EXHIBIT 1
4,000,000 Shares
DIGITAL INSIGHT CORPORATION
COMMON STOCK, par value $0.001
UNDERWRITING AGREEMENT
July __, 2000
July __, 2000
Xxxxxx Xxxxxxx & Co. Incorporated
Deutsche Bank Securities, Inc.
Banc of America Securities LLC
Friedman, Billings, Xxxxxx & Co.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Digital Insight Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule II
hereto (the "Underwriters"), and certain Stockholders of the Company named in
Schedule I hereto (herein collectively called the "Selling Stockholders", which
term shall include, except where otherwise noted, those stockholders named as
Affiliated Selling Stockholders in Schedule I hereto, herein collectively called
the "Affiliated Selling Stockholders") severally propose to sell to the several
Underwriters, an aggregate of 4,000,000 shares of the Common Stock, par value
$0.001 of the Company (the "Firm Shares"), of which 2,150,000 shares are to be
issued and sold by the Company and 1,850,000 shares are to be sold by the
Selling Stockholders, each Selling Stockholder selling the amount set forth
opposite such Selling Stockholder's name in Schedule I hereto.
The Company also proposes to issue and sell and certain Selling
Stockholders propose to transfer and sell to the several Underwriters not more
than an additional 600,000 shares in the aggregate of Common Stock, par value
$0.001 (the "Additional Shares"), of which _________ shares are to be issued and
sold by the Company (the "Company Additional Shares") and _________ shares are
to be sold by such Selling Stockholders, if and to the extent that you, as
Managers of the offering, shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares". The shares of Common
Stock, par value $0.001 of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the "Common Stock".
The Company and the Selling Stockholders are hereinafter sometimes collectively
referred to as the "Sellers".
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "Prospectus".
If the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b)
under the Securities Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed to include
such Rule 462 Registration Statement.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each document filed pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act") complied in all material respects
with the Exchange Act and applicable rules and regulations of the Commission
thereunder, (ii) the Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
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,
(iii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iv) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; all of the issued shares of
capital stock of each 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.
Other than the ownership of all of the outstanding capital stock of nFront,
Inc., 1View Network Corporation, Any Time Access, Inc. and Mureau Acquisition
Corp. (each a "Subsidiary,"
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collectively, the "Subsidiaries"), the Company does not own any of the equity of
any corporation, partnership, joint venture, association or other entity.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock (including the Shares to be sold
by the Selling Stockholders) outstanding prior to the issuance of the Shares to
be sold by the Company have been duly authorized and are validly issued, fully
paid and non-assessable.
(h) The Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will not
contravene any provision of applicable law or the certificate of incorporation
or by-laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except such
as may be required under the Securities Act or by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement).
(k) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations, contracts or
other documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
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(m) The Company is not, and after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as described
in the Prospectus will not be, required to register as an "investment company"
as such term is defined in the Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(p) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to require the Company
to file a registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such securities
with the Shares registered pursuant to the Registration Statement except in each
case as described in the Prospectus (and as to which any requirements to include
any securities in, or register any securities pursuant to, the Registration
Statement have been satisfied or duly waived).
(q) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government of Cuba
or with any person or affiliate located in Cuba.
(r) Except in each case as described in the Prospectus,
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, (1) the Company and its subsidiaries
have not incurred any material liability or obligation, direct or contingent,
nor entered into any material transaction not in the ordinary course of
business; (2) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends; and (3)
there has not been any material change in the capital stock, short-term debt or
long-term debt of the Company and its subsidiaries.
(s) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its subsidiaries, in each case free and
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clear of all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; 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, in each case except as described
in the Prospectus.
(t) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently employed by
them in connection with the business now operated by them, and neither the
Company nor any of its subsidiaries has received any notice of infringement of
or conflict with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse affect on the Company and its
subsidiaries, taken as a whole.
(u) No material labor dispute with the employees of the Company
or any of its subsidiaries exists, except as described in the Prospectus, or, to
the knowledge of the Company, is imminent; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that could have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(v) The Company and its subsidiaries are insured by the insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any of its subsidiaries has been refused any
insurance coverage sought or applied for; and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole, except as described in the Prospectus.
(w) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse effect on
the Company and its subsidiaries, taken as a whole, except as described the
Prospectus
(x) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (3) access to assets
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is permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
2. Representations and Warranties of the Selling Stockholders.
(a) Each of the Selling Stockholders, severally and not jointly,
represents and warrants to and agrees with each of the Underwriters that:
(i) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder.
(ii) The execution and delivery by such Selling Stockholder
of, and the performance by such Selling Stockholder of its obligations under,
this Agreement, the Custody Agreement signed by such Selling Stockholder and
BankBoston Equiserve, N.A., as Custodian, relating to the deposit of the Shares
to be sold by such Selling Stockholder (the "Custody Agreement") and the Power
of Attorney signed by such Selling Stockholder, appointing __________________ as
such Selling Stockholder's attorney-in-fact to the extent set forth therein,
relating to the transactions contemplated hereby and by the Registration
Statement (the "Power of Attorney") will not contravene any provision of
applicable law, or the certificate of incorporation or by-laws of such Selling
Stockholder (if such Selling Stockholder is a corporation), or any agreement or
other instrument material to and binding upon such Selling Stockholder or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over such Selling Stockholder, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by such Selling Stockholder of its
obligations under this Agreement or the Custody Agreement or Power of Attorney
of such Selling Stockholder, except such as may be required under the Securities
Act or by the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares.
(iii) Such Selling Stockholder has, and on the Closing Date
will have, valid title to the Shares to be sold by such Selling Stockholder and
the legal right and power, and all authorization and approval required by law,
to enter into this Agreement, the Custody Agreement and the Power of Attorney
and to sell, transfer and deliver the Shares to be sold by such Selling
Stockholder.
(iv) The Shares to be sold by such Selling Stockholder
pursuant to this Agreement have been duly authorized and are validly issued,
fully paid and non-assessable.
(v) The Custody Agreement and the Power of Attorney have
been duly authorized, executed and delivered by such Selling Stockholder and are
valid and binding agreements of such Selling Stockholder, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally and by general principles
of equity.
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(vi) Delivery of the Shares to be sold by such Selling
Stockholder pursuant to this Agreement will pass title to such Shares free and
clear of any security interests, claims, liens, equities and other encumbrances.
(vii) All information furnished in writing by or on behalf of
such Selling Stockholder for use in the Registration Statement is, and on the
Closing Date will be, true, correct and complete, and does not, and on the
Closing Date will not, contain any untrue statement of a material fact or omit
to state any material fact necessary to make such information not misleading,
and all information furnished in writing by or on behalf of such Selling
Stockholder for use in the Prospectus is, and on the Closing Date will be, true,
correct and complete, and does not, and on the Closing Date will not, contain
any untrue statement of a material fact or omit to state any material fact
necessary to make such information not misleading in the light of the
circumstances under which they were made.
(b) Each of the Affiliated Selling Stockholders, severally and
not jointly, hereby represents and warrants that such Affiliated Selling
Stockholder has reviewed the Registration Statement and Prospectus and, although
such Affiliated Selling Stockholder has not independently verified the accuracy
or completeness of all the information contained therein, nothing has come to
the attention of such Affiliated Selling Stockholder that would lead such
Affiliated Selling Stockholder to believe that (1) the Registration Statement
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; or (2) the Prospectus contains any untrue
statement of a material fact or omitted or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Agreements to Sell and Purchase. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at $______ a share (the "Purchase
Price") the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
number of Firm Shares to be sold by such Seller as the number of Firm Shares set
forth in Schedule II hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Company Additional Shares and certain Selling
Stockholders (the "Option Stockholders") agree to sell to the Underwriters the
number of Additional Shares set forth with respect to such Selling Stockholder
on Schedule I hereto, and the Underwriters shall have a one-time right to
purchase, severally and not jointly, up to 600,000 Additional Shares at the
Purchase Price. If you, on behalf of the Underwriters, elect to exercise such
option, you shall so notify the Company in writing not later than 30 days after
the date of this Agreement, which notice shall specify the number of Additional
Shares to be purchased by the Underwriters and the date on which such shares are
to be purchased. Such date may be the same as the Closing Date (as defined
below) but not earlier than the Closing Date nor later than ten business days
after the date of such notice. Additional Shares may be purchased as provided
in Section 5 hereof solely
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for the purpose of covering over-allotments made in connection with the offering
of the Firm Shares. If any Additional Shares are to be purchased, each
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
you may determine) that bears the same proportion to the total number of
Additional Shares to be purchased as the number of Firm Shares set forth in
Schedule II hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Shares to be sold hereunder, (B) the issuance by the Company of
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof which is described in
the Prospectus or of which the Underwriters have otherwise been advised in
writing, (C) the issuance by the Company of shares of Common Stock or options to
purchase shares of Common Stock pursuant to the Company's employee benefit plans
as in existence on the date of this Agreement, (D) the issuance by the Company
of shares of Common Stock or options to purchase shares of Common Stock in
connection with the acquisition of AnyTime Access, Inc. by the Company or (E)
transactions by any person other than the Company relating to shares of Common
Stock or other securities acquired in open market transactions after the
completion of the offering of the Shares. In addition, each Selling
Stockholder, agrees that, without the prior written consent of Xxxxxx Xxxxxxx &
Co. Incorporated on behalf of the Underwriters, it will not, during the period
ending 90 days after the date of the Prospectus, make any demand for, or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock. The Company hereby represents and warrants that, during the period
ending 90 days after the date of the Prospectus, it will not release any of its
officers, directors or other stockholders, including stockholders of the Company
by virtue of the acquisition of AnyTime Access, Inc., from any lock-up
agreements currently existing or hereafter effected without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated.
4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$_____________ a share (the "Public Offering Price") and to certain dealers
selected by you at a price that represents a concession not in excess of $______
a share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $_____ a share, to any
Underwriter or to certain other dealers.
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5. Payment and Delivery. Payment for the Firm Shares to be sold by
each Seller shall be made to such Seller in immediately available funds by wire
transfers to the accounts specified by each Seller against delivery of such Firm
Shares for the respective accounts of the several Underwriters at 10:00 a.m.,
New York City time, on ____________, 2000, or at such other time on the same or
such other date, not later than _________, 2000, as shall be designated in
writing by you. The time and date of such payment are hereinafter referred to as
the "Closing Date".
Payment for any Additional Shares shall be made to the Company and the
Option Stockholders in immediately available funds by wire transfer to the
accounts specified by the Company and the Option Stockholders against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 3 or at such other time on the same or on such other
date, in any event not later than _______, 2000, as shall be designated in
writing by you. The time and date of such payment are hereinafter referred to
as the "Option Closing Date".
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of
the Sellers to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than [__________] (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and that makes it, in
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your judgment, impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in Section 6(a)(i) above and to the effect that
the representations and warranties of the Company contained in this Agreement
are true and correct in all material respects (if not qualified by materiality)
and in all respects (if qualified by materiality) as of the Closing Date and
that the Company has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of O'Melveny & Xxxxx LLP, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly
existing in good standing under the laws of the State of Delaware, with
corporate power to own its property and to conduct its business as described in
the Prospectus and is qualified as a foreign corporation to do business in the
states identified in a certificate signed by an executive officer of the Company
(the "Officer's Certificate") as states in which the Company conducts business
or owns or leases property, and is in good standing in each of those states;
(ii) each of the Subsidiaries has been duly incorporated,
and is validly existing in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power to own its property and to conduct
its business as described in the Prospectus and is qualified as a foreign
corporation to do business in the states identified in the Officer's Certificate
as states in which such corporations conduct business or own or lease property,
and is in good standing in each of those states;
(iii) the authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the Prospectus;
(iv) the shares of Common Stock (including the Shares to be
sold by the Selling Stockholders) outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized by all necessary
corporate action on the part of the Company and are validly issued, fully paid
and non-assessable;
(v) all of the outstanding shares of capital stock of each
Subsidiary have been duly authorized by all necessary corporate action on behalf
of that corporation and are validly issued, fully paid and non-assessable and
are owned of record by the Company and, to the knowledge of such counsel,
beneficially owned by the Company, free and clear of all liens, encumbrances,
equities or claims;
(vi) the Shares to be sold by the Company have been duly
authorized by all necessary corporation action on the part of the Company and
upon payment for
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and delivery of the Shares to be sold by the Company in accordance with this
Agreement, the Shares to be sold by the Company will be validly issued, fully
paid and non-assessable; and holders of the Common Stock are not entitled to any
preemptive rights to subscribe to any additional shares of the Common Stock
under the Company's Certificate of Incorporation or Bylaws or the Delaware
General Corporation Law or, to the knowledge of such counsel, any similar
rights;
(vii) to the knowledge of such counsel, there is no legal or
beneficial owner of any securities or the Company who has any rights, not
effectively satisfied or waived, to require registration of any shares of
capital stock of the Company in connection with the filing of the Registration
Statement.
(viii) the Company has the corporate power to enter into this
Agreement and to issue, sell and deliver to the Underwriters the Shares to be
issued and sold by the Company;
(ix) this Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been duly executed
and delivered by the Company;
(x) the execution and delivery by the Company of this
Agreement do not, and the Company's performance of its obligations under this
Agreement will not, (1) violate the Company's Certificate of Incorporation or
Bylaws, (2) violate, breach or result in a default under any existing obligation
of or restriction on the Company or any of its subsidiaries under any agreement
(the "Other Agreements") listed as an exhibit to the Registration Statement, or
(3) breach or otherwise violate any existing obligation of or restriction on the
Company or any of its subsidiaries under any order, judgment or decree of any
California or federal court or governmental authority binding on the Company or
any of its subsidiaries identified in the Officer's Certificate, except that
such counsel need express no opinion as to the effect of the Company's
performance of its obligations in this Agreement on the Company's compliance
with any financial covenants in the Other Agreements;
(xi) the statements (A) in the Prospectus under the
captions "Business - Government Regulation," "Management - Employee Benefit
Plans," "Description of Capital Stock" and "Underwriters" and (B) in the
Registration Statement in Items 14 and 15, in each case insofar as such
statements constitute summaries of any legal matters, documents or proceedings
referred to therein, fairly present the information required by Form S-1 with
respect to any such legal matters, documents or proceedings and fairly summarize
the matters referred to therein;
(xii) such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described;
(xiii) such counsel does not know of any statutes,
regulations, contracts or other documents of a character required to be
described in the Registration
11
Statement or filed as an exhibit to the Registration Statement that are not
described or filed as required;
(xiv) the Company is not, and after giving effect to the
offering and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus will not be, required to register as an investment
company under the Investment Company Act of 1940, as amended; and
(xv) the Registration Statement, on the date it was filed,
appeared on its face to comply in all material respects with the requirements as
to form for registration statements on Form S-1 under the Securities Act and the
related rules and regulations in effect at the date of filing, except that such
counsel need express no opinion concerning the financial statements and
schedules and other financial and statistical data contained therein.
Such counsel shall state that in connection with such counsel's
participation in conferences in connection with the preparation of the
Registration Statement and the Prospectus, such counsel has not independently
verified the accuracy, completeness or fairness of the statements contained
therein, and the limitations inherent in the examination made by such counsel
and the knowledge available to such counsel are such that such counsel is unable
to assume, and does not assume, any responsibility for such accuracy,
completeness or fairness (except as otherwise specifically stated in paragraph
(xi) above). However, such counsel shall state that on the basis of such
counsel's review and participation in conferences in connection with the
preparation of the Registration Statement and the Prospectus, such counsel does
not believe that the Registration Statement as of its effective date contained
any 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 such counsel does not believe that the Prospectus, on the date
of the opinion, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; however,
such counsel need express no opinion or belief as to the financial statements
and schedules and other financial and statistical data contained in the
Registration Statement or the Prospectus.
(d) The Underwriters shall have received on the Closing Date an
opinion of O'Melveny & Xxxxx LLP, counsel for the Selling Stockholders, dated
the Closing Date, to the effect that:
(i) A Power of Attorney and a Custody Agreement have been duly
executed and delivered by or on behalf of each Selling Stockholder;
(ii) Each of the Power of Attorney and the Custody Agreement
executed by each Selling Stockholder constitutes the legally valid and binding
obligation of that Selling Stockholder, enforceable against that Selling
Stockholder in accordance with its terms;
(iii) The Underwriting Agreement has been duly executed and
delivered by or on behalf of each Selling Stockholder; and the sale of the Stock
thereunder and the compliance by such Selling Stockholder with all of the
provisions of the Underwriting Agreement, the Power of Attorney and the Custody
Agreement and the consummation of the transactions therein
12
contemplated will not conflict with or result in a material breach or violation
of any terms or provisions of, or constitute a material default under, any
statute, indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to us to which such Selling Stockholder is a party or by
which such Selling Stockholder is bound or to which any of the property or
assets of such Selling Stockholder is subject, nor will such action result in
any violation of the provisions of the certificate of incorporation or bylaws of
such Selling Stockholder, if such Selling Stockholder is a corporation, the
partnership agreement of such Selling Stockholder, if such Selling Stockholder
is a partnership, or any order, rule or regulation known to us of any court or
governmental agency or body having jurisdiction over such Selling Stockholder or
the property of such Selling Stockholder.
(iv) No consent, approval, or order of any California, Delaware
corporate or federal governmental authority is required for the consummation of
the transactions contemplated by the Underwriting Agreement in connection with
the Stock to be sold by such Selling Stockholder under the Underwriting
Agreement, except such as have been obtained under the Act and such as may be
required under state securities or Blue Sky laws of any jurisdiction;
(v) Each Selling Stockholder had full right, power and authority
to sell, assign, transfer and deliver the Stock to be sold by such Selling
Stockholder under the Underwriting Agreement;
(vi) Upon payment for and delivery to the Underwriters in
California or New York of the Shares to be sold by the Selling Stockholders in
accordance with this Agreement, assuming the Underwriters are acquiring such
Shares without notice of any adverse claim, the Underwriters will acquire such
Shares free and clear of any adverse claim as defined in the Uniform Commercial
Code.
(e) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP,
counsel for the Underwriters, dated the Closing Date, covering the matters
referred to in Sections 6(c)(vi), 6(c)(vix), 6(c)(xi) (but only as to the
statements in the Prospectus under "Description of Capital Stock" and
"Underwriters") and the paragraph following the enumerated opinions in paragraph
(c) above.
With respect to Section 6(d) above, O'Melveny & Xxxxx LLP may rely
upon an opinion or opinions of counsel for any Selling Stockholders and, with
respect to factual matters and to the extent such counsel deems appropriate,
upon the representations of each Selling Stockholder contained herein and in the
Custody Agreement and Power of Attorney of such Selling Stockholder and in other
documents and instruments; provided that (A) each such counsel for the Selling
Stockholders is satisfactory to your counsel, (B) a copy of each opinion so
relied upon is delivered to you and is in form and substance satisfactory to
your counsel, (C) copies of such Custody Agreements and Powers of Attorney and
of any such other documents and instruments shall be delivered to you and shall
be in form and substance satisfactory to your counsel and (D) O'Melveny & Xxxxx
LLP shall state in their opinion that they are justified in relying on each such
other opinion.
13
The opinions of O'Melveny & Xxxxx LLP and Xxxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP described in Sections 6(c) and 6(d) above
(and any opinions of counsel for any Selling Stockholder referred to in the
immediately preceding paragraph) shall be rendered to the Underwriters at the
request of the Company or one or more of the Selling Stockholders, as the case
may be, and shall so state therein.
(f) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters, from
PricewaterhouseCoopers LLP, Ernst & Young LLP and Deloitte & Touche LLP,
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus; provided that (i) the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than the
date hereof and (ii) the letter of PricewaterhouseCoopers LLP dated on the
Closing Date shall include a statement as to its review of the unaudited
financial statements of the Company for the six months ended June 30, 2000.
(g) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain stockholders, officers and directors
of the Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional Shares.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, a signed copy of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in New York City, without charge, prior
to 10:00 a.m. New York City time on the second business day next succeeding the
date of this Agreement and during the period mentioned in Section 7(c) below, as
many copies of the Prospectus and any supplements and amendments thereto or to
the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement
or the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to which
you reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus required
to be filed pursuant to such Rule.
14
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers (whose names
and addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon request,
either amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the twelve-month
period ending July 31, 2001 that satisfies the provisions of Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder.
8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Sellers agree to
pay or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel, the Company's accountants and any counsel for
the Selling Stockholders in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 7(d) hereof including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) all costs and expenses incident to listing the
Shares on the Nasdaq National Market, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer agent,
registrar or depositary, (viii) the costs and expenses of the Company relating
to investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses
associated with the production of road show
15
slides and graphics, fees and expenses of any consultants engaged in connection
with the road show presentations with the prior approval of the Company, travel
and lodging expenses of the representatives and officers of the Company and any
such consultants, and the cost of any aircraft chartered in connection with the
road show, and (ix) all other costs and expenses incident to the performance of
the obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided in this
Section, Section 9 entitled "Indemnity and Contribution", and the last paragraph
of Section 11 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes payable
on resale of any of the Shares by them and any advertising expenses connected
with any offers they may make.
The provisions of this Section shall not supersede or otherwise affect
any agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein; provided that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter, or person controlling such
Underwriter, from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability unless such failure is the result of non-
compliance by the Company with Sections 7(a) or 7(c) hereof.
(b) Each Selling Stockholder agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act and each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably
16
incurred in connection with defending or investigating any such action or claim)
(i) caused by any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Selling Stockholder
furnished in writing by or on behalf of such Selling Stockholder expressly for
use in the Registration Statement, any preliminary prospectus, the Prospectus or
any amendments or supplements thereto, (ii) facts that would constitute a breach
of any representation or warranty of such Selling Stockholder set forth in
Section 2(a) hereof, or (iii) in the case of an Affiliated Selling Stockholder,
facts that would constitute a breach of any representation or warranty of such
Affiliated Selling Stockholder set forth in Section 2(b) hereof; provided that
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter, or person controlling such
Underwriter, from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability unless such failure is the result of non-
compliance by the Company with Sections 7(a) or 7(c) hereof.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Selling Stockholders, the directors
of the Company, the officers of the Company who sign the Registration Statement
and each person, if any, who controls the Company or any Selling Stockholder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 9(a), 9(b) or 9(c), such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall
17
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, (ii) the fees and expenses of more than one separate firm (in addition to
any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section and (iii) the fees and expenses of more than
one separate firm (in addition to any local counsel) for all Selling
Stockholders and all persons, if any, who control any Selling Stockholder within
the meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Underwriters and such control persons of any Underwriters, such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated. In the case of any
such separate firm for the Company, and such directors, officers and control
persons of the Company, such firm shall be designated in writing by the Company.
In the case of any such separate firm for the Selling Stockholders and such
control persons of any Selling Stockholders, such firm shall be designated in
writing by the persons named as attorneys-in-fact for the Selling Stockholders
under the Powers of Attorney. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(e) To the extent the indemnification provided for in Section
9(a), 9(b) or 9(c) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the
18
offering of the Shares or (ii) if the allocation provided by clause 9(e)(i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 9(e)(i) above
but also the relative fault of the indemnifying party or parties on the one hand
and of the indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Sellers on the one hand and the Underwriters
on the other hand in connection with the offering of the Shares shall be deemed
to be in the same respective proportions as the net proceeds from the offering
of the Shares (before deducting expenses) received by each Seller and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the Sellers
on the one hand and the Underwriters on the other hand 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 Sellers or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 9 are several in proportion
to the respective number of Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 9(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, 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 Section 9, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by 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 Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 9 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(g) The liability of each Selling Stockholder under such Selling
Stockholder's representations and warranties contained in paragraphs (a)(vii)
and (b) of Section 2 hereof and under the indemnity and contribution agreements
contained in the provisions of this Section 9 hereof shall be limited to an
amount equal to the initial public offering price of the stock sold by such
Selling Stockholder to the Underwriters. In addition, no Selling Stockholder
shall be liable under the indemnity agreements of Section 9 hereof unless and
until the Underwriters have made written demand on the Company for payment under
such Sections which shall not have been paid or agreed to be paid by the Company
within 30 days after receipt by the Company of such demand. A copy of such
demand when made to the Company shall be provided to the Selling Stockholders.
The Company and the Selling Stockholders may agree, as
19
among themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which they each
shall be responsible.
(h) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Stockholders contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Underwriter or any
person controlling any Underwriter, any Selling Stockholder or any person
controlling any Selling Stockholder, or the Company, its officers or directors
or any person controlling the Company and (iii) acceptance of and payment for
any of the Shares.
10. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 10(a)(i) through 10(a)(iv), such event, singly
or together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule II bears to
the aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 11 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail
or refuse to purchase Firm Shares and the aggregate number of Firm Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Firm Shares to be purchased, and arrangements satisfactory to you, the
Company and the Selling Stockholders for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting
20
Underwriter, the Company or the Selling Stockholders. In any such case either
you or the relevant Sellers shall have the right to postpone the Closing Date,
but in no event for longer than seven days, in order that the required changes,
if any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
21
Very truly yours,
DIGITAL INSIGHT CORPORATION
By:
------------------------------
Name:
Title:
The Selling Stockholders
named in Schedule I hereto,
acting severally
By:
------------------------------
Attorney-in-Fact
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Deutsche Bank Securities, Inc.
Banc of America Securities LLC
Friedman, Billings, Xxxxxx & Co.
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:___________________________
Name:
Title:
SCHEDULE I
Selling Stockholder Number of Firm Shares to Number of Additional
be Sold Shares to be Sold
Xxxxxx X. Xxxxxxxx 115,000
Exponential Partners II Limited Partnership 215,000
HarborVest Partners V - Direct Fund, L.P. 154,225
Noro-Xxxxxxx Partners IV, L.P. 176,392
Xxxxx X. Xxxxxxx 254,182
------------------------- --------------------
Total: 905,799
========================= ====================
Affiliated Selling Stockholder Number of Firm Shares to Number of Additional
be Sold Shares to be Sold
Menlo Ventures VII, L.P.
Menlo Entrepreneurs Fund VII, X.X.
Xxxxx L. "Xxxxx" Xxxxxxx III 238,051
Xxxx Xxxxx 105,751
Xxxxxx Xxxxxx 105,751
Xxxx Xxxxxx 40,000
Xxxxx Xxxxxx 33,000
Xxxxx Xxxxxx 7,500
Xxxxxx Xxxx 13,000
Xxxxx XxXxxxx 8,800
Xxxxx Xxxxx 18,000
Xxxxx XxXxxxxxx 18,000
------------------------- -------------------
Total: 944,201
========================= ===================
S-1
SCHEDULE II
Underwriter Number of
Firm Shares
To Be Purchased
Xxxxxx Xxxxxxx & Co. Incorporated
Deutsche Bank Securities, Inc.
Chase H&Q
Banc of America Securities LLC
Friedman, Billings, Xxxxxx & Co.
[NAMES OF OTHER UNDERWRITERS]
------------------------------
Total:
==============================
S-2
EXHIBIT A
[FORM OF LOCK-UP LETTER]
June __, 2000
Xxxxxx Xxxxxxx & Co. Incorporated
Deutsche Bank Securities, Inc.
Banc of America Securities LLC
Friedman, Billings, Xxxxxx & Co.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx
Xxxxxxx") proposes to enter into an Underwriting Agreement (the "Underwriting
Agreement") with Digital Insight Corporation, a Delaware corporation (the
"Company") providing for the public offering (the "Public Offering") by the
several Underwriters, including Xxxxxx Xxxxxxx (the "Underwriters"), of
______________ shares (the "Shares") of the Common Stock, par value $0.001 of
the Company (the "Common Stock").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the final prospectus relating
to the Public Offering (the "Prospectus"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement or (b) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering. In addition, the
undersigned agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the Prospectus, make any demand
for or exercise any right with respect to, the registration of any shares of
Common Stock or any security convertible into or exercisable or exchangeable for
Common Stock. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of the undersigned's shares of Common Stock except in compliance
with the foregoing restrictions.
E-1
The undersigned understands that the Company and the Underwriters are relying
upon this Lock-Up Agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters. This Agreement shall
lapse and become null and void if the Public Offering shall not have occurred on
or before October 31, 2000.
Very truly yours,
_______________________
(Name)
_______________________
(Address)
E-2
