EXHIBIT 1.1
2,500,000 Shares/1/
Common Stock
UNDERWRITING AGREEMENT
____________, 1999
X.X. XXXXXXXXX & COMPANY, LLC
DAIWA SECURITIES AMERICA, INC.
x/x X.X. Xxxxxxxxx & Company, LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Xxxxx.xxx, Inc., a Delaware corporation (the "Company"), proposes to issue
and sell up to an aggregate of 2,500,000 shares of its authorized but unissued
common stock, par value $0.001 per share (the "Common Stock") (said 2,500,000
shares of Common Stock being herein called the "Underwritten Stock") to the
Underwriters (as hereinafter defined) and to grant the Underwriters an option to
purchase up to an aggregate of 375,000 additional shares of Common Stock (the
"Option Stock" and collectively with the Underwritten Stock, the "Shares"). The
Common Stock is more fully described in the Registration Statement and the
Prospectus hereinafter mentioned.
The Company hereby confirms the agreements made with respect to the
purchase of the Shares by the underwriters, for whom you are acting as
representatives, named in Schedule I hereto (herein collectively called the
"Underwriters," which term shall also include any underwriter purchasing Shares
pursuant to Section 3(b) hereof). You represent and warrant that you have been
authorized by each of the other Underwriters to enter into this Agreement on its
behalf and to act for it in the manner herein provided.
1. Registration Statement. The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1 (No.
333-76511, including the related preliminary prospectus, for the registration
under the Securities Act of 1933, as amended (the "Act") of the Shares. Copies
of such registration statement and of each amendment thereto, if any, including
the related preliminary prospectus (meeting the requirements of Rule 430A of the
rules and regulations of the
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/1/ Plus an option to purchase from the Company up to an aggregate of 375,000
additional shares to cover over-allotments.
Commission) heretofore filed by the Company with the Commission have been
delivered to you.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement, including all exhibits and financial statements, all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Shares (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the "Effective
Date"), shall also mean (from and after the effectiveness of such amendment)
such registration statement as so amended (including any rule 462(b)
registration statement). The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Shares first filed with the Commission
pursuant to Rule 424(b) and Rule 430A (or if no such filing is required, as
included in the Registration Statement) and, in the event of any supplement or
amendment so such prospectus after the Effective Date, shall also mean (from and
after the filing with the Commission of such supplement or the effectiveness of
such amendment) such prospectus as so supplemented or amended. The term
"Preliminary Prospectus" as used in this Agreement shall mean each preliminary
prospectus included in such registration statement prior to the time it becomes
effective.
The Registration Statement has been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Act.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Underwriters as follows:
(a) Neither the Commission nor any state securities commission has
issued any order preventing or suspending the use of any Preliminary Prospectus
or has instituted or, to the Company's knowledge, threatened to institute any
proceedings with respect to such an order. The Registration Statement and the
Prospectus comply, and on the Closing Date (as hereinafter defined) and any
later date on which the Option Stock is to be purchased, the Prospectus will
comply, in all material respects, with the provisions of the Act and the rules
and regulations of the Commission thereunder. On the Effective Date, the
Registration Statement did not contain any untrue statement of a material fact
and did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and on the
Effective Date the Prospectus did not and, on the Closing Date and any later
date on which the Option Stock
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is to be purchased, will not contain any untrue statement of a material fact and
did not omit to state any material fact required to be stated therein, or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties in this subparagraph (a) shall
apply to statements in, or omissions from, the Registration Statement or the
Prospectus made in reliance upon and in conformity with information herein or
otherwise furnished in writing to the Company by or on behalf of the
Underwriters expressly for use in the Registration Statement or Prospectus.
(b) Each of the Company and its subsidiaries (i) has been duly organized
and is validly existing and in good standing under the laws of its jurisdiction
of incorporation or formation, as the case may be, having full power and
corporate authority, to own or lease its properties and to conduct its business
as described in the Registration Statement and the Prospectus; and (ii) is duly
qualified to do business as a foreign corporation or limited liability company,
as the case may be, and is in good standing in all jurisdictions in which the
character of the property owned or leased or the nature of the business
transacted by it makes qualification necessary (except where the failure to be
so qualified would not have a material adverse effect on the business,
properties, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole). The Company and its subsidiaries do not own any
capital stock or other equity securities in any entity.
(c) The Company has the duly authorized and validly issued outstanding
capitalization set forth under the caption "Capitalization" in the Prospectus
and will have the adjusted capitalization set forth therein on the Closing Date
and any later date on which the Option Stock is to be purchased, based on the
assumptions set forth therein. The securities of the Company conform to the
descriptions thereof contained in the Prospectus. The form of certificates for
the Shares conforms to the corporate law of the jurisdiction of the Company's
incorporation. The outstanding shares of Common Stock (other than the Shares)
have been duly authorized and validly issued by the Company and are fully paid
and nonassessable. Except as created hereby or referred to in the Prospectus,
there are no outstanding options, warrants, rights or other arrangements
requiring the Company at any time to issue any capital stock. No holders of
outstanding shares of capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the Shares, and neither the
filing of the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to, the registration of any
securities of the Company. The Shares are duly authorized, and will be, when
sold to the Underwriters as provided herein, validly issued, fully paid and
nonassesable and conform to the description thereof contained in the Prospectus.
No further approval or authority of the stockholders or the Board of Directors
of the
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Company will be required for the issuance and sale of the Shares as contemplated
herein. The outstanding shares of capital stock or ownership interests of each
of its subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable, and are solely owned by the Company free and clear of all
liens, encumbrances and equities and claims; and no options, warrants or other
rights to purchase, agreements or other obligations to issue or other rights to
convert any obligations into shares of capital stock or ownership interests in
such subsidiary are outstanding.
(d) The Company has full legal right, power and authority to enter into
this Agreement and to consummate the transactions provided for herein. This
Agreement has been duly authorized, executed and delivered by the Company and,
assuming it is a binding agreement of the Underwriters, constitutes a legal,
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting the enforcement of creditors'
rights and the application of equitable principles relating to the availability
of remedies and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy underlying such laws),
and none of the Company's execution or delivery of this Agreement, its
performance hereunder, its consummation of the transactions contemplated herein,
its application of the net proceeds of the offering in the manner set forth
under the caption "Use of Proceeds" or the conduct of its business as described
in the Prospectus, conflicts or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or constitutes or
will constitute a default under, causes or will cause (or permits or will
permit) the maturation or acceleration of any liability or obligation or the
termination of any right under, or result in the creation or imposition of any
lien, charge, or encumbrance upon, any property or assets of the Company or any
of its subsidiaries pursuant to the terms of (i) the certificate of
incorporation or bylaws of the Company or any of its subsidiaries, (ii) any
indenture, mortgage, deed of trust, voting trust agreement, stockholders'
agreement, note agreement or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which it is or may be bound or to
which its respective property is or may be subject or (iii) any statute,
judgment, decree, order, rule or regulation applicable to the Company or any of
its subsidiaries of any government, arbitrator, court, regulatory body or
administrative agency or other governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries, or their
activities or properties, which would materially and adversely affect the
business or properties of the Company and its subsidiaries taken as a whole.
(e) The Common Stock is approved for quotation on The Nasdaq National
Market and, prior to the Closing Date, (i) the Common Stock shall be listed and
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duly admitted to trading on The Nasdaq National Market and (ii) the Shares will
be authorized for inclusion in The Nasdaq National Market.
(f) The financial statements of the Company and its subsidiaries and the
related notes and schedules thereto included in the Registration Statement and
the Prospectus fairly present the financial position, results of operations,
stockholders' equity and cash flows of the Company and its subsidiaries at the
dates and for the periods specified therein. Such financial statements and the
related notes and schedules thereto have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein) and all adjustments
necessary for a fair presentation of results for such periods have been made;
provided, however, that the unaudited financial statements are subject to normal
year-end audit adjustments (which are not expected to be material) and do not
contain all footnotes required under generally accepted accounting principles.
The summary and selected financial and statistical data included in the
Registration Statement and the Prospectus present fairly the information shown
therein and such data have been prepared on a basis consistent with the
financial statements contained therein and in the books and records of the
Company.
(g) PricewaterhouseCoopers LLP, who have certified the financial statements
filed with the Commission as part of the Registration Statement, are independent
public accountants as required by the Act and the rules and regulations
promulgated thereunder.
(h) Each of the Company and its subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(i) The Company and its subsidiaries have filed all necessary federal,
state and local income, franchise and other material tax returns and has paid
all taxes shown as due thereunder, and the Company and its subsidiaries have no
tax deficiency that has been or, to their knowledge, which might be assessed
against the Company and its subsidiaries which, if so assessed, would materially
and adversely affect the business or properties of the Company and its
subsidiaries, taken as a whole. All tax liabilities accrued through the date
hereof have been adequately provided for on the books of the Company and its
subsidiaries.
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(j) The Company and its subsidiaries maintain insurance underwritten by
insurers of recognized financial responsibility of the types and in amounts and
with such deductibles as customary for companies in the same or similar
business, all of which insurance is in full force and effect.
(k) Except as disclosed in the Prospectus, there is no action, suit, claim,
proceeding or investigation pending or, to the Company's knowledge, threatened
against the Company or any of its subsidiaries before or by any court,
regulatory body or administrative agency or any other governmental agency or
body, domestic or foreign, which (i) questions the validity of the capital stock
of the Company or this Agreement or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement, (ii) is required to be
disclosed in the Registration Statement which is not so disclosed (and such
proceedings, if any, as are summarized in the Registration Statement are
accurately summarized in all material respects), or (iii) may have a material
adverse affect upon the business operations, financial conditions or income of
the Company and its subsidiaries, taken as a whole.
(l) All executed agreements or copies of executed agreements filed or
incorporated by reference as exhibits to the Registration Statement to which the
Company or any of its subsidiaries is a party or by which it is or may be bound
or to which its assets, properties or businesses are or may be subject have been
duly and validly authorized, executed and delivered by the Company or such
subsidiary and constitute the legal, valid and binding agreements of the Company
or such subsidiary enforceable by and against it in accordance with their
respective terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to
enforcement of creditors' rights generally, and general equitable principles
relating to the availability of remedies, and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the public
policy underlying such laws). The descriptions in the Registration Statement of
contracts and other documents are accurate and fairly present the information
required to be shown with respect thereto by the Act and the rules and
regulations promulgated thereunder, and there are no contracts or other
documents which are required by the Act or the rules and regulations promulgated
thereunder to be described in the Registration Statement or filed as exhibits to
the Registration Statement which are not described or filed as required and the
exhibits which have been filed are complete and correct copies of the documents
of which they purport to be copies.
(m) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as expressly contemplated
therein, neither the Company nor any of its subsidiaries has incurred, other
than in the ordinary course of its business, any material liabilities or
obligations, direct or contingent, purchased any of its outstanding capital
stock, paid or declared any dividends or other
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distributions on its capital stock or entered into any material transactions,
and there has been no material change in capital stock or debt or any material
adverse change in the business, properties, assets, net worth, condition
(financial or other), or results of operations or prospects of the Company and
its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business.
(n) Neither the Company nor any of its subsidiaries is, or with the giving
of notice or lapse of time or both, will be, in violation of or in default
under, any term or provision of (i) its certificate of incorporation, bylaws or
operating agreement, (ii) any indenture, mortgage, deed of trust, voting trust
agreement, stockholders' agreement, note agreement or other agreement or
instrument to which it is a party or by which it is or may be bound or to which
any of its property is or may be subject, or any indebtedness, the effect of
which breach or default singly or in the aggregate may have a material adverse
effect on the business, management, properties, assets, rights, operations, or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole, or (iii) any statute, judgment, decree, order, rule or regulation
applicable to the Company or such subsidiary or of any arbitrator, court,
regulatory body, administrative agency or any other governmental agency or body,
domestic or foreign, having jurisdiction over the Company or such subsidiary or
its activities or properties and the effect of which breach or default singly or
in the aggregate may have a material adverse effect on the business, management,
properties, assets, rights, operations, or condition (financial or otherwise) of
the Company and its subsidiaries, taken as a whole.
(o) The Company has not incurred any liability for a fee, commission, or
other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement other than as
contemplated hereby.
(p) No labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the Company's knowledge, is imminent.
(q) Each of the Company and its subsidiaries owns, is licensed or otherwise
possesses all rights to use, all patents, patent rights, inventions, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names, copyrights and other intellectual property rights (collectively,
the "Rights") necessary for the conduct of its business as described in the
Prospectus. To the Company's knowledge, no claims have been asserted against the
Company or any of its subsidiaries by any person with respect to the use of any
such Rights or challenging or questioning the validity or effectiveness of any
such Rights. The continued use of the Rights in connection with the business and
operations of the Company and its subsidiaries does not, to the knowledge of the
Company and its subsidiaries, infringe on the rights of any person, which, if
the subject of an unfavorable decision, ruling or filing, would have a
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material adverse effect on the condition, business or properties of the
Company and its subsidiaries taken as a whole.
(r) The Company and its subsidiaries are conducting their businesses in
compliance with all applicable laws, ordinances or governmental rules or
regulations of the jurisdictions in which they are conducting business, except
where failure to be so in compliance would not materially and adversely affect
the business or properties of the Company and its subsidiaries, taken as a
whole. Each approval, consent, order, authorization, designation, declaration or
filing by or with any regulatory, administrative or other governmental body
necessary in connection with the execution and delivery by the Company of this
Agreement and the consummation of the transactions herein contemplated (except
such additional steps as may be required by the National Association of
Securities Dealers, Inc. (the "NASD"), the Act, the Securities Exchange Act of
1934, as amended or to qualify or exempt the Shares for public offering by the
Underwriters under state securities or Blue Sky laws) has been obtained or made
and is in full force and effect.
(s) Neither the Company nor to the Company's knowledge, any of its
officers, directors or affiliates (within the meaning of the rules and
regulations promulgated under the Act) has taken or may take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock of the Company, to
facilitate the sale or resale of the Shares or otherwise.
(t) Neither the Company nor any of its subsidiaries is, or after giving
effect to the issuance and sale of the Shares by the Company will be, an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the Commission
promulgated thereunder.
(u) The Company and its subsidiaries have good and marketable title to all
properties and assets described in the Prospectus as owned by them, free and
clear of all liens, encumbrances, security interests, equities, claims and
defects, except such as are described in the Registration Statement and
Prospectus, or such as are not materially important in relation to the business
of the Company and its subsidiaries when taken in the aggregate. The Company has
valid and enforceable leases for the properties described in the Prospectus as
leased by it, free and clear of all liens, encumbrances, security interests,
equities, claims and defects, except such as are not material and do not
interfere with the use made by the Company and its subsidiaries thereof. The
Company and its subsidiaries own or lease all such properties as are necessary
to their operations as now conducted, as set forth in the Registration Statement
and the Prospectus and the properties and business of the Company and its
subsidiaries conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus.
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(v) Each of the Company and its subsidiaries holds all franchises,
licenses, permits, approvals, certificates and other authorizations from
federal, state and other governmental or regulatory authorities necessary to the
ownership, leasing and operation of its properties or required for the present
conduct of its business, and such franchises, licenses, permits, approvals,
certificates and other governmental authorizations are in full force and effect
and the Company and its subsidiaries are in compliance therewith in all material
respects, except where the failure so to obtain, maintain or comply with would
not have a materially adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(w) The Company and its subsidiaries are in compliance in all material
respects with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (herein called "ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of its subsidiaries would have any
liability; the Company and its subsidiaries have not incurred and do not expect
to incur liability under (i) Title IV of ERISA with respect to termination of,
or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each "Pension Plan" for
which the Company and its subsidiaries would have liability that is intended to
be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(x) No relationship, direct or indirect, exists between or among the
Company or its subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or its subsidiaries, on the
other hand, which is required to be described in the Prospectus that is not so
described.
(y) Neither the Company nor any of its subsidiaries, nor to the Company's
knowledge, any director, officer, agent, employee or other person associated
with or acting on behalf of the Company or any of its subsidiaries, has used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provisions of the Foreign
Corrupt Practices Act of 1972; or made any bribe, rebate, payoff, influence,
payment, kickback or other unlawful payment.
(z) The business, operations and facilities of the Company and each of its
subsidiaries have been and are being conducted or operated in compliance with
all
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applicable laws, ordinances, rules, regulations, licenses, permits, approvals,
plans, authorizations or requirements relating to occupational safety and
health, pollution, protection of health or the environment (including, without
limitation, those relating to emissions, discharges, release or threatened
releases of pollutants, contaminants or hazardous or toxic substances, materials
or wastes into ambient air, surface water, groundwater or land, or relating to
the manufacture, processing, distribution, use treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) or otherwise relating to remediating real property in which
the Company or any of its subsidiaries has or has had any interest, whether
owned or leased, of any governmental department, commission, board, bureau,
agency or instrumentality of the United States, any state or political
subdivision thereof and all applicable judicial or administrative agency or
regulatory decrees, awards, judgments and orders relating thereto, except for
such failures to so comply as would not, individually or in the aggregate, have
a material adverse effect on the business of the Company and its subsidiaries
taken as a whole, and neither the Company nor any of its subsidiaries has
received any notice from a governmental instrumentality or any third party
alleging any violation thereof or liability thereunder (including, without
limitation, liability for costs of investigating or remediating sites containing
hazardous substances or damage to natural resources).
(aa) Neither the Company nor any of its subsidiaries, nor to the
Company's knowledge any officer or employee of the Company or any of its
subsidiaries is a party to any contract or commitment that restricts in any
material respect the ability of the Company, any of its subsidiaries or such
individual to engage in the business of the Company or such subsidiary as
described in the Registration Statement and the Prospectus.
3. Purchase of the Shares by the Underwriters.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company shall issue and sell the
Underwritten Stock to the Underwriters, and the Underwriters agree to purchase
from the Company the Underwritten Stock. The price at which such shares of
Underwritten Stock shall be sold by the Company and purchased by the
Underwriters shall be [XXXXX] per share (the "Purchase Price"). In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraphs (b) and (c) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) If for any reason one of the Underwriters shall fail or refuse
(other than for a reason sufficient to justify the termination of this Agreement
under the
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provisions of Section 7 or 12 hereof) to purchase and pay for the number of
shares of the Common Stock agreed to be purchased by such Underwriter, the
Company shall immediately give notice thereof to you, and the non-defaulting
Underwriter shall have the right within 24 hours after the receipt by you of
such notice to purchase, or procure one or more other Underwriters to purchase,
in such proportions as may be agreed upon between you and such purchasing
Underwriter and upon the terms herein set forth, all or any part of the shares
of the Common Stock which such defaulting Underwriter agreed to purchase. If the
non-defaulting Underwriter fails so to make such arrangements with respect to
all such shares and portion, the number of shares of the Common Stock which the
non-defaulting Underwriter is otherwise obligated to purchase under this
Agreement shall be automatically increased on a pro rata basis to absorb the
remaining shares and portion which the defaulting Underwriter agreed to
purchase; provided, however, that the non-defaulting Underwriter shall not be
obligated to purchase the shares and portion which the defaulting Underwriter
agreed to purchase if the aggregate number of such shares of Common Stock
exceeds 10% of the total number of Shares which the Underwriters agreed to
purchase under this Agreement. If the total number of shares of the Common Stock
which the defaulting Underwriter agreed to purchase shall not be purchased or
absorbed in accordance with the two preceding sentences, the Company shall have
the right, within 24 hours next succeeding the 24-hour period above referred to,
to make arrangements with other underwriters or purchasers satisfactory to you
for purchase of such shares and portion on the terms herein set forth. In any
such case, either you or the Company shall have the right to postpone the
Closing Date determined as provided in Section 5 hereof for not more than seven
business days after the date originally fixed as the Closing Date pursuant to
said Section 5 in order that any necessary changes in the Registration
Statement, the Prospectus or any other documents or arrangements may be made. If
the non-defaulting Underwriter does not make arrangements within the 24-hour
periods stated above for the purchase of all the shares of the Common Stock
which the defaulting Underwriter agreed to purchase hereunder, this Agreement
shall be terminated without further act or deed and without any liability on the
part of the Company to the non-defaulting Underwriter and without any liability
on the part of the non-defaulting Underwriter to the Company. Nothing in this
paragraph (b), and no action taken hereunder, shall relieve the defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
grants an option to the Underwriters to purchase, severally and not jointly, the
Option Stock at the Purchase Price. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Stock by the Underwriters and
may be exercised in whole or in part at any time (but not more than once) on or
before the thirtieth day after the date of this agreement upon written or
telegraphic notice by the Underwriters to the Company setting
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forth the aggregate number of shares of Option Stock as to which the
Underwriters are exercising the option. Delivery of the certificates for the
shares of Option Stock, and payment therefor shall be made as provided in
Section 5 hereof. The number of shares of the Option Stock to be purchased by
each Underwriter shall be in such amounts as the Underwriters shall agree upon
prior to the exercise of the option set forth hereunder.
4. Offering by the Underwriters.
(a) The terms of the initial public offering by the Underwriters of the
Shares to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front cover
page and under the caption "Plan of Distribution" in the Registration Statement,
any Preliminary Prospectus and the Prospectus relating to the Shares filed by
the Company (insofar as such information relates to the Underwriters or related
persons) constitutes the only information furnished by the Underwriters to the
Company for inclusion in the Registration Statement, any Preliminary Prospectus,
and the Prospectus, and you on behalf of the Underwriters represent and warrant
to the Company that the statements made therein (insofar as they relate to the
Underwriters or related persons) are correct and do not omit any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5. Delivery of and Payment for the Shares.
(a) Delivery of certificates for the shares of the Underwritten Stock
and the Option Stock (if the option granted by Section 3(c) hereof shall have
been exercised not later than 7:00 A.M., San Francisco time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of Xxxx Xxxx Xxxx & Freidenrich LLP, on the third business day
after the date of this agreement, or at such time on such other day, not later
than seven full business days after such third business day, as shall be agreed
upon in writing by the Company and you. The date and hour of such delivery and
payment are herein called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 A.M., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor shall be made at the office of Xxxx Xxxx Xxxx & Freidenrich LLP
at 7:00 A.M., San Francisco time, on the third business day after the exercise
of such Option.
12
(c) Payment for the Shares purchased from the Company shall be made to
the Company or its order by wire transfer or one or more certified or official
bank check or checks in same day funds. Such payment shall be made upon delivery
of certificates for the Shares to you against receipt therefor signed by you.
Certificates for the Shares to be delivered to you shall be registered in the
name or names and shall be in such denominations as you may request at least one
business day before the Closing Date, in the case of Underwritten Stock, and at
least one business day prior to the purchase thereof, in the case of Option
Stock. Such certificates will be made available to the Underwriters for
inspection, checking and packaging of BHC Securities, Inc. on the business days
prior to the Closing Date or, in the case of Option Stock, by 12:00 P.M., San
Francisco time on the business day preceding the date of purchase.
6. Covenants of the Company. The Company covenants and agrees as follows:
(a) The Company will (i) prepare and timely file with the Commission
under 424(b) a Prospectus containing information previously omitted at the time
of effectiveness of the Registration Statement in reliance on Rule 430A and (ii)
not file with the Commission any amendment to the Registration Statement or
supplement to the Prospectus (A) of which the Underwriters shall not previously
have been advised and furnished with a copy a reasonable period of time prior to
the proposed filing and as to which filing the Underwriters shall not have given
their consent or (B) which is not in compliance with the Act or the rules and
regulations of the Commission thereunder.
(b) As soon as the Company is advised or obtains knowledge thereof, the
Company will advise the Underwriters (i) of any request made by the Commission
for amendment of the Registration Statement, for supplement to the Prospectus or
for additional information, (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, or the
institution or threat of any action, investigation or proceeding for that
purpose, or (iii) the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in any jurisdiction,
or the receipt by it of notice of the initiation or threatening of any
proceeding for that purpose. The Company will use its best efforts to prevent
the issuance of any such order and, if issued, to obtain the lifting or
withdrawal thereof as soon as possible.
(c) The Company will (i) on or before the Closing Date, deliver to the
Underwriters a signed copy of the Registration Statement as originally filed and
of each amendment thereto filed prior to the time the Registration Statement
becomes effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any to the Registration Statement (together with,
in each case, all exhibits thereto unless previously delivered to the
Underwriter), (ii) as promptly as possible deliver to the
13
Underwriters, at such office as the Underwriters may designate, as many copies
of the Prospectus as the Underwriters may reasonably request, and (iii)
thereafter from time to time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer, likewise send to the
Underwriters as many additional copies of the Prospectus and as many copies of
any supplement to the Prospectus and of any amended prospectus, filed by the
Company with the Commission, as the Underwriters may reasonably request for the
purposes contemplated by the Act.
(d) If at any time during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised by in writing by
the Underwriters, shall occur as a result of which it is necessary, in the
opinion of counsel for the Company or of counsel for the Underwriters, to
supplement or amend the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser of the Shares, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus or an amended prospectus
so that the Prospectus as so supplemented or amended will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances existing
at the time such Prospectus is delivered to such purchaser, not misleading. If,
after the initial public offering of the Shares by the Underwriters and during
such period, the Underwriters shall propose to vary the terms of the offering
thereof by reason of changes in general market conditions or otherwise, you will
advise the Company in writing of the proposed variation, and, if in the opinion
either of counsel for the Company or of counsel for the Underwriters such
proposed variation requires that the Prospectus be supplemented or amended, the
Company will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended prospectus setting forth such variation. The Company
authorizes the Underwriters and all dealers to whom any of the Shares may be
sold by the Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Shares in accordance with the
applicable provisions of the Act and the applicable rules and regulations
thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will submit
to you, for your information, a copy of any post-effective amendment to the
Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Shares for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or a dealer,
in keeping such qualifications in good standing under said securities or blue
sky laws; provided, however,
14
that the Company shall not be required to qualify as a foreign corporation or
file any general consent to service of process in any jurisdiction in which it
is not so qualified. The Company will from time to time, prepare and file such
statements, reports, and other documents as are or may be required to continue
such qualifications in effect for so long a period as you may reasonably request
for distribution of the Shares.
(g) The Company agrees to pay all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including,
without limitation, all costs and expenses incident to (i) the preparation,
printing and filing with the Commission and the NASD of the Registration
Statement, any Preliminary Prospectus and the Prospectus, (ii) the furnishing to
the Underwriters of copies of any Preliminary Prospectus and of the several
documents required by paragraph (c) of this Section 6 to be so furnished, (iii)
the printing of this Agreement and related documents delivered to the
Underwriters, (iv) the preparation, printing and filing of all supplements and
amendments to the Prospectus referred to in paragraph (d) of this Section 6, (v)
the furnishing to you of the reports and information referred to in paragraph
(j) of this Section 6, and (vi) the printing and issuance of stock certificates,
including the transfer agent's fees.
(h) The Company agrees to reimburse you, for the account of the several
Underwriters, for blue sky fees and related disbursements (including counsel
fees and disbursements and cost of printing memoranda for the Underwriters) paid
by or for the account of the Underwriters or their counsel in qualifying the
Shares under state securities or blue sky laws and in the review of the offering
by the NASD.
(i) As soon as practicable, but in any event not later than 45 days after
the end of the first fiscal quarter first occurring after the first anniversary
of the Effective Date, the Company will make generally available to its security
holders, in the manner specified in Rule 158(b) of the rules and regulations
promulgated under the Act an earnings statement which will be in the detail
required by, and will otherwise comply with, the provisions of Section 11(a) of
the Act and Rule 158(a) of the rules and regulations promulgated thereunder.
(j) During a period of three years after the date hereof, the Company will
furnish to you, and to each Underwriter who may so request in writing, copies of
all periodic and special reports furnished to stockholders of the Company and of
all information, documents and reports filed with the Commission.
(k) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its Common Stock.
15
(l) The Company will not, directly or indirectly, without the prior
written consent of X.X. Xxxxxxxxx & Company, LLC on behalf of the Underwriters,
issue, offer, sell, grant any option to purchase or otherwise dispose (or
announce any issuance, offer, sale, grant of any option to purchase or other
disposition) of any shares of Common Stock or any securities convertible into,
or exchangeable or exercisable for, shares of Common Stock for a period of 90
days following the commencement of the public offering of the Shares by the
Underwriters, except pursuant to this Agreement and except for issuances
pursuant to the exercise of stock options outstanding on or granted subsequent
to the date hereof, pursuant to a stock option or other employee benefit plan in
existence on the date hereof and except as contemplated by the Prospectus.
(m) The Company will cause the Shares to be duly included for quotation
on the Nasdaq National Market prior to the Closing Date.
(n) The Company will not take, directly or indirectly, and will use its
best efforts to cause its officers, directors or affiliates not to take,
directly or indirectly, any action designed to, or which might in the future
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any securities of the Company.
(o) The Company will apply the net proceeds of the offering received by
it in the manner set forth under the caption "Use of Proceeds" in the
Prospectus.
(p) The Company will timely file all such reports, forms or other
documents as may be required from time to time, under the Act, the rules and
regulations promulgated thereunder, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder, and all such reports, forms and documents filed will comply as to
form and substance with the applicable requirements under the Act, the rules and
regulations promulgated thereunder, the Exchange Act and the rules and
regulations promulgated thereunder.
(q) The Company is familiar with the Investment Company Act of 1940, as
amended, and has in the past conducted its affairs, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not and
will not be an "investment company" or a "company" controlled by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
7. Conditions of the Underwriter's Obligations. The obligations of the
several Underwriters under this Agreement are subject to the performance by the
Company on and as of the Closing Date or any later date on which Option Stock is
to be purchased, as the case may be, of its covenants and agreements hereunder,
and the following additional conditions:
16
(a) The Registration Statement shall have become effective, and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued, and no proceedings for that purpose shall have been instituted or
threatened or, to the knowledge of the Company or the Underwriter, shall be
contemplated by the Commission.
(b) The Underwriters shall be satisfied that (i) as of the Effective Date,
the statements made in the Registration Statement and the Prospectus were true
and correct and neither the Registration Statement nor the Prospectus omitted to
state a fact required to be stated therein or is necessary to make the
statements therein not misleading, (ii) since the Effective Date, no event has
occurred which should have been set forth in a supplement or amendment to the
Prospectus which has not been set forth in an effective supplement or amendment,
(iii) since the respective dates as of which information is given in the
Registration Statement in the form in which it originally became effective and
the Prospectus contained therein, there has not been any material adverse change
or any development involving a prospective material adverse change in the
business, properties, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, and since such dates, except in
the ordinary course of business, neither the Company nor any of its subsidiaries
has entered into any material transaction not referred to in the Registration
Statement in the form in which it originally became effective and the Prospectus
contained therein, (iv) neither the Company nor any of its subsidiaries has any
material contingent obligations which are not disclosed in the Registration
Statement and the Prospectus, (v) there are not pending or known threatened
legal proceedings to which the Company or any of its subsidiaries is a party or
of which property of the Company or any of its subsidiaries is subject which are
material and which are not disclosed in the Registration Statement and the
Prospectus, (vi) there are not any franchises, contracts, leases or other
documents which are required to be filed as exhibits to the Registration
Statement which have not been filed as required, and (vii) the representations
and warranties of the Company herein are true and correct in all material
respects as of the Closing Date or any later date on which Option Stock is to be
purchased, as the case may be.
(c) On or prior to the Closing Date, the legality and sufficiency of the
sale of the Shares hereunder and the validity and form of the certificates
representing the Shares, all corporate proceedings and other legal matters
incident to the foregoing, and the form of the Registration Statement and of the
Prospectus (except as to the financial statements contained therein), shall have
been approved at or prior to the Closing Date by Xxxxxxxx & Xxxxxxxx LLP,
counsel for the Underwriters. The Underwriters shall have received from counsel
to the Underwriters, such opinion or opinions with respect to the issuance and
sale of the Shares, the Registration Statement and the Prospectus and such
17
other related matters as the Underwriters reasonably may request and such
counsel shall have received such documents and other information as they request
to enable them to pass upon such matters.
(d) On the Closing Date, and if Option Stock is purchased at any date after
the Closing Date, on such later date, the Underwriters shall have received an
opinion addressed to the Underwriters, dated the Closing Date or, if related to
the later sale of Option Stock, such later date, of Xxxx Xxxx Xxxx & Freidenrich
LLP, counsel to the Company ("Company Counsel"), to the effect set forth below:
(i) Each of the Company and its subsidiaries has been duly organized and
is validly existing and in good standing under the laws of its jurisdiction
of incorporation or formation, as the case may be, with full power and
corporate authority to own or, lease its properties and to conduct its
business as described in the Registration Statement and the Prospectus and
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership or leasing of property
or the conduct of its business requires such qualification (except for
those jurisdictions in which the failure so to qualify would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole);
(ii) Upon the closing of the sale of the Underwritten Stock, the
authorized capital stock of the Company consists of ___________ shares of
Preferred Stock, $_______ par value, of which there are no outstanding
shares, and ___________ shares of Common Stock, $0.001 par value, of which
there are outstanding ________ shares (including the Underwritten Stock and
any shares of Option Stock issued on the date hereof). The securities of
the Company conform in all material respects to the description thereof
contained in the Prospectus. Proper corporate proceedings have been validly
taken to authorize the Company's authorized capital stock and all
outstanding shares of such capital stock (including the Underwritten Stock
have been duly authorized and validly issued by the Company, are fully paid
and nonassessable. Any Option Stock purchased after the Closing Date has
been duly authorized and when issued and delivered to and paid for by the
Underwriters as provided in the Underwriting Agreement, will have been duly
and validly issued and be fully paid and nonassesable. No preemptive
rights, rights of first refusal or other rights exist with respect to the
Shares, or the issue and sale thereof, pursuant to the Company's
certificate of incorporation or bylaws and, there are to the knowledge of
such counsel no contractual preemptive rights that have not been waived,
right of first refusal or rights of co-sale which exist with respect to the
Shares.
18
(iii) The outstanding shares of capital stock or ownership interests of
each of the Company's subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable, and are solely owned by the
Company free and clear of all liens, encumbrances and equities and claims;
and no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into shares
of capital stock or ownership interests in such subsidiary are outstanding.
(iv) To such counsel's knowledge, there are no rights of any holders of
the Company's securities, not effectively satisfied or waived, to require
registration under the Act of any of the Company's securities or other
securities of the Company in connection with the filing of the Registration
Statement or with the offer or sale of the Shares;
(v) The Company has full legal right, power, and authority to enter into
the Underwriting Agreement and to consummate the transactions provided for
therein. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
agreement of the Company, enforceable in accordance with its terms, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws now or hereafter in effect relating to or affecting
creditors' rights generally or by general principles of equity relating to
the availability of remedies and except as rights to indemnity and
contribution may be limited by federal or state securities laws or the
public policy underlying such laws.
(vi) None of the Company's execution or delivery of the Underwriting
Agreement, its performance thereof, its consummation of the transactions
contemplated therein or its application of the net proceeds of the offering
in the manner set forth under the caption "Use of Proceeds," conflicts or
will conflict with or results or will result in any breach or violation of
any of the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon, any
property or assets of the Company pursuant to the terms of the certificate
of incorporation, bylaws or operating agreement of the Company or any of
its subsidiaries; the terms of any indenture, mortgage, deed of trust,
voting trust agreement, stockholder's agreement, note 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 it is or may be bound or to
which its properties may be subject; any statute, rule or regulation of any
regulatory body or administrative agency or other governmental agency or
body, domestic or foreign, having jurisdiction over
19
the Company or any of its subsidiaries or any of their activities or properties,
which would materially and adversely affect the business or properties of the
Company and its subsidiaries taken as a whole; or any judgment, decree or order,
known to such counsel of any government, arbitrator, court, regulatory body or
administrative agency or other governmental agency or body, domestic or foreign,
having such jurisdiction, which would materially and adversely affect the
business or properties of the Company and its subsidiaries taken as a whole;
(vii) No consent, approval, authorization or order of any court, regulatory
body or administrative agency or other governmental agency or body, domestic or
foreign, has been or is required for the consummation of the transactions
contemplated in the Underwriting Agreement, except such as have been obtained
under the Act or may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters;
(viii) To the best of such counsel's knowledge, the conduct of the business of
the Company and its subsidiaries is not in violation of any federal, state or
local statute, administrative regulation or other law, which violation is likely
to have a material adverse effect on the Company and its subsidiaries, taken as
a whole; and each of the Company and its subsidiaries has obtained all licenses,
permits, franchises, certificates and other authorizations from state, federal
and other regulatory authorities as are necessary or required for the ownership,
leasing and operation of its properties and the conduct of its business as
presently conducted and as contemplated in the Prospectus;
(ix) The Registration Statement is effective under the Act; any required
filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto has been
issued, and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of such counsel, are threatened or contemplated by the
Commission;
(x) The Registration Statement and the Prospectus (except for the financial
statements, schedules and other financial data included therein, as to which
such counsel need not express any opinion), complied as to form in all material
respects with the requirements of the Act and the rules and regulations of the
Commission thereunder;
20
(xi) The descriptions contained and summarized in the Registration
Statement and the Prospectus of franchises, contracts, leases,
documents, or any threatened legal or governmental actions, suits or
proceedings, are accurate and fairly represent in all material respects
the information required to be shown by the Act and the rules and
regulations of the Commission thereunder. To the knowledge of such
counsel, there are no franchises, contracts, leases, documents, or any
threatened legal or governmental actions, suits or proceedings, which
are required by the Act and the rules and regulations of the Commission
thereunder to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
which are not described or filed as required;
(xii) The statements (1) in the Prospectus under the captions "Risk
Factors -___________, ___________, __________ and ___________,"
"Business ___________, __________ and ___________," Management,"
"Certain Transactions," "Description of Capital Stock" and "Shares
Eligible for Future Sale" and (2) in the Registration Statement in Items
24 and 26 in each case insofar as such statements constitute summaries
of the legal matters, documents or proceedings referred to therein,
fairly present the information required under the Act and the rules and
regulations promulgated thereunder (the "Act and Rules") with respect to
such legal matters, documents and proceedings and fairly summarize the
matters referred to therein to the extent required by the Act and Rules;
(xiii) Good and marketable title to the Shares sold under the
Underwriting Agreement, free and clear of all liens, encumbrances,
equities, security interests and claims of which counsel has knowledge,
has been transferred to the Underwriters, assuming for the purpose of
this opinion that the Underwriters purchased the same in good faith
without notice of any liens, encumbrances, equities, security interests
or adverse claims; and
(xiv) The Shares have been duly authorized for inclusion in The Nasdaq
National Market upon official notice of issuance.
In addition, such counsel shall state that in the course of the preparation
of the Registration Statement and the Prospectus, such counsel has participated
in conferences with officers and representatives of the Company and with the
Company's independent public accountants, at which conferences such counsel made
inquiries of such officers, representatives and accountants and discussed the
contents of the Registration Statement and the Prospectus and (without taking
any further action to verify independently the statements made in the
Registration Statement and the Prospectus and, except as stated in
21
the foregoing opinion, without assuming responsibility for the accuracy,
completeness or fairness of such statements) nothing has come to such counsel's
attention that causes such counsel to believe that either the Registration
Statement as of the date it is declared effective and as of the Closing Date (or
if related to the later sale of the Option Stock, such later date) or the
Prospectus as of the date thereof and as of the Closing Date (or if related to
the later sale of the Option Stock, such later date) contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (it being understood that such counsel need not express any opinion
with respect to the financial statements, schedules and other financial data
included in the Registration Statement or the Prospectus).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials. References to the Registration
Statement and the Prospectus in this paragraph (d) shall include any amendment
or supplement thereto at the date of such opinion.
(e) You shall have received from PricewaterhouseCoopers LLP a letter or
letters, addressed to the Underwriters and dated the Closing Date and any later
date on which Option Stock is purchased, confirming that they are independent
public accountants with respect to the Company within the meaning of the Act and
the applicable published rules and regulations thereunder and based upon the
procedures described in their letter delivered to the Underwriters concurrently
with the execution of this Agreement (the "Original Letter"), but carried out to
a date not more than three business days prior to the Closing Date or such later
date on which Option Stock is purchased (i) confirming, to the extent true, that
the statements and conclusions set forth in the Original Letter are accurate as
of the Closing Date or such later date, as the case may be, and (ii) setting
forth any revisions and additions to the statements and conclusions set forth in
the Original Letter which are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information. The letters shall not disclose any change, or any development
involving a prospective change, in or affecting the business or properties of
the Company or any of its subsidiaries, which in your sole judgment, makes it
impractical or inadvisable to proceed with the public offering of the Shares or
the purchase of the Option Stock as contemplated by the Prospectus.
(f) You shall have from PricewaterhouseCoopers LLP, a letter stating
that their review of the Company's internal accounting controls, to the extent
they deemed necessary in establishing the scope of their examination of the
Company's
22
financial statements as at March 31, 1999, did not disclose any weakness in
internal controls that they considered to be material weaknesses.
(g) On the Closing Date, and on any later date on which Option Stock is
purchased, you shall have received a certificate, dated the Closing Date or such
later date, as the case may be, signed by the Chief Executive Officer and Chief
Financial Officer of the Company stating that the respective signers of said
certificate have carefully examined the Registration Statement in the form in
which it originally became effective and the Prospectus contained therein and
any amendments or supplements thereto and this Agreement, and that the
statements included in clauses (i) through (xiii) of paragraph (d) of this
Section 7 are true and correct.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Shares shall have been duly
authorized for inclusion on the Nasdaq National Market upon official notice of
issuance.
In case any of the conditions specified in this Section 7 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement,
including all costs and expenses referred to in paragraphs (g) and (h) of
Section 6 hereof, and (ii) if this Agreement is terminated by you because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein, to fulfill any of the conditions herein, or to comply with any
provision hereof other than by reason of a default by any of the Underwriters,
the Company will reimburse the Underwriters severally upon demand for all out-
of-pocket expenses (including reasonable fees and disbursements of counsel) that
shall have been incurred by them in connection with the transactions
contemplated hereby.
8. Conditions of the Obligations of the Company.
(a) The obligations of the Company to deliver the Shares shall be
subject to the conditions that (i) the Registration Statement shall have become
effective and (ii) no stop order suspending the effectiveness thereof shall be
in effect and no proceedings therefor shall be pending or threatened by the
Commission.
23
(b) In case either of the conditions specified in paragraph (a) of this
Section 8 shall not be fulfilled, this Agreement may be terminated by the
Company by giving notice to you. Any such termination shall be without liability
of the Company to the Underwriters and without liability of the Underwriters to
the Company; provided, however, that in the event of any such termination the
Company agrees to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company under
this Agreement, including all costs and expenses referred to in paragraphs (g)
and (h) of Section 6 hereof.
9. Indemnification and Contribution.
(a) Subject to the provisions of paragraph (d) of this Section 9, the
Company agrees to indemnify and hold harmless each Underwriter (and any person
participating in the distribution who is deemed to be an underwriter (as defined
in Section 2(11) of the Act) and each person (including each member or officer
thereof), if any, who controls any Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages or liabilities, joint or several (and actions in respect
thereof), to which such indemnified parties or any of them may become subject,
under the Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, and the Company agrees to reimburse each
such Underwriter and controlling person for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages, or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue statement
of any material fact contained in any Preliminary Prospectus or the Prospectus
(as amended or as supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstance under
which they were made, not misleading; provided, however, that (i) the indemnity
agreement of the Company contained in this paragraph (a) shall not apply to any
such loss, claim, damage, liability or action if such statement or omission was
made in reliance upon and in conformity with information furnished as herein
stated or otherwise furnished in writing to the Company by or on behalf of any
Underwriter expressly for use in any Preliminary Prospectus or the
24
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, and (ii) that the indemnity agreement contained in
this paragraph (a) with respect to any Preliminary Prospectus shall not
inure to the benefit of any Underwriter (or such persons) if the person
asserting any such loss, claim, damage, liability or action purchased
Shares which are the subject thereof to the extent that any such loss,
claim, damage, liability or action (A) results from the fact that such
Underwriter failed to send or give a copy of the Prospectus (as amended or
supplemented) to such person at or prior to the confirmation of the sale of
such Shares to such person in any case where such delivery is required by
the Act and (B) arises out of or is based upon an untrue statement or
omission of a material fact contained in such Preliminary Prospectus that
was corrected in the Prospectus (as amended and supplemented), unless such
failure resulted from non-compliance by the Company with paragraph (c) of
Section 6 hereof. The indemnity agreements of the Company contained in
this paragraph (a) and the representations and warranties of the Company
contained in Section 2 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery and payment for the
Shares.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who has signed the
Registration Statement, each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, and the other Underwriters against any and all losses, claims, damages
or liabilities, joint or several, to which such indemnified parties or any
of them may become subject, under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise
and to reimburse each of them for any legal or other expenses (including,
except as otherwise hereinafter provided, reasonable fees and disbursements
of counsel) incurred by the respective indemnified parties in connection
with defending against any such losses, claims, damages or liabilities or
in connection with any investigation or inquiry of, or other proceeding
which may be brought against, the respective indemnified parties, in each
case arising out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement (including the Prospectus as part thereof and any Rule 462(b)
registration statement) or any post-effective amendment thereto (including
any Rule 462(b) registration statement) or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, or (ii) any untrue statement
or alleged untrue statement of any material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstance under which they were
made, not misleading, in each case to the extent, but only to the extent,
that such statement or
25
omission was made in reliance upon and in conformity with information furnished
as herein stated or otherwise furnished in writing by or on behalf of such
indemnifying Underwriter to the Company expressly for use in the Registration
Statement or the Prospectus or any such amendment thereof or supplement thereto,
and will reimburse, as incurred, all legal or other expenses reasonably incurred
by the Company or any such director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action. The indemnity agreement of each Underwriter contained in this paragraph
(b) shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery and payment for the Shares.
(c) Each party indemnified under the provisions of paragraph (a) or (b) of
this Section 9 agrees that, upon the service of a summons or other initial legal
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceeding against it, in respect of which indemnity may be sought on account
of any indemnity agreement contained in such paragraphs, such indemnified party
will promptly notify any party or parties from whom indemnification may be
sought hereunder of the commencement thereof in writing. No indemnification
provided for in such paragraphs shall be available to any party who shall fail
so to give such notice if the party to whom such notice was not given was
unaware of the action, suit, investigation, inquiry or proceeding to which such
notice would have related and was prejudiced by the failure to give the notice,
but the omission so to notify such indemnifying party or parties of any such
service or notification shall not relieve such indemnifying party or parties
from any liability which it or they may have to the indemnified party for
contribution or otherwise than on account of such indemnity agreement. Any
indemnifying party or parties against which a claim is to be made will be
entitled, at its own expense, to participate in the defense of such action,
suit, investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of
notice from the indemnified party or parties of an action, suit, investigation
or inquiry to which indemnity may be sought, to assume the entire defense
thereof (alone or in conjunction with any other indemnifying party or parties),
at its own expense, in which case such defense shall be conducted by counsel
reasonably satisfactory to the indemnified party or parties; provided, however,
that (i) if the indemnified party or parties has reasonably concluded that there
may be a conflict between the positions of the indemnifying party or parties and
of the indemnified party or parties in conducting the defense of such action,
suit, investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct such defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties and (ii) in any
26
event, the indemnified party or parties shall be entitled to have counsel chosen
by such indemnified party or parties participate in, but not conduct, the
defense. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 9 for any legal or other expenses
(other than the reasonable costs of investigation) subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party has employed such counsel in connection with the assumption of
different or additional legal defenses in accordance with the proviso to the
immediately preceding sentence, or (ii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party. If no such notice to assume the defense of such action
has been given within a reasonable time of the indemnified party's or parties'
notice to such indemnifying party or parties, the indemnifying party or parties
shall be responsible for any legal or other expenses incurred by the indemnified
party or parties in connection with the defense of the action, suit,
investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 9 is unavailable or
insufficient to hold harmless an indemnified party under paragraph (a) or (b)
above in respect of any losses, claims, damages, expenses or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) referred to in paragraphs
(a) and (b) above (i) in such proportion as is appropriate to reflect the
relative benefits received by each of the contributing parties from the offering
of the Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of each of the contributing parties, on the one hand, and the party to be
indemnified, 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
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 (before deducting expenses) and the total underwriting discount received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus, bear to the aggregate public offering price of the Shares.
Relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
each indemnifying party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
27
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be determined by pro rata allocation or
by any other method of allocation which does not take into account the equitable
consideration referred to above. 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 paragraph (d) 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 paragraph (d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Shares purchased by the Underwriter hereunder. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in this
paragraph (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect to which a claim for contribution may be made against another
party or parties under this paragraph (d), it will promptly notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any other obligation it may have hereunder or otherwise
(except as specifically provided in paragraph (c) of this Section 9). The
contribution agreement set forth above shall be in addition to any liabilities
which any indemnifying party may have at common law or otherwise.
(e) No indemnifying party will without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such indemnified
party or any person who controls such Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of such indemnified party and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding.
10. Reimbursement of Certain Expenses. In addition to their other
obligations under Section 9 of this Agreement, the Company hereby agrees to
reimburse on quarterly basis the Underwriters for all reasonable legal and other
expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 9 of this agreement, notwithstanding the absence of a
judicial determination as to the propriety and
28
enforceability of the obligations under this Section 10 and the possibility that
such payments might later be held to be improper; provided, however, that (i) to
the extent that any such payment is ultimately held to be improper, the
Underwriters shall promptly refund it and (ii) the Underwriters shall provide to
the Company, upon request, reasonable assurances of their ability to effect any
refund, when and if due.
11. Representations, etc. to Survive Delivery. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers, and the Underwriters,
respectively, set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriters, and will survive delivery of and payment for the Shares. Any
successors to the Underwriters shall be entitled to the indemnity, contribution
and reimbursement agreements contained in this Agreement.
12. Termination.
(a) This Agreement (except for the provisions of Section 9 hereof) may
be terminated by you by notice to the Company at any time prior to the Closing
Date if: (i) the Company shall have sustained a loss by strike, fire, flood,
accident or other calamity of such a character as to interfere materially with
the conduct of the business and operations of the Company regardless of whether
or not such loss was insured; (ii) trading in the Common Stock shall have been
suspended or trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been suspended
or limitations on such trading shall have been imposed or limitations on prices
shall have been established on any such exchange or market system; (iii) the
engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States on
or after the date hereof shall have occurred; (iv) any outbreak of hostilities
or other national or international calamity or crisis or material adverse change
in economic or political conditions shall have occurred if the effect of such
outbreak, calamity, crisis or change in economic or political conditions in the
financial markets of the United States would, in your reasonable judgment, make
the offering or delivery of the Shares impracticable; (v) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of, or commencement of any proceeding or investigation
by, any court, legislative body, agency or other governmental authority shall
have occurred which in the Underwriter's reasonable opinion materially and
adversely affects or will materially or adversely affect the business or
operations of the Company; (vi) a banking moratorium shall have been declared by
New York or United States authorities; (vii) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs shall have occurred which in your reasonable judgment has a
material adverse effect on the securities markets in the United States.
29
(b) If this agreement is terminated pursuant to this Section 12, there
shall be no liability of the Company to the Underwriters and no liability of the
Underwriters to the Company; provided, however, that in the event of any such
termination, the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all costs and expenses referred to in
paragraphs (g) and (h) of Section 6. Notwithstanding any termination of this
agreement, the provisions of Section 9 hereof shall survive and remain in full
force and effect.
13. Notices. All communications hereunder shall be in writing and if sent
to the Underwriters shall be mailed or delivered or telegraphed and confirmed by
letter or telecopied and confirmed by letter to X.X. Xxxxxxxxx & Company, LLC at
000 Xxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 or, if sent to the
Company, shall be mailed or delivered or telegraphed and confirmed to the
Company at 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
14. Successors. This agreement shall incur to the benefit of and be
binding upon the Company and the Underwriters and, with respect to the
provisions of Section 9 hereof, the several parties (in addition to the Company
and the Underwriters) indemnified under the provisions of said Section 9, and
their respective personal representatives successors and assigns. Nothing in
this agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this agreement,
or any provisions herein contained. The term "successors and assigns" as herein
used shall not include any purchaser, as such purchaser, of any of the Shares
from the Underwriters.
15. Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
30
If the foregoing correctly sets forth our understanding, please indicate
the Underwriters' acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
Xxxxx.xxx, Inc.
By:
--------------------------------
Xxxxxxx X'Xxxxxxx
Chief Executive Officer and
President
Accepted as of the date first above
written:
X.X. Xxxxxxxxx & Company, LLC
Daiwa Securities America, Inc.
By: X.X. Xxxxxxxxx & Company, LLC
By:
-------------------------------
Title:
----------------------------
31
Schedule I
Underwriters
Number of Shares
Underwriters to be Purchased
------------------------------------- ----------------
X.X. Xxxxxxxxx & Company, LLC........................
Daiwa Securities America, Inc........................
