EXHIBIT 1.1
RealNetworks, Inc.
Common Stock
______________________
Underwriting Agreement
______________________
June __, 1999
Xxxxxxx, Xxxxx & Co.
BancBoston Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxx Partners LLC
As representatives of the several Underwriters
named in Schedule I hereto
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
RealNetworks, Inc., a Washington corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
3,525,000 shares and, at the election of the Underwriters, up to 600,000
additional shares of Common Stock, par value $.001 per share (the "Stock"), of
the Company, and the shareholders of the Company named in Schedule II hereto
(the "Selling Shareholders") propose, subject to the terms and conditions stated
herein, to sell to the Underwriters an aggregate of 475,000 shares of Stock.
The aggregate of 4,000,000 shares to be sold by the Company and the Selling
Shareholders is herein called the "Firm Shares" and the aggregate of 600,000
additional shares that may be sold by the Company is herein called the "Optional
Shares". The Firm Shares and the Optional Shares that the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"Shares."
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-3 (File No. 333-78589) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, but
including all documents incorporated by reference in the prospectus
contained therein, each in the form heretofore delivered to you, and,
excluding exhibits thereto but including all documents incorporated by
reference in the prospectus contained therein, to you for each of the other
Underwriters, have been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the
offering (the "Rule 462(b) Registration
Statement") filed pursuant to Rule 462(b) under the Securities Act of 1933,
as amended (the "Act"), which became effective upon filing, no other
document with respect to the Initial Registration Statement or document
incorporated by reference therein has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule
462(b) Registration Statement, if any, has been issued and no proceeding
for that purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in the Initial Registration Statement and
the Rule 462(b) Registration Statement, if any, or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including (i) the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under
the Act to be part of the Initial Registration Statement at the time it was
declared effective and (ii) the documents incorporated by reference in the
prospectus contained in the Initial Registration Statement at the time such
part of the Initial Registration Statement became effective, each as
amended at the time such part of the Initial Registration Statement became
effective or such part of the Rule 462(b) Registration Statement, if any,
became or hereafter becomes effective, are hereinafter collectively called
the "Registration Statement"; such final prospectus, in the form first
filed pursuant to Rule 424(b) under the Act, is hereinafter called the
"Prospectus"; any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Act, as of the date of such Preliminary Prospectus or Prospectus, as the
case may be; and any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary Prospectus
or Prospectus, as the case may be, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by reference in
such Preliminary Prospectus or Prospectus, as the case may be; and any
reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company filed pursuant to
Section 13(a) or 15(d) of the Exchange Act after the effective date of the
Initial Registration Statement that is incorporated by reference in the
Registration Statement;
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did 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 the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Xxxxxxx, Xxxxx & Co. expressly for use therein or by a Selling Shareholder
expressly for use in the preparation of the answers therein to Item 7 of
Form S-3;
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(iii) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will 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; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Xxxxxxx, Sachs & Co. expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
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; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use therein or
by a Selling Shareholder expressly for use in the preparation of the
answers therein to Item 7 of Form S-3;
(v) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its 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, otherwise than as set forth
or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock (other than
as a result of the exercise of options or warrants outstanding as of the
date of this Agreement) or any increase in the long-term debt of the
Company or any of its subsidiaries in excess of $200,000 or any material
adverse change, or any development that could reasonably be expected to
result in a material adverse change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise
than as set forth or contemplated in the Prospectus;
(vi) The Company and its subsidiaries have good and marketable title
to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or such as
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do not and will not have a material adverse effect upon the assets,
business, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole, or on the consummation of any of the
transactions contemplated hereby (a "Material Adverse Effect"); and any
real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries;
(vii) The Company has been duly incorporated and is duly authorized
to transact business in the corporate form under the laws of the state of
Washington, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties or conducts any business so as to
require such qualification, except where the failure to be so qualified in
any such jurisdiction would not have a Material Adverse Effect; and each
subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(viii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and conform to the description of the various classes
and series of capital stock incorporated by reference in the Prospectus;
and all of the issued shares of capital stock of each wholly owned
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly by the Company,
free and clear of all liens, encumbrances, equities or claims;
(ix) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued and fully paid and non-assessable and will conform
to the description of the Stock incorporated by reference in the
Prospectus;
(x) The issue and sale of the Shares to be sold by the Company
hereunder and the compliance by the Company with all of the provisions of
this Agreement and the consummation of the transactions herein contemplated
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject, nor will
such action result in any violation of the provisions of the Restated
Articles of Incorporation or Amended and Restated Bylaws of the Company or
any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Shares or the consummation by the Company of the transactions
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contemplated by this Agreement, except the registration under the Act of
the Shares, and such consents, approvals, authorizations, registrations or
qualifications as have been obtained or as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(xi) Neither the Company nor any of its subsidiaries is (i) in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound, except
for such defaults as would not be reasonably likely to have a Material
Adverse Effect, or (ii) in violation of its articles of incorporation or
bylaws;
(xii) The statements (i) incorporated by reference in the Prospectus
under the caption "Description of Capital Stock," insofar as they purport
to constitute a summary of the terms of the various classes and series of
capital stock of the Company, and (ii) set forth in the Prospectus under
the caption "Underwriting," insofar as they purport to describe the
provisions of the laws and documents referred to therein, are in each case
accurate and complete;
(xiii) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which the Company
or any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject that, if determined
adversely to the Company or any of its subsidiaries, would individually or
in the aggregate have a Material Adverse Effect; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(xiv) 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");
(xv) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(xvi) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(xvii) Except as described in the Prospectus, the Company and each of
its subsidiaries own or possess adequate licenses or other rights to use
all patents, patent applications, trademarks, trademark applications,
service marks, service xxxx applications, trade names, copyrights,
manufacturing or other processes, formulae, trade secrets, know-how,
franchises and other material intangible property and assets (collectively,
"Intellectual Property") that are necessary or material to the conduct of
their businesses as conducted and as proposed to be conducted as described
in the Prospectus. Except as described in the Prospectus, there are no
facts that would preclude it from having rights to the patent and patent
applications referenced in the
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Prospectus. Except as described in the Prospectus, the Company is not aware
that it or any of its subsidiaries lacks or will be unable to obtain any
rights or licenses to use any of the Intellectual Property necessary to
conduct the business now conducted or proposed to be conducted by it as
described in the Prospectus. The Prospectus fairly and accurately describes
the Company's rights with respect to the Intellectual Property. The Company
is not aware of any material violation or infringement by a third party of
any of the Intellectual Property and, except as described in the
Prospectus, no third party has an interest in or right to a license to use,
or the right to license others to use, any of the Intellectual Property. No
material claim is pending or, to the Company's knowledge, threatened to the
effect that the operations of the Company infringe upon or conflict with
the asserted rights of any other person or entity under any Intellectual
Property, and there is no basis for any such material claim (whether or not
pending or threatened) known to the Company. No material claim is pending
or, to the Company's knowledge, threatened to the effect that any such
Intellectual Property owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company, and there is no known basis for any such material claim (whether
or not pending or threatened). To the Company's knowledge, all material
proprietary trade secrets developed by or belonging to the Company that
have not been patented have been kept confidential. Each current and prior
employee (other than clerical staff and other employees without access to
proprietary trade secrets) has executed an agreement regarding
confidentiality, proprietary information and assignment of inventions to
the Company and, to the Company's knowledge, no such person is in breach of
any agreement or arrangement with employers relating to proprietary
information or assignment of inventions. Except as described in the
Prospectus, to the Company's knowledge, the business conducted or proposed
to be conducted by the Company will not cause the Company to infringe or
violate any of the patents, trademarks, service marks, trade names,
copyrights, licenses, trade secrets or other proprietary rights of any
other person or entity. Except as described in the Prospectus, to the
Company's knowledge, no person or entity, including any prior or current
employer of any prior or current employee, has any right to or interest in
any material inventions, improvements, discoveries or other information
assigned to the Company by such employee;
(xviii) The Company and its subsidiaries possess all consents,
licenses, certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, except where the failure to possess
such consents, licenses, certificates, authorizations and permits would not
be reasonably likely to have a Material Adverse Effect, and the Company is
not aware of any proceedings relating to the revocation or modification of
any such certificate, authorization or permit that, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would be reasonably likely to have a Material Adverse Effect, except as
described in or contemplated by the Prospectus;
(xix) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorizations, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets,
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and (C) access to assets is permitted only in accordance with management's
general or specific authorization;
(xx) Except as set forth in the Prospectus, (A) no preemptive right,
co-sale right, right of first refusal or other similar rights of
securityholders exist with respect to any class or series of capital stock,
including the issuance and sale of the Shares, other than those that have
been expressly waived or terminated prior to the date hereof, (B) no holder
of securities of the Company has the right to cause the Company to include
such holder's securities in the Registration Statement (other than such
rights that have been waived as previously disclosed to the Underwriters),
(C) no further approval or authorization of any securityholder, the Board
of Directors or any duly appointed committee thereof or others is required
under the Act, the Exchange Act, or under state securities or Blue Sky laws
and (D) the Company does not have outstanding any options or warrants to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations; and
(xxi) The Company has reviewed its operations and those of its
subsidiaries and any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to which
the business or operations of the Company or any of its subsidiaries will
be affected by the Year 2000 Problem. As a result of such review, the
Company has no reason to believe, and does not believe, that the Year 2000
Problem will have a Material Adverse Effect or result in any material loss
or interference with the Company's business or operations. The "Year 2000
Problem" as used herein means any significant risk that computer hardware
or software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in the
case of dates or time periods occurring after December 31, 1999, function
at least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000.
(b) Each of the Selling Shareholders severally represents and warrants to,
and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Shareholder of this
Agreement, the Power of Attorney and the Custody Agreement hereinafter
referred to, and for the sale and delivery of the Shares to be sold by such
Selling Shareholder hereunder have been obtained; and such Selling
Shareholder has full right, power and authority to enter into this
Agreement, the Power of Attorney and the Custody Agreement and to sell,
assign, transfer and deliver the Shares to be sold by such Selling
Shareholder hereunder;
(ii) The sale of the Shares to be sold by such Selling Shareholder
hereunder and the compliance by such Selling Shareholder with all of the
provisions of this Agreement, the Power of Attorney and the Custody
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which such Selling Shareholder is a party or by
which such Selling Shareholder is
7
bound, or to which any of the property or assets of such Selling
Shareholder is subject, nor will such action result in any violation of the
provisions of the articles of incorporation or bylaws of such Selling
Shareholder if such Selling Shareholder is a corporation, the partnership
agreement of such Selling Shareholder if such Selling Shareholder is a
partnership, or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over such Selling
Shareholder or the property of such Selling Shareholder;
(iii) Such Selling Shareholder has, and immediately prior to the
First Time of Delivery (as defined in Section 4 hereof) such Selling
Shareholder will have, good and valid title to the Shares to be sold by
such Selling Shareholder hereunder free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such Shares and
payment therefor pursuant hereto and thereto, good and valid title to such
Shares, free and clear of all liens, encumbrances, equities or claims, will
pass to the several Underwriters;
(iv) During the period beginning from the date hereof and continuing
to and including the date 90 days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder, any securities of the Company that are substantially similar to
the Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, Stock or any such substantially similar securities (other than
pursuant to employee stock option plans existing on, or upon the conversion
or exchange of convertible or exchangeable securities outstanding as of,
the date of this Agreement), without your prior written consent;
(v) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by such Selling
Shareholder expressly for use therein, such Preliminary Prospectus and the
Registration Statement did, and the Prospectus and any further amendments
or supplements to the Registration Statement and the Prospectus, when they
become effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading;
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Shareholder will deliver to you prior to or at
the First Time of Delivery a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof);
(viii) Certificates in negotiable form representing all of the Shares
to be sold by such Selling Shareholder hereunder have been placed in
custody under a Custody
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Agreement, in the form heretofore furnished to you (the "Custody
Agreement"), duly executed and delivered by such Selling Shareholder to
ChaseMellon Shareholder Services, L.L.C., as custodian (the "Custodian"),
and such Selling Shareholder has duly executed and delivered a Power of
Attorney, in the form heretofore furnished to you (the "Power of
Attorney"), appointing the persons indicated in Schedule II hereto, and
each of them, as such Selling Shareholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this Agreement
on behalf of such Selling Shareholder, to determine the purchase price to
be paid by the Underwriters to the Selling Shareholders as provided in
Section 2 hereof, to authorize the delivery of the Shares to be sold by
such Selling Shareholder hereunder and otherwise to act on behalf of such
Selling Shareholder in connection with the transactions contemplated by
this Agreement and the Custody Agreement; and
(ix) The Shares represented by the certificates held in custody for
such Selling Shareholder under the Custody Agreement are subject to the
interests of the Underwriters hereunder; the arrangements made by such
Selling Shareholder for such custody, and the appointment by such Selling
Shareholder of the Attorneys-in-Fact by the Power of Attorney, are to that
extent irrevocable; the obligations of the Selling Shareholders hereunder
shall not be terminated by operation of law, whether by the death or
incapacity of any individual Selling Shareholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee or
the termination of such estate or trust, or in the case of a partnership or
corporation, by the dissolution of such partnership or corporation, or by
the occurrence of any other event; if any individual Selling Shareholder or
any such executor or trustee should die or become incapacitated, or if any
such estate or trust should be terminated, or if any such partnership or
corporation should be dissolved, or if any other such event should occur,
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Shareholders in
accordance with the terms and conditions of this Agreement and of the
Custody Agreements; and actions taken by the Attorneys-in-Fact pursuant to
the Powers of Attorney shall be as valid as if such death, incapacity,
termination, dissolution or other event had not occurred, regardless of
whether or not the Custodian, the Attorneys-in-Fact, or any of them, shall
have received notice of such death, incapacity, termination, dissolution or
other event.
2. Subject to the terms and conditions herein set forth, (a) the Company
and each of the Selling Shareholders agree, severally and not jointly, to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company and each of the Selling Shareholders,
at a purchase price per share of $_____, the number of Firm Shares (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
the aggregate number of Firm Shares to be sold by the Company and each of the
Selling Shareholders as set forth opposite their respective names in Schedule II
hereto by a fraction, the numerator of which is the aggregate number of Firm
Shares to be purchased by such Underwriter as set forth opposite the name of
such Underwriter in Schedule I hereto and the denominator of which is the
aggregate number of Firm Shares to be purchased by all of the Underwriters from
the Company and all of the Selling Shareholders hereunder set forth opposite the
name of such Underwriter in Schedule I hereto and (b) in the event and to the
extent that the Underwriters shall exercise the election to purchase Optional
Shares as provided below, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at the purchase price per share set forth in clause
(a) of this Section 2, that portion of the number of
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Optional Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Optional Shares by a fraction, the numerator of which is the
maximum number of Optional Shares that such Underwriter is entitled to purchase
as set forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of Optional Shares that all of the
Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 600,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Shareholders, shall be delivered by or on
behalf of the Company and to the Selling Shareholders to Xxxxxxx, Sachs & Co.,
for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal (same
day) funds to the account specified by the Company and the Custodian, as their
interests may appear, to Xxxxxxx, Xxxxx & Co. at least forty-eight hours in
advance. The Company will cause the certificates representing the Shares to be
made available for checking and packaging at least twenty-four hours prior to
the Time of Delivery (as defined below) with respect thereto at the office of
Xxxxxxx, Sachs & Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York City time, on __________, 1999 or such
other time and date as Xxxxxxx, Xxxxx & Co. and the Company and the Selling
Shareholders may agree upon in writing, and, with respect to the Optional
Shares, 9:30 a.m., New York time, on the date specified by Xxxxxxx, Sachs & Co.
in the written notice given by Xxxxxxx, Xxxxx & Co. of the Underwriters'
election to purchase such Optional Shares, or such other time and date as
Xxxxxxx, Sachs & Co. and the Company may agree upon in writing. Such time and
date for delivery of the Firm Shares is herein called the "First Time of
Delivery," such time and date for delivery of the Optional Shares, if not the
First Time of Delivery, is herein called the "Second Time of Delivery," and each
such time and date for delivery is herein called a "Time of Delivery."
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 7(i) hereof, will be delivered at the offices of Xxxxxxx
Coie, 0000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000 (the "Closing
Location"), and the Shares will be delivered at the Designated Office, all at
10
each Time of Delivery. A meeting will be held at the Closing Location at 1:00
p.m., New York City time, on the New York Business Day immediately preceding
each Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form mutually approved by the Company
and you and to file such Prospectus pursuant to Rule 424(b) under the Act not
later than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or Prospectus
without your prior written approval; to advise you, promptly after it receives
notice thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies thereof; to
file promptly all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of 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; to advise you, promptly
after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or prospectus, of the suspension of the qualification of the Shares
for offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, promptly to use its best
efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Shares for offering and sale under the securities laws of
such jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Shares, provided
that in connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to furnish the
Underwriters with copies of the Prospectus in New York City in such quantities
as you may from time to time reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Shares and if at such time any event shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is
11
delivered, not misleading, or, if for any other reason it shall be necessary
during such period to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus in order
to comply with the Act or the Exchange Act, to notify you and upon your request
to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may from time
to time reasonably request of an amended Prospectus or a supplement to the
Prospectus that will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Shares at any time nine months or more after
the time of issue of the Prospectus, upon your request but at the expense of
such Underwriter, to prepare and deliver to such Underwriter as many copies as
you may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule
158);
(e) During the period beginning from the date hereof and continuing to and
including the date 90 days after the date of the Prospectus (the "Lock-up
Period"), not to offer, sell, contract to sell or otherwise dispose of, except
as provided hereunder, any securities of the Company that are substantially
similar to the Shares, including, but not limited to, any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Stock or any such substantially similar securities (other than pursuant to
employee stock option or employee stock purchase plans existing on, or upon the
conversion or exchange of convertible or exchangeable securities outstanding as
of, the date of this Agreement), without your prior written consent.
Notwithstanding the foregoing, the Company may, during the Lock-up Period, issue
in the aggregate not more than 7,100,000 shares of Stock solely in connection
with the establishment of strategic relationships or in connection with
acquisitions and business combinations, provided that the recipients of such
Stock agree not to offer, sell, contract to sell, or otherwise dispose of the
Stock thereby acquired prior to a date specified by the Company, which date
shall be no earlier than the expiration of the Lock-up Period;
(f) To furnish to its shareholders as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and statements of
income, shareholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date of the
Registration Statement), to make available to its shareholders consolidated
summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed and (ii) such
12
additional information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to the
Company's shareholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on the Nasdaq
National Market ("Nasdaq"); and
(j) If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and
the Company shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) under the Act.
6. The Company and each of the Selling Shareholders covenant and agree
with one another and with the several Underwriters that (a) the Company will pay
or cause to be paid the following: (i) the fees, disbursements and expenses of
the Company's counsel and accountants in connection with the registration of the
Shares under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or producing any Agreement among Underwriters, this Agreement, the
Agreement between Syndicates, the Selling Agreements, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky surveys
(if any); (iv) all fees and expenses in connection with listing the Shares on
Nasdaq; (v) the filing fees incident to, and the fees and disbursements of
counsel for the Underwriters in connection with, securing any required review by
the National Association of Securities Dealers, Inc. of the terms of the sale of
the Shares; (vi) the cost of preparing stock certificates; (vii) the cost and
charges of any transfer agent or registrar; and (viii) all other costs and
expenses incident to the performance of its obligations hereunder that are not
otherwise specifically provided for in this Section; and (b) such Selling
Shareholder will pay or cause to be paid all costs and expenses incident to the
performance of such Selling Shareholder's obligations hereunder which are not
otherwise specifically provided for in this Section, including (i) any fees and
expenses of counsel for such Selling Shareholder, (ii) such Selling
Shareholder's pro rata share of the fees and expenses of the Attorneys-in-Fact
and the Custodian and (iii) all expenses and taxes incident to the sale and
delivery of the Shares to be sold by such Selling Shareholder to the
Underwriters hereunder. It is understood, however, that the Company shall bear,
and the Selling Shareholders shall not be required to pay or to reimburse the
Company for, the cost of any other matters not directly relating to the sale and
purchase of the Shares pursuant to this Agreement, and that except as provided
in this Section, and Sections 8 and 11 hereof, the Underwriters will pay all of
their own costs and
13
expenses, including the fees of their counsel, stock transfer taxes on resale of
any of the Shares by them, and any advertising expenses connected with any
offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and the Selling Shareholders herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company and the Selling
Shareholders shall have performed all of its and their obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 5(a) hereof;
if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Xxxxxxx Coie LLP, counsel for the Underwriters, shall have furnished
to you such opinion or opinions, (a draft of each such opinion is attached as
Annex II(a) hereto) dated such Time of Delivery, with respect to the matters
covered in paragraphs (i), (ii), (vi), (x) and (xvi) of subsection (c) below as
well as such other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx P.C., counsel for the Company, shall
have furnished to you their written opinion (except with respect to all of
subparagraph (c)(iv) and those sections of subparagraphs (c)(ix) and (c)(xiv)
that relate to the Company's subsidiaries and to matters of foreign law, which
opinions will be provided by other counsel to the Company), dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is duly
authorized to transact business in the corporate form under the laws
of the state of Washington, with power and authority (corporate and
other) to own its properties and conduct its business as described in
the Prospectus;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of
the Company (including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and are
fully paid and nonassessable; and the Shares conform to the
description of the Stock contained in the Prospectus;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, except where the reason for failure to be so qualified
in any such jurisdiction does not have a Material Adverse Effect (such
counsel being entitled to rely in respect of the opinion in this
clause upon
14
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company, provided that such counsel
shall state that they believe that both you and they are justified in
relying upon such opinions and certificates);
(iv) Each wholly owned subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation; and all of the
issued shares of capital stock of each such subsidiary have been duly
and validly authorized and issued, are fully paid and non-assessable,
and are owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims (such counsel being entitled to rely
in respect of the opinion in this clause upon opinions of local
counsel and in respect to matters of fact upon certificates of
officers of the Company or its subsidiaries, provided that such
counsel shall state that they believe that both you and they are
justified in relying upon such opinions and certificates);
(v) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate be reasonably
likely to have a material adverse effect on the current consolidated
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries taken as a whole; and, to such
counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(vi) This Agreement has been duly authorized, executed and
delivered by the Company;
(vii) The issue and sale of the Shares being delivered at such
Time of Delivery to be sold by the Company and the compliance by the
Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation
of the provisions of the Restated Articles of Incorporation or Amended
and Restated Bylaws of the Company or any statute, order, rule or
regulation known to such counsel of any court or governmental agency
or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties;
(viii) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Shares or the
performance by the Company of its
15
obligations pursuant to this Agreement, except the registration under
the Act of the Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(ix) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is (i) in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or
any of its properties may be bound, except for such defaults as would
not be reasonably likely to have a Material Adverse Effect, or (ii) in
violation of its articles of incorporation or bylaws;
(x) The statements (i) incorporated by reference in the
Prospectus under the caption "Description of Capital Stock," insofar
as they purport to constitute a summary of the terms of the various
classes and series of capital stock of the Company, and (ii) set forth
in the Prospectus under the caption "Underwriting," insofar as they
purport to describe the provisions of the laws and documents referred
to therein, are in each case accurate and fair summaries of such laws
and documents;
(xi) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act;
(xii) The documents incorporated by reference in the Prospectus
or any further amendment or supplement thereto made by the Company
prior to such Time of Delivery other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion, when they became effective or were filed with the Commission,
as the case may be, complied as to form in all material respects with
the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder; and they have
no reason to believe that any of such documents, when such documents
became effective or were so filed, as the case may be, contained, in
the case of a registration statement which became effective under the
Act, an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or, in the case of other documents
which were filed under the Exchange Act with the Commission, an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so
filed, not misleading; and
(xiii) Except as described in the Prospectus and to the best of
such counsel's knowledge, the Company and each of its subsidiaries own
or possess adequate licenses or other rights to use the Intellectual
Property that are necessary or material to the conduct of their
businesses as conducted and as proposed to be conducted as described
in the Prospectus. Except as described in the Prospectus, such counsel
is not aware of any facts that would preclude the
16
Company from having rights to its patent and patent applications
referenced in the Prospectus. To the best of such counsel's knowledge,
the Prospectus fairly and accurately describes the Company's rights
with respect to the Intellectual Property. Such counsel is not aware
of any material violation or infringement by a third party of any of
the Intellectual Property and, except as described in the Prospectus
and to the best of such counsel's knowledge, no third party has a
material interest in or right to a license to use, or the right to
license others to use any of the Intellectual Property. To the best of
such counsel's knowledge, no material claim is pending or threatened
to the effect that the operations of the Company infringe upon or
conflict with the asserted rights of any other person or entity under
any Intellectual Property. To the best of such counsel's knowledge, no
material claim is pending or threatened to the effect that any such
Intellectual Property owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by
the Company;
(xiv) The Company and its subsidiaries possess all material
consents, licenses, certificates, authorizations and permits issued by
the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses as described in the
Prospectus, and the Company has not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
materially adverse effect on the current or future consolidated
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, except as described in or
contemplated by the Prospectus;
(xv) Except as set forth in the Prospectus, to such counsel's
knowledge, (A) no preemptive right, co-sale right, right of first
refusal or other similar rights of securityholders exists with respect
to any class or series of capital stock, including the issuance and
sale of the Shares, other than those that have been expressly waived
or terminated prior to the date hereof, (B) no holder of securities of
the Company has the right to cause the Company to include such
holder's securities in the Registration Statement, (C) no further
approval or authorization of any securityholder, the Board of
Directors or any duly appointed committee thereof or others is
required under the Act, the Exchange Act or under state securities or
Blue Sky laws and (D) the Company does not have outstanding any
options or warrants to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, rights, convertible
securities or obligations; and
(xvi) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to such Time of Delivery (other than the financial statements, the
financial data derived from the financial statements and the related
schedules therein, as to which such counsel need express no belief)
complied as to form in all material respects with the requirements of
the Act and the rules and regulations thereunder. In addition, such
counsel shall state that although they do not assume any
responsibility for the accuracy, completeness or fairness of the
statements
17
contained or incorporated by reference in the Registration Statement
or the Prospectus, except for those referred to in the opinion in
subsection (x) of this Section 7(c), they have no reason to believe
that, as of its effective date, the Registration Statement or any
further amendment thereto made by the Company prior to such Time of
Delivery (other than the financial statements, the financial data
derived from the financial statements and the related schedules
therein, as to which such counsel need express no belief) contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Prospectus or any
further amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements, the
financial data derived from the financial statements and the related
schedules therein, as to which such counsel need express no belief)
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading or
that, as of such Time of Delivery, either the Registration Statement
or the Prospectus or any further amendment or supplement thereto made
by the Company prior to such Time of Delivery (other than the
financial statements, the financial data derived from the financial
statements and the related schedules therein, as to which such counsel
need express no belief) contains an untrue statement of a material
fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and they do not know of any amendment to
the Registration Statement required to be filed or of any contracts or
other documents of a character required to be filed as an exhibit to
the Registration Statement or required to be incorporated by reference
into the Prospectus or required to be described in the Registration
Statement or the Prospectus that are not filed or incorporated by
reference or described as required.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction outside the United States.
(d) The respective counsel for each of the Selling Shareholders, as
indicated in Schedule II hereto, each shall have furnished to you their written
opinion with respect to each of the Selling Shareholders for whom they are
acting as counsel, dated the First Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) A Power of Attorney and a Custody Agreement have been duly
executed and delivered by such Selling Shareholder and constitute
valid and binding agreements of such Selling Shareholder in accordance
with their terms;
(ii) This Agreement has been duly executed and delivered by or
on behalf of such Selling Shareholder; and the sale of the Shares to
be sold by such Selling Shareholder hereunder and the compliance by
such Selling Shareholder with all of the provisions of this Agreement,
the Power of Attorney and the Custody Agreement and the consummation
of the transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any terms or provisions of,
or constitute a default under, any statute, indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument known to
such counsel
18
to which such Selling Shareholder is a party or by which such Selling
Shareholder is bound, or to which any of the property or assets of
such Selling Shareholder is subject, nor will such action result in
any violation of the provisions of the Certificate of Incorporation or
Amended and Restated Bylaws of such Selling Shareholder if such
Selling Shareholder is a corporation, the Partnership Agreement of
such Selling Shareholder if such Selling Shareholder is a partnership,
or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over such Selling
Shareholder or the property of such Selling Shareholder;
(iii) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the
Shares to be sold by such Selling Shareholder hereunder, except for
such consents, approvals, authorizations or orders as have been
obtained under the Act and such as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of such Shares by the Underwriters;
(iv) Immediately prior to the First Time of Delivery, such
Selling Shareholder had good and valid title to the Shares to be sold
at the First Time of Delivery by such Selling Shareholder under this
Agreement, free and clear of all liens, encumbrances, equities or
claims, and full right, power and authority to sell, assign, transfer
and deliver the Shares to be sold by such Selling Shareholder
hereunder and thereunder; and
(v) Good and valid title to such Shares, free and clear of all
liens, encumbrances, equities or claims, has been transferred to each
of the several Underwriters, who have purchased such Shares in good
faith and without notice of any such lien, encumbrance, equity or
claim or any other adverse claim within the meaning of the Uniform
Commercial Code.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction outside the United States and in
rendering the opinion in subparagraph (iv) such counsel may rely upon a
certificate of such Selling Shareholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on the Shares sold by
such Selling Shareholder, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such certificate;
(e) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent
to the date of this Agreement and also at each Time of Delivery, KPMG Peat
Marwick LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to
you, to the effect set forth in Annex I hereto (the executed copy of the
letter delivered prior to the execution of this Agreement is attached as
Annex I(a) hereto and a draft of the form of letter to be delivered on the
effective date of any post-effective amendment to the Registration
Statement and as of each Time of Delivery is attached as Annex I(b)
hereto);
(f) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference
19
in the Prospectus any loss or interference with its 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,
otherwise than as set forth or contemplated in the Prospectus and (ii)
since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock (other
than as a result of the exercise of options or warrants outstanding as of
the date of this Agreement) or any increase in the long-term debt of the
Company or any of its subsidiaries in excess of $200,000 or any change, or
any development that could reasonably be expected to result in a change, in
or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in Clause (i)
or (ii), is in the judgment of the Representatives so material and adverse
as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on 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 or Washington State authorities; or
(iv) the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war, if
the effect of any such event specified in this Clause (iv) in the judgment
of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at
such Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(h) The Shares to be sold by the Company and the Selling Shareholders
at such Time of Delivery shall have been duly listed for quotation on
Nasdaq;
(i) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each of the Company's shareholders
named in Schedule II hereto substantially to the effect set forth in
Subsection 1(b)(iv) hereof in form and substance satisfactory to you;
(j) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each Executive Officer and Director of
the Company, other than Selling Shareholders, to the effect set forth in
Subsection 1(b)(iv) hereof in form and substance satisfactory to you;
(k) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(l) The Company and the Selling Shareholders shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and the Selling Shareholders, respectively,
satisfactory to you as to the accuracy of the
20
representations and warranties of the Company and the Selling Shareholders,
respectively, herein at and as of such Time of Delivery, as to the
performance by the Company and the Selling Shareholders of all of their
respective obligations hereunder to be performed at or prior to such Time
of Delivery, and as to such other matters as you may reasonably request and
the Company shall have furnished or caused to be furnished certificates as
to the matters set forth in subsections (a) and (e) of this Section, and as
to such other matters as you may reasonably request.
8. (a) The Company and each of Xxxxxx Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxx
Xxxxxxxx and Xxxxx Xxxxxxxx, jointly and severally, will indemnify and hold
harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal
or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as such expenses
are incurred; provided, however, that the Company and the Selling
Shareholders shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through Xxxxxxx, Sachs & Co. expressly for use therein;
provided, further, that the liability of each of Xxxxxx Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx and Xxxxx Xxxxxxxx pursuant to this Section 8(a)
shall not exceed the product of the number of Shares sold by each such
Selling Shareholder and the initial price to public of the Shares as set
forth in the Prospectus.
(b) The Xxxxxx Family Foundation will indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by such
Selling Shareholder expressly for use therein; and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action
or claim as such expenses are incurred; provided, however, that such
Selling Shareholder shall not be liable in any such case to
21
the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
any Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use therein;
provided, further, that the liability of the Xxxxxx Family Foundation
pursuant to this Section 8(b) shall not exceed the product of the number of
Shares sold by such Selling Shareholder and the initial price to public of
the Shares as set forth in the Prospectus.
(c) Each Underwriter will indemnify and hold harmless the Company and
each Selling Shareholder against any losses, claims, damages or liabilities
to which the Company or such Selling Shareholder may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use therein;
and will reimburse the Company and each Selling Shareholder for any legal
or other expenses reasonably incurred by the Company or such Selling
Shareholder in connection with investigating or defending any such action
or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or
22
claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising
out of such action or claim and (ii) does not include a statement as to or
an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then,
subject to the limitations on liability set forth in Sections 8(a) and (b)
above, each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the Company
and the Selling Shareholders on the one hand and the Underwriters on the
other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice
required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Selling Shareholders on the
one hand and the Underwriters on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Shares
purchased under this Agreement (before deducting expenses) received by the
Company and the Selling Shareholders bear to the total underwriting
discounts and commissions received by the Underwriters with respect to the
Shares purchased under this Agreement, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Selling Shareholders on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, each of the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (e) 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 which does not take account of the
equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to
23
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Shareholders under
this Section 8 shall be in addition to any liability that the Company and
the respective Selling Shareholders may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability
that the respective Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each officer and director of the Company
and to each person, if any, who controls the Company or any Selling
Shareholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Shares that it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after
such default by any Underwriter you do not arrange for the purchase of such
Shares, then the Company and the Selling Shareholders shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company and
the Selling Shareholders that you have so arranged for the purchase of such
Shares, or the Company and the Selling Shareholders notify you that they have so
arranged for the purchase of such Shares, you or the Company and the Selling
Shareholders shall have the right to postpone such Time of Delivery for a period
of not more than seven days in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus that in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Shareholders as provided in subsection (a) above, the aggregate
number of such Shares that remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Shareholders shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares that such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares that such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Shareholders as provided in subsection (a) above, the aggregate
number of such Shares that remains unpurchased exceeds one-eleventh of the
aggregate number of all the Shares to be purchased at such Time of Delivery, or
if the Company and the Selling Shareholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase
24
Shares of a defaulting Underwriter or Underwriters, then this Agreement (or,
with respect to the Second Time of Delivery, the obligations of the Underwriters
to purchase and of the Company to sell the Optional Shares) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company or the Selling Shareholders, except for the expenses to be borne by
the Company and the Selling Shareholders and the Underwriters as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Shareholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any of the Selling Shareholders, or any officer
or director or controlling person of the Company, or any controlling person of
any Selling Shareholder, and shall survive delivery of and payment for the
Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Shareholders shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason, any Shares are not delivered by or on behalf of the
Company and the Selling Shareholders as provided herein, the Company and each of
the Selling Shareholders pro rata (based on the number of shares to be sold by
the Company and such Selling Shareholder hereunder) will reimburse the
Underwriters through you for all out-of-pocket expenses approved in writing by
you, including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but the Company and the Selling Shareholders shall then
be under no further liability to any Underwriter in respect of the Shares not so
delivered except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives and in all dealings with any Selling Shareholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Shareholder made or given by any
or all of the Attorneys-in-Fact for such Selling Shareholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; if to any Selling Shareholder shall be delivered or sent by mail,
telex or facsimile transmission to counsel for such Selling Shareholder at its
address set forth in Schedule II hereto; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company or the Selling Shareholders by you upon request. Any such statements,
requests, notices or agreements shall take effect at the time of receipt
thereof.
25
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company, the Selling Shareholders and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
and each person who controls the Company, any Selling Shareholder or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
26
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and for each of the Representatives plus one
for each counsel and the Custodian, if any, counterparts hereof, and upon the
acceptance hereof by you, on behalf of each of the Underwriters, this letter and
such acceptance hereof shall constitute a binding agreement among each of the
Underwriters, the Company and each of the Selling Shareholders. It is
understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters (U.S. Version) the form of which shall be submitted to the Company
and the Selling Shareholders for examination upon request, but without warranty
on your part as to the authority of the signers thereof.
Very truly yours,
RealNetworks, Inc.
By: _____________________________
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer &
Chairman
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxx
Xxxxxx Family Foundation
Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
By: _____________________________
Name:
Title:
As Attorney-in-Fact acting on behalf
of each of the Selling Shareholders
named in Schedule II to this
Agreement.
Accepted as of the date hereof:
Xxxxxxx, Sachs & Co.
BancBoston Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxx Partners LLC
By: __________________________
(Xxxxxxx, Sachs & Co.)
On behalf of each of the Underwriters
SCHEDULE I
Number of
Total Number Optional
of Shares to Be Purchased if
Firm Shares Maximum Option
Underwriter to Be Purchased Exercised
------------------------------------------------------------- --------------- --------------------------
Xxxxxxx, Xxxxx & Co.......................................... ________ ________
BancBoston Xxxxxxxxx Xxxxxxxx................................ ________ ________
Xxxxxxxxx, Lufkin & Xxxxxxxx................................. ________ ________
Xxxxxx Brothers.............................................. ________ ________
Xxxxxx Xxxxxx Partners LLC................................... ________ ________
-------------- -------------------------
Total..............................................
============== =========================
SCHEDULE II
Number of
Optional Shares
Total Number of to be Sold
Firm Shares if Maximum
to be Sold Option Exercised
The Company.................................................. 3,525,000 600,000
The Selling Shareholder(s):
Xxxxxx Xxxxxx(a)........................................... 310,000 0
Xxxxxxx Xxxxxxx(a)......................................... 50,000 0
Xxxxxx Family Foundation(a)................................ 75,000 0
Xxxxx Xxxxxxxx(a).......................................... 20,000 0
Xxxxx Xxxxxxxx(a).......................................... 20,000 0
----------- -------
Total.............................................. 4,000,000 600,000
=========== =======
(a) This Selling Shareholder is represented by Xxxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP, 000 Xxxxxxxxxxxx Xxxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000, and has appointed Xxxx Xxxxxx and Xxxxx Xx XxxXxxxxx, and
each of them, as the Attorneys-in-Fact for such Selling Shareholder.
2
ANNEX I
FORM OF COMFORT LETTER
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and
the related published rules and regulations thereunder; and, if applicable,
they have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the consolidated
interim financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been separately furnished to the representatives of the
Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus and/or
included in the Company's Quarterly Report on Form 10-Q incorporated by
reference into the Prospectus as indicated in their reports thereon copies
of which have been separately furnished to the Representatives; and on the
basis of specified procedures including inquiries of officials of the
Company who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing came
to their attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the period from February 4, 1994 through March 31, 1999 included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year agrees
with the corresponding amounts (after restatement where applicable) in the
audited consolidated financial statements
for such period which were included or incorporated by reference in the
Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus and/or included or incorporated by
reference in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Exchange
Act and the related published rules and regulations, or (ii) any
material modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus or
included in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus, for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and items
were not determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated financial
statements included or incorporated by reference in the Company's
Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited income
statement data and balance sheet items included in the Prospectus and
referred to in clause (B) were not determined on a basis substantially
consistent with the basis for
2
the audited financial statements included or incorporated by reference
in the Company's Annual Report on Form 10-K for the most recent fiscal
year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet included
or incorporated by reference in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders' equity or
other items specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes, increases
or decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter; and
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the
specified date referred to in clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or per share
amounts of consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period of
the preceding year and with any other period of corresponding length
specified by the Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus (excluding
documents incorporated by reference) or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representatives
or in documents incorporated by reference in the Prospectus specified by
the Representatives, and have compared certain of such amounts, percentages
and financial information with
3
the accounting records of the Company and its subsidiaries and have found them
to be in agreement.
4
