Exhibit 1.1
Loudcloud, Inc.
Common Stock
______________
Underwriting Agreement
----------------------
___________, 2001
Xxxxxxx, Xxxxx & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Xxxxxx Partners LLC
Epoch Securities, Inc.
As representatives of the several Underwriters
named in Schedule I hereto (the "Representatives"),
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
and
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Loudcloud, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
______ shares (the "Firm Shares") and, at the election of the Underwriters, up
to ______ additional shares (the "Optional Shares") of Common Stock, par value
$0.001 per share ("Stock"), of the Company (the Firm Shares and the Optional
Shares that the Underwriters elect to purchase pursuant to Section 2 hereof
being collectively called the "Shares"). Xxxxxx Xxxxxxx & Co. Incorporated has
agreed to reserve a portion of the Shares to be purchased by it under this
Agreement for sale to the Company's directors, officers, employees and business
associates and other parties related to the Company (collectively,
"Participants"), as set forth in the Prospectus under the heading "Underwriting"
(the "Directed Share Program"). The Shares to be sold by Xxxxxx Xxxxxxx & Co.
Incorporated and its affiliates pursuant to the Directed Share Program are
referred to hereinafter as the "Directed Shares". Any Directed Shares not
confirmed for
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purchase by any Participant by the end of the business day on which this
Agreement is executed will be offered to the public by the Underwriters as set
forth in the Prospectus.
It is understood and agreed that Xxxxxxx, Sachs & Co. and Xxxxxx
Xxxxxxx & Co. Incorporated are joint book runners for the offering and any
determination or other actions to be made under this Agreement by the
Representatives shall require the concurrence of both Xxxxxxx, Sachs & Co. and
Xxxxxx Xxxxxxx & Co. Incorporated.
1. The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-46606)
(the "Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, and, excluding exhibits thereto, to you for
each of the other Underwriters, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of the Initial Registration Statement,
any post-effective amendment thereto or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been initiated
or, to the Company's knowledge, threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus"; the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and
deemed by virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective, each as amended at
the time such part of the Initial Registration Statement became effective or
such part of the Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, are hereinafter collectively called the "Registration
Statement"; and such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, is hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each Preliminary
Prospectus filed after September 27, 2000, at the time of filing thereof,
conformed in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
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however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by an Underwriter through Xxxxxxx, Sachs & Co. and
Xxxxxx Xxxxxxx & Co. Incorporated expressly for use therein;
(c) The Registration Statement conforms, and any further
amendments or supplements to the Registration Statement will conform, in all
material respects to the requirements of the Act and the rules and regulations
of the Commission thereunder and do not and will not, as of the applicable
effective date, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; the Prospectus conforms, and any further
amendments or supplements to the Prospectus will conform, in all material
respects to the requirements of the Act and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable filing date,
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that these representations and warranties shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through Xxxxxxx, Sachs & Co. and Xxxxxx
Xxxxxxx & Co. Incorporated expressly for use therein;
(d) Neither the Company nor any of its "significant
subsidiaries" as defined in paragraph (w) of Rule 1-02 of Regulation S-X
promulgated under the Securities Exchange Act of 1934, as amended (the
"Significant Subsidiaries") has sustained, since the date of the latest audited
financial statements included in the Prospectus, any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been any change in the capital stock (other than upon the issuance or
exercise of stock options or stock purchase rights granted pursuant to the
Company's stock plans or upon the exercise of warrants) or long-term debt of the
Company or any of its subsidiaries or any material adverse change, or any
development with a reasonable possibility of resulting in a prospective material
adverse change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated in
the Prospectus.
(e) Neither the Company nor any of its Significant Subsidiaries
own any real property; the Company and its Significant Subsidiaries have good
and marketable title to all personal property owned by them, in each case free
and clear of all liens, encumbrances and defects except such as are described in
the Prospectus or such as do not materially affect the value of such property
and do not interfere in any material respect with the use made and proposed to
be made of such property by the Company and its Significant Subsidiaries; and
any real property and buildings held
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under lease by the Company and its Significant Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere in any material respect with the use made and
proposed to be made of such property and buildings by the Company and its
Significant Subsidiaries, in each case except as set forth or contemplated in
the Prospectus;
(f) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state of
Delaware, with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such qualification,
except where failure to be so qualified in any such jurisdiction would not have
a material adverse effect on the current, and would not be reasonably likely to
have a Material Adverse Effect on the future, consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"); and each
Significant Subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation;
(g) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform to the description of the Stock contained in the
Prospectus; and all of the issued shares of capital stock of each Significant
Subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and (except for directors' qualifying shares) are
owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(h) The Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;
(i) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, except for any conflict, breach, violation or default
that would not (A) have a Material Adverse Effect and (B) affect the validity of
the Shares, nor will such action result in any violation of the provisions of
the Certificate of Incorporation or By-laws of the Company or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties; and no consent, approval,
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authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Shares or
the consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws or by the rules and regulations
of the National Association of Securities Dealers, Inc. (the "NASD") in
connection with the purchase and distribution of the Shares by the Underwriters;
(j) Neither the Company nor any of its Significant Subsidiaries
is (A) in violation of its Certificate of Incorporation or By-laws or (B) in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound, except, with respect to (B), for
defaults that would not have a Material Adverse Effect;
(k) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the caption "Underwriting", insofar
as they purport to describe the provisions of the laws referred to therein and
of this Agreement and the lock-up agreements described in Annex III hereto, are
accurate and complete summaries and descriptions of such terms and provisions in
all material respects;
(l) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of its
Significant Subsidiaries is a party or of which any property of the Company or
any of its Significant Subsidiaries is the subject with respect to which there
is a reasonable possibility of an unfavorable decision to the Company or any of
its Significant Subsidiaries that would individually or in the aggregate have a
Material Adverse Effect; and, to the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
(m) The Company is not and, after giving effect to the use of
proceeds from the sale of the Shares, as described in the Prospectus, will not
be an "investment company", as such term is defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act");
(n) To the knowledge of the Company, after due inquiry, Ernst &
Young LLP, who have certified certain financial statements of the Company and
its subsidiaries, are independent public accountants as required by the Act and
the rules and regulations of the Commission thereunder;
(o) Each of the Company and its Significant Subsidiaries owns
or possesses, or can acquire or license on reasonable terms, all patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or
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procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by it, except to the extent that the failure to own,
possess, acquire or license any of the foregoing would not result in a Material
Adverse Effect, and neither the Company nor any of its Significant Subsidiaries
has received any correspondence relating to any Intellectual Property or notice
of infringement of or conflict with asserted rights of others relating to any
Intellectual Property, with respect to which there is a reasonable possibility
of an unfavorable decision that would have a Material Adverse Effect, nor is the
Company or any Significant Subsidiary otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, that, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect;
(p) Each of the Company and its Significant Subsidiaries
possesses such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, except to the extent that the failure to possess
such permits, licenses, approvals, consents and other authorizations would not
have a Material Adverse Effect; they are in compliance with the terms and
conditions of all such Governmental Licenses, except to the extent that non-
compliance would not have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except to the extent that the
failure to be so valid and in full force and effect would not have a Material
Adverse Effect, and the Company has not received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses
with respect to which there is a reasonable possibility of an unfavorable
decision, ruling or finding that would result in a Material Adverse Effect;
(q) The Company has no Significant Subsidiaries;
(r) The financial statements included in the Registration
Statement and the Prospectus, together with the related schedules and notes,
present fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The supporting
schedules included in the Registration Statement present fairly in accordance
with GAAP the information required to be stated therein. The selected financial
data and the summary financial information included in the Prospectus present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement;
(s) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in
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accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (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 the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences; and
(t) Other than any rights that have been effectively waived,
there are no persons with registration rights or other similar rights to have
any securities registered pursuant to the Registration Statement.
(u) The Registration Statement, the Prospectus and any
Preliminary Prospectus comply, and any amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any Preliminary Prospectus, as amended or supplemented,
if applicable, is distributed in connection with the Directed Share Program.
(v) No authorization, approval, consent, license, order,
registration or qualification of or with any government, governmental
instrumentality or court, other than such as have been obtained and other than
such authorizations, approvals, consents, orders, registrations and
qualifications that if not obtained would not have a Material Adverse Effect, is
required in connection with the offering of the Directed Shares in any
jurisdiction in which the Directed Shares are being offered.
(w) The Company has not offered, or caused the Underwriters to
offer, Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company, or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $_______, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of
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which is the maximum number of Optional Shares that all of the Underwriters are
entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase
at their election up to _______ Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering sales of
shares in excess of the number of Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares,
the several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. and Xxxxxx Xxxxxxx & Co. Incorporated may request
upon at least forty-eight hours' prior notice to the Company shall be delivered
by or on behalf of the Company to Xxxxxxx, Sachs & Co. and Xxxxxx Xxxxxxx & Co.
Incorporated, through the facilities of the Depository Trust Company ("DTC"),
for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal (same-
day) funds to the account specified by the Company to Xxxxxxx, Sachs & Co. and
Xxxxxx Xxxxxxx & Co. Incorporated at least forty-eight hours in advance. The
Company will cause the certificates representing the Shares to be made available
for checking and packaging at least twenty-four hours prior to the Time of
Delivery (as defined below) with respect thereto at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New
York City time, on ___________, 2001 or such other time and date as Xxxxxxx,
Sachs & Co. and Xxxxxx Xxxxxxx & Co. Incorporated and the Company may agree upon
in writing, and, with respect to the Optional Shares, 9:30 a.m., New York time,
on the date specified by Xxxxxxx, Sachs & Co. and Xxxxxx Xxxxxxx & Co.
Incorporated in the written notice given by them of the Underwriters' election
to purchase such Optional Shares, or such other time and date as they and the
Company may agree upon in writing. Such time and date for delivery of the Firm
Shares is herein called the "First Time of Delivery", such time and date for
delivery of the Optional Shares, if not the First Time of Delivery, is herein
called the "Second Time of Delivery", and each such time and date for delivery
is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(m) hereof, will be delivered at the offices
of Xxxxxx Xxxxxxx
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Xxxxxxxx & Xxxxxx, P.C., 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000-0000
(the "Closing Location"), and the Shares will be delivered at the Designated
Office, all at such Time of Delivery. A meeting will be held at the Closing
Location at 3:00 p.m., California time, on the New York Business Day next
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be disapproved by you promptly after reasonable notice thereof; to advise
you, promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters with written or electronic copies of the Prospectus
in New York City in such quantities as you may reasonably request, and, if the
delivery of a prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the offering
or sale of the Shares and if at such time any event shall have occurred as a
result of which the Prospectus as then
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amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in order to
comply with the Act, to notify you and upon your request to prepare and furnish
without charge to each Underwriter and to any dealer in securities as many
written or electronic copies as you may from time to time reasonably request of
an amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Shares
at any time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and deliver to
such Underwriter as many written or electronic copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earnings statement of the Company and its subsidiaries (which need
not be audited) complying with Section 11(a) of the Act and the rules and
regulations thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the Prospectus,
not to offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder any securities of the Company that are substantially similar to the
Shares, including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than (A) pursuant to employee stock
option and stock purchase plans existing on, or upon the conversion or exchange
of convertible or exchangeable securities outstanding as of, the date of this
Agreement, (B) in connection with any acquisition of or merger with another
company or the acquisition of any assets of another company or (C) in connection
with any strategic transaction that includes a commercial relationship involving
the Company and other entities, including joint ventures, marketing or
distribution arrangements, provided, however, that with respect to (B) and (C),
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any such acquisition, merger or strategic transaction involves an amount of the
Company's securities that is less than or equal to 10 percent of the Company's
outstanding share capital, which shall be measured at the time a definitive
agreement is signed in connection with such acquisition, merger or strategic
transaction, and provided further, that it shall be a condition to the closing
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of any such acquisition, merger or strategic transaction that any person who
becomes obligated to make filings with the Commission with respect to the
Company pursuant to Section 16 of the Exchange Act as a result of such
acquisition, merger or strategic transaction shall execute an agreement
substantially to the effect set forth in Annex III(a) hereto and any other
persons who become holders of the Company's Stock or any securities
substantially similar to the Stock, including but not limited to any securities
convertible into or exchangeable for, or that represent the right to receive
Stock, shall execute an agreement substantially to the effect set forth in Annex
III(b) hereto) without
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the prior written consent of Xxxxxxx, Xxxxx & Co. and Xxxxxx Xxxxxxx & Co.
Incorporated;
(f) To furnish to its stockholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed (other than
any such reports or financial statements that are filed with the Commission
electronically via XXXXX or any successor system); and (ii) such additional non-
confidential information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on
the Nasdaq National Market ("Nasdaq");
(j) To file with the Commission such information on Form 10-Q
or Form 10-K as may be required by Rule 463 under the Act;
(k) If the Company elects to rely upon Rule 462(b), to file a
Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and
at the time of filing, to either pay to the Commission the filing fee for the
Rule 462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act;
(l) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if any,
operated by such Underwriter for the purpose of facilitating the on-line
offering of the Shares (the
11
"License"); provided, however, that the License shall be used solely for the
purpose described above, is granted without any fee and may not be assigned or
transferred;
(m) In connection with the Directed Share Program, to restrict,
and to direct the transfer agent to place stop transfer restrictions upon, the
Directed Shares to the extent the NASD or the rules and regulations of the NASD
require such Directed Shares to be restricted from sale, transfer, assignment,
pledge or hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement; provided, however, that Xxxxxx
Xxxxxxx & Co. Incorporated notifies the Company as to which Participants will
need to be so restricted; and
(n) To comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in which the
Directed Shares are offered in connection with the Directed Share Program.
6. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey
(iv) all fees and expenses in connection with listing the Shares on Nasdaq; (v)
the filing fees incident to, and the reasonable fees and disbursements of
counsel for the Underwriters in connection with, securing any required review by
the NASD of the terms of the sale of the Shares; (vi) the cost of preparing
stock certificates; (vii) the cost and charges of any transfer agent or
registrar; (viii) all reasonable fees and disbursements of counsel incurred by
the Underwriters in connection with the Directed Share Program and stamp duties,
similar taxes or duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program and (ix) all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that,
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, stock transfer taxes on resale of any of the Shares by them, and
any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares
to be delivered at each Time of Delivery, shall be subject, in their discretion,
to the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the
12
Company shall have performed all of its obligations hereunder to be performed
prior to the Time of Delivery, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Underwriters, shall
have furnished to you their written opinion (a draft of such opinion is attached
as Annex II(a) hereto) dated such Time of Delivery, with respect to certain
matters regarding the incorporation and legal existence of the Company, the
issued shares of capital stock, the Shares, this Agreement, the statements set
forth in the Prospectus under the caption "Description of Capital Stock" and
"Underwriting" and the matters covered in paragraph (xiii) of subsection (c)
below as well as such other related matters as you may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, PC, counsel for the Company
("Xxxxxx Xxxxxxx"), shall have furnished to you their written opinion (a draft
of such opinion is attached as Annex II(b) hereto), dated such Time of Delivery,
in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered at such Time of Delivery)
have been duly and validly authorized and issued and are fully paid and no-
assessable; and the Shares conform to the description of the Stock
contained in the Prospectus in all material respects;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under
the laws of each other jurisdiction in the United States in which it owns
or leases properties or conducts any business so as to require such
qualification except where failure to be so qualified in any such
jurisdiction would not have a Material Adverse Effect (such counsel being
entitled to rely in respect of the opinion in this
13
clause upon opinions of local counsel and in respect of matters of fact
upon certificates of officers of the Company, provided that such counsel
shall state that they believe that both you and they are justified in
relying upon such opinions and certificates and provided that the
Representatives are furnished with signed original copies of such opinions
and/or certificates);
(iv) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending to
which the Company or any of its Significant Subsidiaries is a party or of
which any property of the Company or any of its Significant Subsidiaries is
the subject with respect to which there is a reasonable possibility of an
unfavorable decision, ruling or finding that would individually or in the
aggregate have a Material Adverse Effect; and, to such counsel's knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(v) This Agreement has been duly authorized, executed and
delivered by the Company;
(vi) The issue and sale of the Shares being delivered at such
Time of Delivery by the Company and the compliance by the Company with all
of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, (i) any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument filed as an exhibit to the Registration
Statement or (ii) any agreements made by the Company with customers who
individually accounted for 10% or more of the Company's revenues for the
nine-month period ended October 31, 2000, nor will such action result in
any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties;
(vii) No consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body having jurisdiction over the Company or its properties is
required for the issue and sale of the Shares or the consummation by the
Company of the transactions contemplated by this Agreement, except the
registration under the Act of the Shares, and such consents, approvals,
authorizations, registrations or qualifications (A) as may be required
under state securities or Blue Sky laws or by the rules and regulations of
the NASD in connection with the purchase and distribution of the Shares by
the Underwriters or (B) as have been obtained or waived;
(viii) Neither the Company nor any of its Significant
Subsidiaries is in violation of its Certificate of Incorporation or By-laws
or, to such counsel's knowledge and except as would not have a Material
Adverse Effect, in
14
default in the performance or observance of any obligation, agreement,
covenant or condition contained in (i) any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument filed as an
exhibit to the Registration Statement or (ii) any agreements made by the
Company with customers who individually accounted for 10% or more of the
Company's revenues as of the date of the latest financial statements
included in the Prospectus;
(ix) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the caption "Underwriting",
insofar as they purport to describe the provisions of the laws referred to
therein and of this Agreement and the lock-up agreements described in Annex
III hereto, and included in the Registration Statement in answer to Item 14
and Item 15 of Form S-1, insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate and complete
summaries and descriptions of such terms and provisions in all material
respects;
(x) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such Time
of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act and the
rules and regulations thereunder; although they do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, except for those
referred to in the opinion in subsection (xi) of this section 7(c), they
have no reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the Prospectus
or any further amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as of
such Time of Delivery, either the Registration Statement or the Prospectus
or any further amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and they do not
know of any amendment to the Registration Statement required to be filed or
of any contracts or other documents of a character required to be filed as
an exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or described
as required.
(d) To the extent the Company has any Significant Subsidiaries at the
Time of Delivery, based on the Company's financial statements for the quarter
ended October 31, 2000, Xxxxxx Xxxxxxx shall have furnished to you their written
opinion, dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
Each Significant Subsidiary of the Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation; and all of the issued shares of capital stock of
each such Significant Subsidiary have been duly and validly authorized and
issued, are fully paid and non-assessable, and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims.
Xxxxxx Xxxxxxx shall be entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company or its subsidiaries, provided that such
counsel shall state that they believe that both you and they are justified in
relying upon such opinions and certificates and provided that the
Representatives are furnished with signed original copies of such opinions
and/or certificates.
(e) Xxxxxxxxxxx & Xxxxxxxx, LLP, special counsel for the Company,
shall have furnished to you their written opinion (a draft of such opinion is
attached as Annex II (c) hereto), dated such Time of Delivery in form and
substance satisfactory to you to the effect that the Company is not and, after
giving effect to the use of proceeds from the sale of the Shares, as described
in the Prospectus, will not be an "investment company", as such term is defined
in the Investment Company Act. Xxxxxxxxxxx & Xxxxxxxx, LLP shall be entitled to
rely in respect of factual matters relevant to the opinion in this clause,
without
15
independent factual inquiry, upon the second to last paragraph of the opinion
letter of Xxxxxx Xxxxxxx and upon representations certified by an officer of the
Company as of the Time of Delivery, provided that such counsel shall state that
they have no actual knowledge of any facts that would cause them to alter their
opinion and provided that the Representatives are furnished with signed original
copies of such opinions and/or certificates.
(f) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, Ernst & Young LLP
shall have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto;
(g) (i) Neither the Company nor any of its Significant Subsidiaries
shall have sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus there shall
not have been any change in the capital stock, short-term debt or long-term debt
of the Company or any of its Significant Subsidiaries or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is in the judgment of the Representatives so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(h) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded the Company's debt securities or preferred stock by any
"nationally recognized statistical rating organization", as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities or preferred stock;
(i) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on Nasdaq; (ii) a suspension or
material limitation in trading in the Company's securities on Nasdaq; (iii) a
general moratorium on commercial banking activities declared by either Federal
or New York or California State authorities; or (iv) any outbreak or escalation
of hostilities, or any change in financial markets, or any calamity or crisis,
or any declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (iv), singly or together with
any other such event, in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the
16
Shares being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(j) The Shares to be sold at such Time of Delivery shall have been
duly listed for quotation on Nasdaq;
(k) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from all officers and directors of the Company
and from other stockholders and optionholders of the Company who collectively
hold, together with the officers and directors of the Company, at least 99% of
the outstanding shares and options of the Company, substantially to the effect
set forth in Annex III(a), III(b) or III(c) hereto, as applicable, in each case,
in form and substance satisfactory to you;
(l) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(m) The Company shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the Company reasonably
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery, as to the performance by
the Company of all of its obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections (a) and (f) of
this Section and as to such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Xxxxxxx, Xxxxx & Co. and Xxxxxx Xxxxxxx & Co. Incorporated expressly for
use therein;
17
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Xxxxxxx, Sachs
& Co. and Xxxxxx Xxxxxxx & Co. Incorporated expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or claim
as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability
18
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (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 subsection (d), 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 which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
19
(e) (i) The Company agrees to indemnify and hold harmless Xxxxxx
Xxxxxxx & Co. Incorporated and its affiliates, and each person, if any, who
controls Xxxxxx Xxxxxxx & Co. Incorporated or its affiliates within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
("Xxxxxx Xxxxxxx Entities"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (x) caused by any untrue statement or alleged untrue
statement of a material fact contained in any material prepared by or with the
consent of the Company for distribution to Participants in connection with the
Directed Share Program or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (y) caused by the failure of any Participant to pay for and
accept delivery of Directed Shares that, following the effectiveness of the
Registration Statement, Participant agreed to purchase; or (z) related to,
arising out of, or in connection with the Directed Share Program, other than
losses, claims, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of Xxxxxx Xxxxxxx Entities.
(ii) In case any proceeding (including any governmental
investigation) shall be instituted involving any Xxxxxx Xxxxxxx Entity in
respect of which indemnity may be sought pursuant to Section 8(e)(i), the
Xxxxxx Xxxxxxx Entity seeking indemnity, shall promptly notify the Company
in writing and the Company, upon request of the Xxxxxx Xxxxxxx Entity,
shall retain counsel reasonably satisfactory to the Xxxxxx Xxxxxxx Entity
to represent the Xxxxxx Xxxxxxx Entity and any others the Company may
designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
Xxxxxx Xxxxxxx Entity shall have the right to retain its own counsel, but
the fees and expenses of such counsel shall be at the expense of such
Xxxxxx Xxxxxxx Entity unless (i) the Company shall have agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Company and the Xxxxxx
Xxxxxxx Entity and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between
them. The Company shall not, in respect of the legal expenses of the
Xxxxxx Xxxxxxx Entities in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Xxxxxx Xxxxxxx Entities. Any such separate firm for the Xxxxxx Xxxxxxx
Entities shall be designated in writing by Xxxxxx Xxxxxxx & Co.
Incorporated. The Company 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 Company
agrees to indemnify the Xxxxxx Xxxxxxx Entities from and against any loss
or liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time a Xxxxxx Xxxxxxx Entity shall have
requested the Company to reimburse it for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
Company agrees that it
20
shall be liable for any settlement of any proceeding effected without its
written consent if (x) such settlement is entered into more than 30 days
after receipt by the Company of the aforesaid request and (y) the Company
shall not have reimbursed the Xxxxxx Xxxxxxx Entity in accordance with such
request prior to the date of such settlement. The Company shall not,
without the prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated,
effect any settlement of any pending or threatened proceeding in respect of
which any Xxxxxx Xxxxxxx Entity is or could have been a party and indemnity
could have been sought hereunder by such Xxxxxx Xxxxxxx Entity, unless such
settlement includes an unconditional release of the Xxxxxx Xxxxxxx Entities
from all liability on claims that are the subject matter of such
proceeding.
(iii) To the extent the indemnification provided for in
Section 8(e)(i) is unavailable to a Xxxxxx Xxxxxxx Entity or insufficient
in respect of any losses, claims, damages or liabilities referred to
therein, then the Company in lieu of indemnifying the Xxxxxx Xxxxxxx Entity
thereunder, shall contribute to the amount paid or payable by the Xxxxxx
Xxxxxxx Entity as a result of such losses, claims, damages or liabilities
(x) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Xxxxxx Xxxxxxx Entities on
the other hand from the offering of the Directed Shares or (y) if the
allocation provided by clause 8(e)(iii)(x) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause 8(e)(iii)(x) above but also the
relative fault of the Company on the one hand and of the Xxxxxx Xxxxxxx
Entities on the other hand in connection with any 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 Xxxxxx Xxxxxxx Entities on
the other hand in connection with the offering of the Directed Shares shall
be deemed to be in the same respective proportions as the net proceeds from
the offering of the Directed Shares (before deducting expenses) and the
total underwriting discounts and commissions received by the Xxxxxx Xxxxxxx
Entities for the Directed Shares, bear to the aggregate Public Offering
Price of the Directed Shares. If the loss, claim, damage or liability is
caused by an untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact, the relative fault
of the Company on the one hand and the Xxxxxx Xxxxxxx Entities on the other
hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement or the omission or alleged omission
relates to information supplied by the Company or by the Xxxxxx Xxxxxxx
Entities and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(iv) The Company and the Xxxxxx Xxxxxxx Entities agree that it
would not be just or equitable if contribution pursuant to this Section
8(e) were determined by pro rata allocation (even if the Xxxxxx Xxxxxxx
Entities 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
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8(e)(iii). The amount paid or payable by the Xxxxxx Xxxxxxx Entities 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 the Xxxxxx Xxxxxxx Entities in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 8(e), no Xxxxxx Xxxxxxx Entity shall be required to contribute any
amount in excess of the amount by which the total price at which the
Directed Shares distributed to the public were offered to the public
exceeds the amount of any damages that such Xxxxxx Xxxxxxx Entity has
otherwise been required to pay. The remedies provided for in this Section
8(e) 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.
(v) The indemnity and contribution provisions contained in this
Section 8(e) shall remain operative and in full force and effect regardless
of (x) any termination of this Agreement, (y) any investigation made by or
on behalf of any Xxxxxx Xxxxxxx Entity or the Company, its officers or
directors or any person controlling the Company and (z) acceptance of and
payment for any of the Directed Shares.
(f) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Shares that it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such Shares,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company shall have the right to postpone
such Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
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(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
except as provided in Sections 6 and 8 hereof; but, if for any other reason, any
Shares are not delivered by or on behalf of the Company as provided herein, the
Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Shares not so delivered, but the Company
shall then be under no further liability to any Underwriter except as provided
in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
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statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly as the Representatives or by Xxxxxxx, Sachs & Co. and
Xxxxxx Xxxxxxx & Co. Incorporated on your behalf. It is understood and agreed
that Xxxxxxx, Sachs & Co. and Xxxxxx Xxxxxxx & Co. Incorporated are joint book
runners for the offering and any determinations or other actions to be made
under this Agreement by the Representatives shall require the concurrence of
both Xxxxxxx, Sachs & Co. and Xxxxxx Xxxxxxx & Co. Incorporated.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representatives in care of (i) Xxxxxxx,
Sachs & Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Registration Department and (ii) in care of Xxxxxx Xxxxxxx & Co. Incorporated,
0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration Department;
and if to the Company shall be delivered or sent by mail to the address of the
Company set forth in the Registration Statement, Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
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If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Underwriters and the
Company. It is understood that your acceptance of this letter on behalf of each
of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
Loudcloud, Inc.
By: _____________________________________
Name: ______________________________
Title: _____________________________
Accepted as of the date hereof:
Xxxxxxx, Sachs & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Xxxxxx Partners LLC
Epoch Securities, Inc.
By: ________________________________
(Xxxxxxx, Sachs & Co.)
By: ________________________________
(Xxxxxx Xxxxxxx & Co. Incorporated)
On behalf of each of the Underwriters
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