribers as
designated by the Company, (the "Affinity Marketing Participants") as part of
the distribution of the Shares by the Underwriters, subject to the terms of this
Agreement, the applicable rules, regulations and interpretations of the NASD and
all other applicable laws, rules and regulations. The number of Shares available
for sale to the general public will be reduced to the extent that Affinity
Marketing Participants purchase Affinity Reserved Shares. The Underwriters may
offer any Affinity Reserved Shares not purchased by Affinity Marketing
Participants to the general public on the same basis as the other Shares being
issued and sold hereunder. It is understood that any number of those invited to
participate in the Affinity Marketing Campaign may decline to do so.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-114988)
including a prospectus, relating to the Shares. The Company has furnished to
you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses (each such preliminary prospectus, being herein called
a "Preliminary Prospectus") relating to the Shares. Except where the context
otherwise requires, the registration statement, as amended when it became or
becomes effective, including all documents filed as a part thereof, and
including any information contained in a prospectus subsequently filed with the
Commission pursuant to Rule 424(b) under the Act and deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430(A)
under the Act and also including any registration statement filed pursuant to
Rule 462(b) under the Act, is herein called the "Registration Statement," and
the prospectus, in the form filed by the Company with the Commission pursuant to
Rule 424(b) under the Act on or before the second business day after the date
hereof (or such earlier time as may be required under the Act) or, if no such
filing is required, the form of final prospectus included in the Registration
Statement at the time it became effective, is herein called the "Prospectus." As
used herein, "business day" shall mean a day on which the New York Stock
Exchange is open for trading.
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the representations and warranties
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the respective Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule A
attached hereto, subject to adjustment in accordance with Section 8 hereof, in
each case at a purchase price of $______ per Share. The Company is advised by
you that the Underwriters intend (i) to make a public offering of their
respective portions of the Firm Shares as soon after the effective date of the
Registration Statement as in the Underwriters' judgment is advisable and (ii)
initially to offer the Firm Shares upon the terms set forth in the Prospectus.
The Underwriters may from time to time increase or decrease the public offering
price after the initial public offering to such extent as you may determine.
In addition, the Company hereby grants to the several Underwriters
the option to
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purchase, and upon the basis of the representations and warranties and subject
to the terms and conditions herein set forth, the Underwriters shall have the
right to purchase, severally and not jointly, from the Company, ratably in
accordance with the number of Firm Shares to be purchased by each of them, all
or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised by XX Xxxxx & Co., LLC ("XX
Xxxxx") on behalf of the several Underwriters at any time and from time to time
on or before the thirtieth day following the date of the Prospectus, by written
notice to the Company. Such notice shall set forth the aggregate number of
Additional Shares as to which the option is being exercised, and the date and
time when the Additional Shares are to be delivered (such date and time being
herein referred to as the "additional time of purchase"); provided, however,
that the additional time of purchase shall not be earlier than the time of
purchase (as defined below) nor earlier than the second business day after the
date on which the option shall have been exercised nor later than the tenth
business day after the date on which the option shall have been exercised. The
number of Additional Shares to be sold to each Underwriter shall be the number
that bears the same proportion to the aggregate number of Additional Shares
being purchased as the number of Firm Shares set forth opposite the name of such
Underwriter on Schedule A hereto bears to the total number of Firm Shares
(subject, in each case, to such adjustment as you may determine to eliminate
fractional shares), subject to adjustment in accordance with Section 8 hereof.
2. Payment and Delivery. Payment of the purchase price for the Firm Shares
shall be made to the Company by Federal Funds wire transfer, against delivery of
the certificates for the Firm Shares to you through the facilities of The
Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on _______________, 2004 (unless another time shall be agreed to by
you and the Company or unless postponed in accordance with the provisions of
Section 8 hereof). The time at which such payment and delivery are to be made is
hereinafter sometimes called "the time of purchase." Electronic transfer of the
Firm Shares shall be made to the Underwriters at the time of purchase in such
names and in such denominations as the Underwriters shall specify.
Payment of the purchase price for the Additional Shares shall be
made at the additional time of purchase in the same manner and at the same
office as the payment for the Firm Shares. Electronic transfer of the Additional
Shares shall be made to you at the additional time of purchase in such names and
in such denominations as you shall specify.
Deliveries of the documents described in Section 6 hereof with
respect to the purchase of the Shares shall be made at the offices of O'Melveny
& Xxxxx LLP, Times Square Tower, 0 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, at
9:00 A.M., New York City time, on the date of the closing of the purchase of the
Firm Shares or the Additional Shares, as the case may be.
3. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
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(a) The Registration Statement has been declared effective under the
Act; no stop order of the Commission preventing or suspending the use of
any Preliminary Prospectus or the effectiveness of the Registration
Statement has been issued and no proceedings for such purpose have been
instituted or, to the Company's knowledge after due inquiry, are
contemplated by the Commission; each Preliminary Prospectus distributed in
connection with the offering of the Shares did not, as of its date, and
does not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; the Registration Statement complied when it became
effective, complies and will comply, at the time of purchase and any
additional time of purchase, in all material respects with the
requirements of the Act and the Prospectus will comply, as of its date and
at the time of purchase and any additional times of purchase, in all
material respects with the requirements of the Act; the requirements of
Form S-1 have been satisfied; the Registration Statement did not when it
became effective, does not and will not, at the time of purchase and any
additional time of purchase, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and the Prospectus
will not, as of its date and at the time of purchase and any additional
time of purchase, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes
no warranty or representation with respect to any statement contained in
the last Preliminary Prospectus, the Registration Statement or the
Prospectus in reliance upon and in conformity with information concerning
an Underwriter and furnished in writing by or on behalf of such
Underwriter through you to the Company expressly for use in the last
Preliminary Prospectus, the Registration Statement or the Prospectus; and
the Company has not distributed and will not distribute any offering
material in connection with the offering or sale of the Shares other than
the Registration Statement, the then most recent Preliminary Prospectus
and the Prospectus;
(b) as of the date of this Agreement, the Company has an authorized
and outstanding capitalization as set forth in the section of the
Registration Statement and the Prospectus entitled "Capitalization" and,
as of the time of purchase and the additional time of purchase, as the
case may be, the Company shall have an authorized and outstanding
capitalization as set forth in the section of the Registration Statement
and the Prospectus entitled "Capitalization" (subject, in each case, to
the issuance of shares of Common Stock upon exercise of stock options and
warrants disclosed as outstanding in the Registration Statement and the
Prospectus and grant of options under existing stock option plans
described in the Registration Statement and the Prospectus); all of the
issued and outstanding shares of capital stock, including the Common
Stock, of the Company have been duly authorized and validly issued and are
fully paid and non-assessable, have been issued in compliance with all
federal and state securities laws and were not issued in violation of any
preemptive right, resale right, right of first refusal or similar right;
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(c) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with full corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and the Prospectus, to execute and deliver this Agreement and to
issue, sell and deliver the Shares as contemplated herein;
(d) the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
and in good standing would not, individually or in the aggregate, have a
material adverse effect on the business, properties, financial condition,
results of operation or prospects of the Company and the Subsidiaries (as
hereinafter defined) taken as a whole (a "Material Adverse Effect");
(e) the Company has no subsidiaries (as defined in the Act) other
than PlanetOut USA Inc., a Delaware corporation, Online Partners Holdings
Europe BV, a Netherlands corporation, Online Partners Holdings Latin
America BV, a Netherlands corporation, PlanetOut Partners France SARL, a
France corporation, Online Partners Argentina S.R.L., an Argentina
corporation and PlanetOut Partners UK Ltd., a United Kingdom corporation
(collectively, the "Subsidiaries"); other than the capital stock of the
Subsidiaries and 45% of the capital stock of Xxx.xx. S.p.A, an Italy
company, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation
or have any equity interest in any firm, partnership, joint venture,
association or other entity; complete and correct copies of the
certificates of incorporation and the by-laws of the Company and all
amendments thereto have been delivered to you, and except as set forth in
the exhibits to the Registration Statement no changes therein will be made
subsequent to the date hereof and prior to the time of purchase or, if
later, the additional time of purchase; each Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus; each Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
and in good standing would not, individually or in the aggregate, have a
Material Adverse Effect; all of the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued, are
fully paid and non-assessable and are owned directly or indirectly by the
Company and by such individuals or entities as may be required by the laws
of applicable jurisdictions, subject to no security interest, other
encumbrance or adverse claims; and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligation into shares of capital stock or ownership interests
in the Subsidiaries are outstanding;
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(f) the Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable and free of
statutory and contractual preemptive rights, resale rights, rights of
first refusal and similar rights;
(g) the capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and the Prospectus and the certificates for the
Shares are in due and proper form and to the Company's knowledge, no event
shall have occurred so as to subject the holders of the Shares to personal
liability by reason of being such holders;
(h) this Agreement has been duly authorized, executed and
delivered by the Company;
(i) neither the Company nor any of the Subsidiaries is in breach or
violation of or in default under (nor has any event occurred which with
notice, lapse of time or both would result in any breach or violation of,
constitute a default under or give the holder of any indebtedness (or a
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a part of such indebtedness
under) (A) its respective charter or by-laws, (B) any indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of
indebtedness or (C) any license, lease, contract or other agreement or
instrument to which the Company or any of the Subsidiaries is a party or
by which any of them or any of their properties may be bound or affected
except in the case of clauses (B) or (C) for any such breach, violation or
default that would not, individually or in the aggregate, have a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement, the issuance and sale of the Shares and the consummation of the
transactions contemplated hereby will not conflict with, result in any
breach or violation of or constitute a default under (nor constitute any
event which with notice, lapse of time or both would result in any breach
or violation of or constitute a default under) the (A) charter or by-laws
of the Company or any of the Subsidiaries, (B) any indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of
indebtedness, (C) any license, lease, contract or other agreement or
instrument to which the Company or any of the Subsidiaries is a party or
by which any of them or any of their respective properties may be bound or
affected or (D) any federal, state, local or foreign law, regulation or
rule or any decree, judgment or order applicable to the Company or any of
the Subsidiaries, except in the case of clauses (B) or (C) for any such
conflict, breach, violation or default that would not, individually or in
the aggregate, have a Material Adverse Effect;
(j) no approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares or the consummation by the
Company of the transactions contemplated hereby other than registration of
the Shares under the Act and approval for quotation on the Nasdaq Stock
Market, which has been or will be effected, and any necessary
qualification under the
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securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters or under the rules and
regulations of the NASD;
(k) except as set forth in the Registration Statement and the
Prospectus, (i) no person has the right, contractual or otherwise, to
cause the Company to issue or sell to it any shares of Common Stock or
shares of any other capital stock or other equity interests of the
Company, (ii) no person has any preemptive rights, resale rights, rights
of first refusal or other rights to purchase any shares of Common Stock or
shares of any other capital stock or other equity interests of the Company
and (iii) no person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the offer and sale of
the Shares, in the case of each of the foregoing clauses (i), (ii) and
(iii), whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby
or otherwise; except as set forth in the Registration Statement and the
Prospectus, no person has the right, contractual or otherwise, which right
has not been properly waived, to cause the Company to register under the
Act any shares of Common Stock or shares of any other capital stock or
other equity interests of the Company, or to include any such shares or
interests in the Registration Statement or the offering contemplated
thereby, whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby
or otherwise;
(l) each of the Company and the Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all
necessary filings required under any federal, state, local or foreign law,
regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, in order to conduct its
respective business; neither the Company nor any of the Subsidiaries is in
violation of, or in default under, or has received notice of any
proceedings relating to revocation or modification of, any such license,
authorization, consent or approval or any federal, state, local or foreign
law, regulation or rule or any decree, order or judgment applicable to the
Company or any of the Subsidiaries, except where such violation, default,
revocation or modification would not, individually or in the aggregate,
have a Material Adverse Effect;
(m) all legal or governmental proceedings, affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements, leases or
documents required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement have
been so described or filed as the case may be;
(n) there are no actions, suits, claims, investigations or
proceedings pending or threatened or, to the Company's knowledge after due
inquiry, contemplated to which the Company or any of the Subsidiaries or
any of their respective directors or officers is or would be a party or of
which any of their respective properties is or would be subject at law or
in equity, before or by any federal, state, local or foreign governmental
or regulatory commission, board, body, authority or agency, except any
such action, suit, claim, investigation or proceeding that would not
result in a judgment, decree or order having, individually or in the
aggregate, a Material Adverse Effect on or preventing consummation of the
transactions contemplated hereby;
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(o) Pricewaterhouse Coopers LLP, whose report on the consolidated
financial statements of the Company and the Subsidiaries is filed with the
Commission as part of the Registration Statement and the Prospectus, are
independent public accountants as required by the Act; except as
pre-approved in accordance with the requirements set forth in Section 10A
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
PricewaterhouseCoopers LLP has not engaged in any "prohibited activities"
(as defined in Section 10A of the Exchange Act) on behalf of the Company;
(p) the audited financial statements included in the Registration
Statement and the Prospectus, together with the related notes and
schedules, present fairly the consolidated financial position of the
Company and the Subsidiaries as of the dates indicated and the
consolidated results of operations and cash flows of the Company and the
Subsidiaries for the periods specified and have been prepared in
compliance with the requirements of the Act and in conformity with
generally accepted accounting principles applied on a consistent basis
during the periods involved; any pro forma financial statements or data
included in the Registration Statement and the Prospectus comply with the
requirements of the Act and the assumptions used in the preparation of
such pro forma financial statements and data are reasonable, the pro forma
adjustments used therein are appropriate to give effect to the
transactions or circumstances described therein and the pro forma
adjustments have been properly applied to the historical amounts in the
compilation of those statements and data; the other financial and
statistical data set forth in the Registration Statement and the
Prospectus are accurately presented and prepared on a basis consistent
with the financial statements and books and records of the Company; there
are no financial statements (historical or pro forma) that are required to
be included in the Registration Statement and the Prospectus that are not
included as required; and the Company and the Subsidiaries do not have any
material liabilities or obligations, direct or contingent (including any
off-balance sheet obligations), not disclosed in the Registration
Statement and the Prospectus; except as disclosed in the Registration
Statement and the Prospectus, there are no material off-balance sheet
transactions, arrangements, obligations (including contingent obligations)
or any other relationships with unconsolidated entities or other persons,
that may have a material current or future effect on the Company's
financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or
significant components of revenues or expenses;
(q) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
(i) any material adverse change, or any development involving a
prospective material adverse change, in the business, properties,
management, financial condition or results of operations of the Company
and the Subsidiaries taken as a whole, (ii) any transaction that is
material to the Company and the Subsidiaries taken as a whole, (iii) any
obligation, direct or contingent (including any off-balance sheet
obligations), incurred by the Company or the Subsidiaries, which is
material to the Company and the Subsidiaries taken as a whole, (iv) any
change in the capital stock or outstanding indebtedness of the Company or
the
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Subsidiaries or (v) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company;
(r) the Company has obtained for the benefit of the Underwriters the
agreement (a "Lock-Up Agreement"), in the form set forth as Exhibit A
hereto, of each of its directors and executive officers and certain
holders of the Company's capital stock designated by you, which
collectively constitute at least 90% of the Company's outstanding capital
stock;
(s) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(t) the Company and each of the Subsidiaries has good and marketable
title to all property described the Registration Statement and in the
Prospectus as being owned by each of them, free and clear of all liens,
claims, security interests or other encumbrances; all the property
described in the Registration Statement and the Prospectus as being held
under lease by the Company or a Subsidiary is held thereby under valid,
subsisting and enforceable leases;
(u) (i) the Company and the Subsidiaries own, or have obtained valid
and enforceable licenses for, or other rights to use, the inventions,
patent applications (to the Company's knowledge), patents (to the
Company's knowledge), trademarks (both registered and unregistered),
tradenames, copyrights, trade secrets and other proprietary information
described in the Registration Statement and the Prospectus as being owned
or licensed by them or which are necessary for the conduct of their
respective businesses, except where the failure to own, license or have
such rights would not, individually or in the aggregate, have a Material
Adverse Effect (collectively, "Intellectual Property"); (ii) neither the
Company nor any of the Subsidiaries has infringed any patent (to the
Company's knowledge), trademark, copyright, trade secret or other
proprietary rights of others; (iii) the Company and the Subsidiaries have
taken all reasonable steps necessary to secure interests in its
Intellectual Property from its employees and contractors; (iv) none of the
technology employed by the Company or the Subsidiaries has been obtained
or is being used by the Company in violation of any contractual obligation
binding on the Company or any of the Subsidiaries or to the Company's
knowledge, any of their respective officers, directors or employees or
otherwise in violation of the rights of others; (v) there are no third
parties who have or, to the Company's knowledge after due inquiry, will be
able to establish rights to any Intellectual Property, except for the
ownership rights of the owners of the Intellectual Property that is
licensed to the Company; (vi) to the Company's knowledge, there is no
infringement by third parties of any Intellectual Property; (vii) except
as set forth in the Registration Statement and Prospectus, there is no
pending or threatened action, suit, proceeding or claim by others
challenging the Company's rights in or to any Intellectual Property, and
the Company is unaware of any facts that could form a reasonable basis for
any such claim; (viii) except
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as set forth in the Registration Statement and Prospectus, there is no
pending or threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Intellectual Property, and the
Company is unaware of any facts that could form a reasonable basis for any
such claim; and (ix) except as set forth in the Registration Statement and
Prospectus, there is no pending or threatened action, suit, proceeding or
claim by others, and the Company or any Subsidiary has not received any
written or oral communications from a third party claiming, that the
Company infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others other than such
violations that would not, individually or in the aggregate, have a
Material Adverse Effect, and the Company is unaware of any facts that
could form a reasonable basis for any such claim;
(v) neither the Company nor any of the Subsidiaries is engaged in
any unfair labor practice; except for matters that would not, individually
or in the aggregate, have a Material Adverse Effect, (i) there is (A) no
unfair labor practice complaint pending or, to the Company's knowledge
after due inquiry, threatened against the Company or any of the
Subsidiaries before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under collective bargaining
agreements is pending or threatened, (B) no strike, labor dispute,
slowdown or stoppage pending or, to the Company's knowledge after due
inquiry, threatened against the Company or any of the Subsidiaries and (C)
no union representation dispute currently existing concerning the
employees of the Company or any of the Subsidiaries, and (ii) to the
Company's knowledge after due inquiry, (A) no union organizing activities
are currently taking place concerning the employees of the Company or any
of the Subsidiaries and (B) there has been no violation of any federal,
state, local or foreign law relating to discrimination in the hiring,
promotion or pay of employees, any applicable wage or hour laws or any
provision of the Employee Retirement Income Security Act of 1974 ("ERISA")
or the rules and regulations promulgated thereunder concerning the
employees of the Company or any of the Subsidiaries;
(w) the Company and the Subsidiaries and their properties, assets
and operations are in compliance with, and hold all permits,
authorizations and approvals required under, Environmental Laws (as
defined below), except to the extent that failure to so comply or to hold
such permits, authorizations or approvals would not, individually or in
the aggregate, have a Material Adverse Effect; there are no past, present
or, to the Company's knowledge after due inquiry, reasonably anticipated
future events, conditions, circumstances, activities, practices, actions,
omissions or plans that could reasonably be expected to give rise to any
material costs or liabilities to the Company or the Subsidiaries under, or
to interfere with or prevent compliance by the Company or the Subsidiaries
with, Environmental Laws; except as would not, individually or in the
aggregate, have a Material Adverse Effect, neither the Company nor any of
the Subsidiaries (i) is the subject of any investigation, (ii) has
received any notice or claim, (iii) is a party to or affected by any
pending or threatened action, suit or proceeding, (iv) is bound by any
judgment, decree or order or (v) has entered into any agreement, in each
case relating to any alleged violation of any Environmental Law or any
actual or alleged
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release or threatened release or cleanup at any location of any Hazardous
Materials (as defined below) (as used herein, "Environmental Law" means
any federal, state, local or foreign law, statute, ordinance, rule,
regulation, order, decree, judgment, injunction, permit, license,
authorization or other binding requirement, or common law, relating to
health, safety or the protection, cleanup or restoration of the
environment or natural resources, including those relating to the
distribution, processing, generation, treatment, storage, disposal,
transportation, other handling or release or threatened release of
Hazardous Materials, and "Hazardous Materials" means any material
(including, without limitation, pollutants, contaminants, hazardous or
toxic substances or wastes) that is regulated by or may give rise to
liability under any Environmental Law);
(x) all tax returns required to be filed by the Company and each of
the Subsidiaries have been filed, and all taxes and other assessments of a
similar nature (whether imposed directly or through withholding) including
any interest, additions to tax or penalties applicable thereto due or
claimed to be due from such entities have been paid, other than those
being contested in good faith and for which adequate reserves have been
provided;
(y) the Company and each of the Subsidiaries maintains insurance
covering its properties, operations, personnel and businesses as is
reasonable and customary; such insurance insures against such losses and
risks to an extent which is adequate in accordance with customary industry
practice to protect the Company and the Subsidiaries and their businesses;
all such insurance is fully in force on the date hereof and will be fully
in force at the time of purchase and any additional time of purchase;
(z) neither the Company nor any of the Subsidiaries has sustained
since the date of the last audited financial statements included in the
Registration Statement and the Prospectus any loss or interference with
its respective business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree;
(aa) the Company has not sent or received any communication
regarding termination of, or intent not to renew, any of the material
contracts or agreements referred to or described in, or filed as an
exhibit to, the Registration Statement, and no such termination or
non-renewal has been threatened by the Company or, to the Company's
knowledge after due inquiry, any other party to any such contract or
agreement;
(bb) the Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with existing
-12-
assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(cc) The Company's Board of Directors has validly appointed an audit
committee whose composition satisfies the requirements of NASD Rule
4350(d)(2) and the Board of Directors and/or the audit committee has
adopted a charter that satisfies the requirements of Rule 4350(d)(1) of
the NASD Rules; the audit committee has reviewed the adequacy of its
charter within the past twelve months; neither the Board of Directors nor
the audit committee has been informed of (i) any significant deficiencies
or material weaknesses in the design or operation of the Company's
internal controls over financial reporting which are reasonably likely to
adversely affect the Company's ability to record, process, summarize and
report financial information, or (ii) any fraud, whether or not material,
that involves management or other employees of the Company who have a
significant role in the Company's internal controls over financial
reporting;
(dd) the Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15 and 15d-15 under
the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to the Company's Chief Executive
Officer and its Chief Financial Officer by others within those entities,
have been evaluated for effectiveness within the last 90 days, and such
disclosure controls and procedures are effective to perform the functions
for which they were established; since the date of the most recent
evaluation of such disclosure controls and procedures, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses; based on
the most recent evaluation of its disclosure controls and procedures,
there is not (i) any significant deficiency in the design or operation of
internal controls over financial reporting which could adversely affect
the Company's ability to record, process, summarize and report financial
data or any material weaknesses in internal controls over financial
reporting, or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls over financial reporting;
(ee) the Company has provided you true, correct, and complete copies
of all documentation pertaining to any extension of credit in the form of
a personal loan made, directly or indirectly, by the Company to any
director or executive officer of the Company, or to any family member or
affiliate of any director or executive officer of the Company; and since
July 30, 2002, the Company has not, directly or indirectly, including
through any subsidiary: (i) extended credit, arranged to extend credit, or
renewed any extension of credit, in the form of a personal loan, to or for
any director or executive officer of the Company, or to or for any family
member or affiliate of any director or executive officer of the Company;
or (ii) made any material modification, including any renewal thereof, to
any term of any personal loan to any director or executive officer of the
Company, or any family member or affiliate of any director or executive
officer, which loan was outstanding on July 30, 2002;
-13-
(ff) any statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate, and the
Company has obtained the consent to the use of such data from such sources
to the extent required;
(gg) neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge after due inquiry, any employee or agent of the
Company or the Subsidiaries has made any payment of funds of the Company
or the Subsidiaries or received or retained any funds in violation of any
law, rule or regulation;
(hh) neither the Company nor any of the Subsidiaries nor any of
their respective directors, officers, affiliates or controlling persons
has taken, or will take, directly or indirectly, any action designed, or
that has constituted or might reasonably be expected to cause or result
in, under the Exchange Act or otherwise, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Shares; the Company acknowledges that the Underwriters may
engage in passive market making transactions in the Shares on the Nasdaq
National Market ("Nasdaq") in accordance with Regulation M under the
Exchange Act;
(ii) to the Company's knowledge after due inquiry, there are no
affiliations or associations between any member of the NASD and any of the
Company's officers, directors or securityholders, except as set forth in
the Registration Statement and the Prospectus;
(jj) 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 any foreign
jurisdiction in which the Prospectus or any preliminary prospectus is
distributed in connection with the Directed Share Program; and no
approval, authorization, consent or order of or filing with any
governmental or regulatory commission, board, body, authority or agency,
other than those obtained, is required in connection with the offering or
sale of the Reserved Shares in any jurisdiction where the Reserved Shares
are being offered or sold and the offer and sale of such Reserved Shares
is not in violation of any applicable laws or regulations of any foreign
jurisdiction;
(kk) the Company has not offered, or caused the Underwriters to
offer, Shares to any person pursuant to the Directed Share Program with
the intent to influence unlawfully (i) a customer or supplier of the
Company or any of the Subsidiaries to alter the customer's or supplier's
level or type of business with the Company or any of the Subsidiaries, or
(ii) a trade journalist or publication to write or publish favorable
information about the Company or any of the Subsidiaries or any of their
respective products or services;
(ll) the Company has filed a listing application with the Nasdaq
Stock Market, Inc. to list the Shares and the Shares have been approved
for listing on Nasdaq subject to official notice of issuance; and
-14-
(mm) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in
the Prospectus has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
In addition, any certificate signed by any officer of the Company or
any of the Subsidiaries and delivered to the Underwriters or counsel for the
Underwriters in connection with the offering of the Shares shall be deemed to be
a representation and warranty by the Company or Subsidiary, as the case may be,
as to matters covered thereby, to each Underwriter.
4. Certain Covenants of the Company. The Company hereby agrees:
--------------------------------
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states or other jurisdictions as you
may designate and to maintain such qualifications in effect so long as you
may request for the distribution of the Shares; provided that the Company
shall not be required to qualify as a foreign corporation or to consent to
the service of process under the laws of any such jurisdiction (except
service of process with respect to the offering and sale of the Shares);
and to promptly advise you of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose;
(b) to make available to the Underwriters in New York City, as soon
as practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Underwriters, as many
copies of the Prospectus (or of the Prospectus as amended or supplemented
if the Company shall have made any amendments or supplements thereto after
the effective date of the Registration Statement) as the Underwriters may
request for the purposes contemplated by the Act; in case any Underwriter
is required to deliver a prospectus after the nine-month period referred
to in Section 10(a)(3) of the Act in connection with the sale of the
Shares, the Company will prepare, at its expense, promptly upon request
such amendment or amendments to the Registration Statement and the
Prospectus as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the Act;
(c) if, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or any post-effective amendment
thereto to be declared effective before the Shares may be sold, the
Company will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as possible and the
Company will advise you promptly and, if requested by you, will confirm
such advice in writing, (i) when the Registration Statement and any such
post-effective amendment thereto has become effective, and (ii) if Rule
430A under the Act is used, when the Prospectus is filed with the
Commission pursuant to Rule 424(b) under the Act (which the Company agrees
to file in a timely manner under such Rule);
-15-
(d) to advise you promptly, confirming such advice in writing, of
any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information
with respect thereto, or of notice of institution of proceedings for, or
the entry of a stop order, suspending the effectiveness of the
Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to use its
best efforts to obtain the lifting or removal of such order as soon as
possible; to advise you promptly of any proposal to amend or supplement
the Registration Statement or the Prospectus and to provide you and
Underwriters' counsel copies of any such documents for review and comment
a reasonable amount of time prior to any proposed filing and to file no
such amendment or supplement to which you shall object in writing;
(e) subject to Section 4(d) hereof, to file promptly all reports and
any definitive proxy or information statement required to be filed by the
Company with the Commission in order to comply with the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery
of a prospectus is required in connection with the offering or sale of the
Shares; and to provide you with a copy of such reports and statements and
other documents to be filed by the Company pursuant to Section 13, 14 or
15(d) of the Exchange Act including, for purposes of this section, via
XXXXX;
(f) if necessary or appropriate, to file a registration
statement pursuant to Rule 462(b) under the Act;
(g) to advise the Underwriters promptly of the happening of any
event within the time during which a prospectus relating to the Shares is
required to be delivered under the Act that could require the making of
any change in the Prospectus then being used so that the Prospectus would
not include an untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and, during such
time, subject to Section 4(d) hereof, to prepare and furnish, at the
Company's expense, to the Underwriters promptly such amendments or
supplements to such Prospectus as may be necessary to reflect any such
change;
(h) to make generally available to its security holders, and to
deliver to you, an earning statement of the Company (which need not be
audited, but will satisfy the provisions of Section 11(a) of the Act)
covering a period of twelve months beginning after the effective date of
the Registration Statement (as defined in Rule 158(c) under the Act) as
soon as is reasonably practicable after the termination of such
twelve-month period but not later than fifteen months after the effective
date of the Registration Statement;
(i) to furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a consolidated balance
sheet and statements of income, shareholders' equity and cash flow of the
Company and the Subsidiaries for such
-16-
fiscal year, accompanied by a copy of the certificate or report thereon of
nationally recognized independent certified public accountants);
(j) to furnish to you four copies of the Registration Statement, as
initially filed with the Commission, and of all amendments thereto and
sufficient copies of the foregoing (including all exhibits thereto) for
distribution of a copy to each of the other Underwriters;
(k) to furnish to you promptly (including, for purposes of this
section, via XXXXX) and, upon request, to each of the other Underwriters
for a period of five years from the date of this Agreement (i) copies of
any reports, proxy statements, or other communications which the Company
shall send to its stockholders or shall from time to time publish or
publicly disseminate, (ii) copies of all annual, quarterly and current
reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such
other similar forms as may be designated by the Commission, (iii) copies
of documents or reports filed with any national securities exchange on
which any class of securities of the Company is listed, and (iv) such
other information as you may reasonably request regarding the Company or
the Subsidiaries;
(l) to furnish to you as early as practicable prior to the time of
purchase and any additional time of purchase, as the case may be, but not
later than two business days prior thereto, a copy of the latest available
unaudited interim and monthly consolidated financial statements, if any,
of the Company and the Subsidiaries which have been read by the Company's
independent certified public accountants, as stated in their letter to be
furnished pursuant to Section 6(c) hereof;
(m) to apply the net proceeds from the sale of the Shares in
the manner set forth under the caption "Use of Proceeds" in the
Prospectus;
(n) to pay all costs, expenses, fees and taxes incurred by the
Company in connection with (i) the preparation and filing of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and
any amendments or supplements thereto, and the printing and furnishing of
copies of each thereof to the Underwriters and to dealers (including costs
of mailing and shipment), (ii) the registration, issue, sale and delivery
of the Shares including any stock or transfer taxes and stamp or similar
duties payable upon the sale, issuance or delivery of the Shares to the
Underwriters, (iii) the reproduction and/or printing of any closing
documents (including compilations thereof) and furnishing of copies of
each thereof to the Underwriters and (except closing documents) to dealers
(including costs of mailing and shipment), (iv) the qualification of the
Shares for offering and sale under state or foreign laws and the
determination of their eligibility for investment under state or foreign
law as aforesaid (including the legal fees and filing fees and other
disbursements of counsel for the Underwriters) and the printing and
furnishing of copies of any blue sky surveys or legal investment surveys
to the Underwriters and to dealers, (v) any listing of the Shares on any
securities exchange or qualification of the Shares for quotation on Nasdaq
and any registration thereof under the Exchange Act, (vi)
-17-
any filing for review of the public offering of the Shares by the NASD,
including the legal fees and filing fees and other disbursements of
counsel to the Underwriters, (vii) the fees and disbursements of any
transfer agent or registrar for the Shares, (viii) the costs and expenses
of the Company relating to presentations or meetings undertaken in
connection with the marketing of the offering and sale of the Shares to
prospective investors and the Underwriters' sales forces, including,
without limitation, expenses associated with the production of road show
slides and graphics, fees and expenses of any consultants engaged by the
Company in connection with the road show presentations, travel, lodging
and other expenses incurred by the officers of the Company and any such
consultants and (ix) the performance of the Company's other obligations
hereunder;
(o) not to sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of
or agree to dispose of, directly or indirectly, any Common Stock or
securities convertible into or exchangeable or exercisable for Common
Stock or warrants or other rights to purchase Common Stock or any other
securities of the Company that are substantially similar to Common Stock,
or file or cause to be declared effective a registration statement under
the Act relating to the offer and sale of any shares of Common Stock or
securities convertible into or exercisable or exchangeable for Common
Stock or other rights to purchase Common Stock or any other securities of
the Company that are substantially similar to Common Stock for a period of
180 days after the date hereof (the "Lock-Up Period"), without the prior
written consent of XX Xxxxx, except for (i) the registration of the Shares
and the sales to the Underwriters pursuant to this Agreement, (ii)
issuances of Common Stock upon the exercise of options or warrants
disclosed as outstanding in the Registration Statement and the Prospectus
and (iii) the issuance of employee stock options or other securities
pursuant to equity incentive plans existing as of the date hereof and as
described in the Registration Statement and the Prospectus;
(p) to use its best efforts to cause the Common Stock to be
listed for quotation on Nasdaq;
(q) to maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar for the
Common Stock;
(r) to ensure that the Reserved Shares will be restricted from sale,
transfer, assignment, pledge or hypothecation for such period and to such
extent as may be required by the NASD and its rules; and to comply with
all applicable securities and other applicable laws, rules and regulations
in each jurisdiction in which the Reserved Shares are offered in
connection with the Directed Share Program;
(s) not to take, directly or indirectly, any action designed to
cause or result in, or that constitutes or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
securities of the Company; and
(t) prior to the time of purchase and, if applicable, prior to the
additional time of purchase, the Company will not issue any press release
or other communication
-18-
directly or hold any press conference with respect to the Company, its
condition, financial or otherwise, or earnings, business affairs or
business prospects (except for routine marketing communications in the
ordinary course of business and consistent with the past practices of the
Company), without the prior written consent of the Underwriters, unless in
the judgment of the Company and its counsel, and after notification to the
Underwriters, such press release or communication is required by law.
5. Reimbursement of Underwriters' Expenses. If the Shares are not
delivered for any reason other than (A) the termination of this Agreement
pursuant to the fifth paragraph of Section 8 hereof or (B) the default by one or
more of the Underwriters in its or their respective obligations hereunder, the
Company shall, in addition to paying the amounts described in Section 4(n)
hereof, reimburse the Underwriters for all of their out-of-pocket expenses,
including the fees and disbursements of their counsel.
6. Conditions of Underwriters' Obligations. The several obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties on the part of the Company on the date hereof, at the time of
purchase and, if applicable, at the additional time of purchase, the performance
by the Company of its obligations hereunder and to the following additional
conditions precedent:
(a) The Company shall furnish to you at the time of purchase and, if
applicable, at the additional time of purchase, an opinion of Xxxxxx Xxxx
Nemerovski Xxxxxx Xxxx & Xxxxxx, A Professional Corporation, special
counsel for the Company, addressed to the Underwriters to the effect set
forth on Exhibit C hereto, and dated the time of purchase or the
additional time of purchase, as the case may be, with reproduced copies
for each of the other Underwriters and in form and substance satisfactory
to O'Melveny & Xxxxx LLP, counsel for the Underwriters;
(b) The Company shall furnish to you at the time of purchase and, if
applicable, at the additional time of purchase, an opinion of Xxxx Huge,
counsel for the Company addressed to the Underwriters, to the effect set
forth on Exhibit D hereto and dated the time of purchase or the additional
time of purchase, as the case may be, with reproduced copies for each of
the other Underwriters and in form and substance satisfactory to O'Melveny
& Xxxxx LLP, counsel for the Underwriters;
(c) You shall have received from PricewaterhouseCoopers LLP letters
dated, respectively, the date of this Agreement, the time of purchase and,
if applicable, the additional time of purchase, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the
forms heretofore approved by XX Xxxxx and O'Melveny & Xxxxx LLP, counsel
to the Underwriters.
(d) You shall have received at the time of purchase and, if
applicable, at the additional time of purchase, the favorable opinion of
O'Melveny & Xxxxx LLP, counsel for the Underwriters, dated the time of
purchase or the additional time of purchase, as the case may be, as to the
matters referred to in paragraphs (ii), (iii), (v), (vi), (vii) and the
last paragraph of Exhibit C hereto.
-19-
(e) No Prospectus or amendment or supplement to the Registration
Statement or the Prospectus shall have been filed to which you object in
writing.
(f) The Registration Statement shall become effective not later than
5:30 P.M. New York City time, on the date of this Agreement and, if Rule
430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act at or before 5:30 P.M.,
New York City time, on the second full business day after the date of this
Agreement and any registration statement pursuant to Rule 462(b) under the
Act required in connection with the offering and sale of the Shares shall
have been filed and become effective no later than 10:00 p.m., New York
City time, on the date of this Agreement.
(g) Prior to the time of purchase, and, if applicable, the
additional time of purchase, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under
the Act or proceedings initiated under Section 8(d) or 8(e) of the Act;
(ii) the Registration Statement and all amendments thereto shall not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and (iii) the Prospectus and all amendments or
supplements thereto shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading.
(h) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, no
material adverse change or any development involving a prospective
material adverse change in the business, properties, management, financial
condition or results of operations of the Company and the Subsidiaries
taken as a whole shall occur or become known.
(i) The Company will, at the time of purchase and, if applicable, at
the additional time of purchase, deliver to you a certificate of its Chief
Executive Officer and its Chief Financial Officer in the form attached as
Exhibit B hereto.
(j) You shall have received signed Lock-up Agreements referred to in
Section 3(r) hereof.
(k) The Company shall have furnished to you such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the time of purchase and,
if applicable, the additional time of purchase, as you may reasonably
request.
(l) The Shares shall have been approved for quotation on Nasdaq,
subject only to notice of issuance at or prior to the time of purchase or
the additional time of purchase, as the case may be.
-20-
7. Effective Date of Agreement; Termination. This Agreement shall become
effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of XX Xxxxx or any group of
Underwriters (which may include XX Xxxxx) that has agreed to purchase in the
aggregate at least 50% of the Firm Shares, if (x) since the time of execution of
this Agreement or the earlier respective dates as of which information is given
in the Registration Statement and the Prospectus, there has been any material
adverse change or any development involving a prospective material adverse
change in the business, properties, management, financial condition or results
of operations of the Company and the Subsidiaries taken as a whole, which would,
in XX Xxxxx'x judgment or in the judgment of such group of Underwriters, make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares on the terms and in the manner contemplated in the Registration
Statement and the Prospectus, or (y) since the date of execution of this
Agreement, there shall have occurred: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange, the American
Stock Exchange or Nasdaq; (ii) a suspension or material limitation in trading in
the Company's securities on Nasdaq; (iii) a general moratorium on commercial
banking activities declared by either federal or New York State authorities or a
material disruption in commercial banking or securities settlement or clearance
services in the United States; (iv) an outbreak or escalation of hostilities or
acts of terrorism involving the United States or a declaration by the United
States of a national emergency or war; or (v) any other calamity or crisis or
any change in financial, political or economic conditions in the United States
or elsewhere, if the effect of any such event specified in clause (iv) or (v) in
XX Xxxxx'x judgment or in the judgment of such group of Underwriters makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares on the terms and in the manner contemplated in the Registration
Statement and the Prospectus, or (z) since the time of execution of this
Agreement, there shall have occurred any downgrading, or any notice or
announcement shall have been given or made of (i) any intended or potential
downgrading or (ii) any watch, review or possible change that does not indicate
an affirmation or improvement in the rating accorded any securities of or
guaranteed by the Company or any Subsidiary by any "nationally recognized
statistical rating organization," as that term is defined in Rule 436(g)(2)
under the Act.
If XX Xxxxx or any group of Underwriters elects to terminate this
Agreement as provided in this Section 7, the Company and each other Underwriter
shall be notified promptly in writing.
If the sale to the Underwriters of the Shares, as contemplated by
this Agreement, is not carried out by the Underwriters for any reason permitted
under this Agreement or if such sale is not carried out because the Company
shall be unable to comply with any of the terms of this Agreement, the Company
shall not be under any obligation or liability under this Agreement (except to
the extent provided in Sections 4(n), 5, 9, 12 and 13 hereof), and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the
-21-
extent provided in Section 9, 12 and 13 hereof) or to one another hereunder.
8. Increase in Underwriters' Commitments. Subject to Sections 6 and 7
hereof, if any Underwriter shall default in its obligation to take up and pay
for the Firm Shares to be purchased by it hereunder (otherwise than for a
failure of a condition set forth in Section 6 hereof or a reason sufficient to
justify the termination of this Agreement under the provisions of Section 7
hereof) and if the number of Firm Shares which all Underwriters so defaulting
shall have agreed but failed to take up and pay for does not exceed 10% of the
total number of Firm Shares, the non-defaulting Underwriters shall take up and
pay for (in addition to the aggregate number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as hereinafter provided. Such
Shares shall be taken up and paid for by such non-defaulting Underwriters in
such amount or amounts as you may designate with the consent of each Underwriter
so designated or, in the event no such designation is made, such Shares shall be
taken up and paid for by all non-defaulting Underwriters pro rata in proportion
to the aggregate number of Firm Shares set opposite the names of such
non-defaulting Underwriters in Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Firm Shares hereunder unless all of the Firm Shares are purchased
by the Underwriters (or by substituted Underwriters selected by you with the
approval of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and the
Prospectus and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Firm Shares which the defaulting
Underwriter or Underwriters agreed to purchase exceeds 10% of the total number
of Firm Shares which all Underwriters agreed to purchase hereunder, and if
neither the non-defaulting Underwriters nor the Company shall make arrangements
within the five business day period stated above for the purchase of all the
Firm Shares which the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall terminate 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, and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
9. Indemnity and Contribution.
-22-
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, any such
Underwriter or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company) or in a Prospectus (the term Prospectus for the purpose of this Section
9 being deemed to include any Preliminary Prospectus, the Prospectus and the
Prospectus as amended or supplemented by the Company), or arises out of or is
based upon any omission or alleged omission to state a material fact required to
be stated in either such Registration Statement or such Prospectus or necessary
to make the statements made therein not misleading, except insofar as any such
loss, damage, expense, liability or claim arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact contained in and
in conformity with information concerning such Underwriter furnished in writing
by or on behalf of such Underwriter through you to the Company expressly for use
in such Registration Statement or such Prospectus or arises out of or is based
upon any omission or alleged omission to state a material fact in connection
with such information required to be stated in such Registration Statement or
such Prospectus or necessary to make such information not misleading, (ii) any
untrue statement or alleged untrue statement made by the Company in Section 3
hereof or the failure by the Company to perform when and as required any
agreement or covenant contained herein, (iii) any untrue statement or alleged
untrue statement of any material fact contained in any audio or visual materials
provided by the Company or based upon written information furnished by or on
behalf of the Company including, without limitation, slides, videos, films or
tape recordings used in connection with the marketing of the Shares, or (iv) the
Directed Share Program or the Affinity Marketing Campaign, provided that the
Company shall not be responsible under this clause (iv) for any loss, damage,
expense, liability or claim that is finally judicially determined to have
resulted from the gross negligence or willful misconduct of WRH in conducting
the Directed Share Program or Affinity Marketing Campaign.
If any action, suit or proceeding (each, a "Proceeding") is brought
against an Underwriter or any such person in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such Underwriter
or such person shall promptly notify the Company in writing of the institution
of such Proceeding and the Company shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that the omission
to so notify the Company shall not relieve the Company from any liability which
the Company may have to any Underwriter or any such person or otherwise. Such
Underwriter or such person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such Underwriter or of such person unless the employment of such
counsel shall have been authorized in writing by the Company in connection with
the defense of such Proceeding or the Company shall not have, within a
reasonable period of time in light of the circumstances, employed counsel to
have
-23-
charge of the defense of such Proceeding or such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it or
them which are different from, additional to or in conflict with those available
to the Company (in which case the Company shall not have the right to direct the
defense of such Proceeding on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by the Company and
paid as incurred (it being understood, however, that the Company shall not be
liable for the expenses of more than one separate counsel (in addition to any
local counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties to such
Proceeding). The Company shall not be liable for any settlement of any
Proceeding effected without its written consent but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Underwriter and any such person from and against any loss or liability by reason
of such settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the indemnifying party agrees that it shall be
liable for any settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 60 business days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall not have fully reimbursed the indemnified party in accordance with
such request prior to the date of such settlement and (iii) such indemnified
party shall have given the indemnifying party at least 30 days' prior notice of
its intention to settle. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such Proceeding and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, any such
Underwriter or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability or
claim (1) arises out of or is based upon (a) any of the matters referred to in
clauses (i) through (iii) of the first paragraph of this Section 9(a), or (b)
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
Directed Share 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 Directed Share Participant to pay
for and accept delivery of Reserved Shares that the Directed Share Participant
has agreed to purchase; or (iii) otherwise arises out of or is based upon the
Directed Share Program, provided that the Company shall not be responsible under
this clause (iii) for any loss, damage, expense, liability or claim that is
finally judicially determined to have resulted from the gross negligence or
willful misconduct of WRH in conducting the Directed Share Program. The
-24-
second paragraph of this Section 9(a) shall apply equally to any Proceeding
brought against any such Underwriter or any such person in respect of which
indemnity may be sought against the Company pursuant to the foregoing sentence;
except that the Company shall be liable for the expenses of one separate counsel
(in addition to any local counsel) for any such person, separate and in addition
to counsel for the Underwriters, in any such Proceeding.
The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, any such
Underwriter or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability or
claim (1) arises out of or is based upon (a) any of the matters referred to in
clauses (i) through (iii) of the first paragraph of this Section 9(a), or (b)
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
Affinity Marketing Participants in connection with the Affinity Marketing
Campaign 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 Affinity Marketing
Participant to pay for and accept delivery of Affinity Reserved Shares that the
Affinity Marketing Participant has agreed to purchase; or (iii) otherwise arises
out of or is based upon the Affinity Marketing Campaign, provided that the
Company shall not be responsible under this clause (iii) for any loss, damage,
expense, liability or claim that is finally judicially determined to have
resulted from the gross negligence or willful misconduct of WRH in conducting
the Affinity Marketing Campaign. The second paragraph of this Section 9(a) shall
apply equally to any Proceeding brought against any such Underwriter or any such
person in respect of which indemnity may be sought against the Company pursuant
to the foregoing sentence; except that the Company shall be liable for the
expenses of one separate counsel (in addition to any local counsel) for any such
person, separate and in addition to counsel for the Underwriters, in any such
Proceeding.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, its directors and officers, and any person who controls
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, the Company or
any such person may incur under the Act, the Exchange Act, the common law or
otherwise, insofar as such loss, damage, expense, liability or claim arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information concerning such
Underwriter furnished in writing by or on behalf of such Underwriter through you
to the Company expressly for use in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company) or in a Prospectus, or arises out of or is based upon any omission or
alleged omission to state a material fact in connection with such information
required to be stated in such
-25-
Registration Statement or such Prospectus or necessary to make such information
not misleading.
If any Proceeding is brought against the Company or any such person
in respect of which indemnity may be sought against any Underwriter pursuant to
the foregoing paragraph, the Company or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such Underwriter shall not relieve such Underwriter from any liability
which such Underwriter may have to the Company or any such person or otherwise.
The Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense of such
Proceeding or such Underwriter shall not have, within a reasonable period of
time in light of the circumstances, employed counsel to defend such Proceeding
or such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from or additional
to or in conflict with those available to such Underwriter (in which case such
Underwriter shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties, but such Underwriter may employ
counsel and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that such Underwriter shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel) in
any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such Proceeding effected
without the written consent of such Underwriter but if settled with the written
consent of such Underwriter, such Underwriter agrees to indemnify and hold
harmless the Company and any such person from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second sentence of this paragraph, then the indemnifying party agrees
that it shall be liable for any settlement of any Proceeding effected without
its written consent if (i) such settlement is entered into more than 60 business
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least 30 days'
prior notice of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such Proceeding.
-26-
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 or insufficient to hold an indemnified party harmless in respect of
any losses, damages, expenses, liabilities or claims referred to therein, then
each applicable indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (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 hand 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 the Company on the one
hand and of the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses, liabilities or
claims, 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 respective proportions as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, bear to the aggregate
public offering price of the Shares. The relative fault of the Company on the
one hand and of the Underwriters on the other shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, damages, expenses, liabilities and claims referred to in this subsection
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating, preparing to defend or
defending any Proceeding.
(d) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by such Underwriter and distributed to the public were offered to
the public exceeds the amount of any damage which such Underwriter has otherwise
been required to pay by reason of such untrue statement 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 to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of the Company
contained in this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any Underwriter, its partners,
directors or officers or any person (including each partner, officer or director
of such person) who controls any Underwriter within the meaning of Section 15 of
the
-27-
Act or Section 20 of the Exchange Act, or by or on behalf of the Company,
its directors or officers or any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, and shall
survive any termination of this Agreement or the issuance and delivery of the
Shares. The Company and each Underwriter agree promptly to notify each other of
the commencement of any Proceeding against it and, in the case of the Company,
against any of the Company's officers or directors in connection with the
issuance and sale of the Shares, or in connection with the Registration
Statement or the Prospectus.
10. Information Furnished by the Underwriters. The statements set forth in
the last paragraph on the cover page of the Prospectus and the statements set
forth in paragraphs fifteen, sixteen, seventeen and eighteen under the caption
"Underwriting" in the Prospectus with respect to (i) the amount of selling
concession and reallowance and (ii) overallotment and stabilization constitute
the only information furnished by or on behalf of the Underwriters as such
information is referred to in Sections 3 and 9 hereof.
11. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if
to the Underwriters, shall be sufficient in all respects if delivered or sent
to XX Xxxxx & Co., LLC, 1221 Avenue of the Americas, New York, N.Y. 10020,
Attention: General Counsel and, if to the Company, shall be sufficient in
all respects if delivered or sent to the Company at the offices of the
Company at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000,
Attention: Xxxxxxx X. Xxxxxx.
12. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
13. Submission to Jurisdiction. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company
consents to the jurisdiction of such courts and personal service with respect
thereto. The Company hereby consents to personal jurisdiction, service and venue
in any court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against XX Xxxxx or any indemnified
party. Each of XX Xxxxx and the Company (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and affiliates)
waives all right to trial by jury in any action, proceeding or counterclaim
(whether based upon contract, tort or otherwise) in any way arising out of or
relating to this Agreement. The Company agrees that a final judgment in any such
action, proceeding or counterclaim brought in any such court shall be conclusive
and binding upon the Company and may be enforced in any other courts to the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
-28-
14. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters and the Company and to the
extent provided in Section 9 hereof the controlling persons, partners, directors
and officers referred to in such section, and their respective successors,
assigns, heirs, personal representatives and executors and administrators. No
other person, partnership, association or corporation (including a purchaser, as
such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
15. Counterparts. This Agreement may be signed by the parties in one
or more counterparts which together shall constitute one and the same
agreement among the parties.
16. Successors and Assigns. This Agreement shall be binding upon the
Underwriters and the Company and their successors and assigns and any
successor or assign of any substantial portion of the Company's and any of
the Underwriters' respective businesses and/or assets.
-29-
If the foregoing correctly sets forth the understanding between the
Company and the several Underwriters, please so indicate in the space provided
below for that purpose, whereupon this agreement and your acceptance shall
constitute a binding agreement between the Company and the Underwriters,
severally.
Very truly yours,
PLANETOUT INC.
By:
__________________________________
Title:
Accepted and agreed to as of the date first above written, on behalf of
themselves and the other several Underwriters named in Schedule A
XX XXXXX & CO., LLC
RBC CAPITAL MARKETS CORPORATION
XX XXXXXXXXX + CO, LLC
By: XX XXXXX & CO., LLC
By: __________________________
Title:
By: __________________________
Title:
SCHEDULE A
Number of
Underwriter Firm Shares
----------- -----------
XX XXXXX & CO., LLC......................................
RBC CAPITAL MARKETS CORPORATION..........................
XX XXXXXXXXX + CO, LLC...................................
-----------
Total..............
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