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EXHIBIT 1.1
Draft of June 1, 1998
2,600,000 Shares*
Datalink Corporation
Common Stock
UNDERWRITING AGREEMENT
, 1998
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XXXXXXX & COMPANY, INC.
CRUTTENDEN XXXX INCORPORATED
XXXX X. XXXXXXX AND COMPANY, INCORPORATED
As Representatives of the several Underwriters
c/o Needham & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Datalink Corporation, a Minnesota corporation (the "Company"), proposes
to issue and sell 2,600,000 shares (the "Company Firm Shares") of the Company's
Common Stock, $.001 par value per share (the "Common Stock"), to you and to the
several other Underwriters named in Schedule I hereto (collectively, the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"). The Company and the stockholder of the Company named in
Schedule II hereto (the "Selling Stockholder") have also agreed to grant to you
and the other Underwriters an option (the "Option") to purchase up to an
additional 320,000 shares of Common Stock (the "Company Option Shares") and
70,000 shares of Common Stock (the "Selling Stockholder Option Shares"),
respectively, on the terms and for the purposes set forth in Section 1(b). The
Company Option Shares and the Selling Stockholder Option Shares are referred to
collectively herein as the "Option Shares," and the Firm Shares and the Option
Shares are referred to collectively herein as the "Shares."
The Company and the Selling Stockholder confirm as follows their
respective agreements with the Representatives and the several other
Underwriters.
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* Plus an option to purchase up to an additional 390,000 shares to cover
over-allotments.
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1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and agreements of
the Company and the Selling Stockholder herein contained and subject to all the
terms and conditions of this Agreement, (i) the Company agrees to issue and sell
the Company Firm Shares to the several Underwriters and (ii) each of the
Underwriters, severally and not jointly, agrees to purchase from the Company the
respective number of Firm Shares set forth opposite that Underwriter's name in
Schedule I hereto, at the purchase price of $____ for each Firm Share.
(b) Subject to all the terms and conditions of this Agreement, the
Company and the Selling Stockholder grant the Option to the several Underwriters
to purchase, severally and not jointly, up to the maximum number of Option
Shares set forth in Schedule II hereto at the same price per share as the
Underwriters shall pay for the Firm Shares. The Option may be exercised only to
cover over-allotments in the sale of the Firm Shares by the Underwriters and may
be exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of this Agreement upon written or telegraphic
notice (the "Option Shares Notice") by the Representatives to the Company and
the Selling Stockholder no later than 12:00 noon, New York City time, at least
two and no more than five business days before the date specified for closing in
the Option Shares Notice (the "Option Closing Date"), setting forth the
aggregate number of Option Shares to be purchased and the time and date for such
purchase. On the Option Closing Date, the Company will issue and sell and the
Selling Stockholder will sell to the Underwriters the number of Option Shares
set forth in the Option Shares Notice (all Option Shares will be purchased from
the Selling Stockholder before any Option Shares are purchased from the
Company), and each Underwriter will purchase such percentage of the Option
Shares as is equal to the percentage of Firm Shares that such Underwriter is
purchasing, as adjusted by the Representatives in such manner as they deem
advisable to avoid fractional shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be made to
the Representatives for the accounts of the Underwriters against payment of the
purchase price by certified or official bank checks or by wire transfers payable
in same-day funds to the order of the Company for the Company Firm Shares to be
sold by it at the office of Xxxxxxx & Company, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, at 10:00 a.m., New York City time, on the third (or, if the
purchase price set forth in Section 1(b) hereof is determined after 4:30 p.m.,
Washington D.C. time, the fourth) business day following the commencement of the
offering contemplated by this Agreement, or at such time on such other date, not
later than seven business days after the date of this Agreement, as may be
agreed upon by the Company and the Representatives (such date is hereinafter
referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above for the
Company and, in the case of Options Shares, if any, to be sold by the Selling
Stockholder, the Selling Stockholder) will take place at the offices specified
above for the Closing Date at the time and date (which may be the Closing Date)
specified in the Option Shares Notice. Payment for the Selling Stockholder
Option Shares, if any, to be sold by the Selling Stockholder shall be made
pursuant to the terms of the Selling Stockholder's Letter of Transmittal and
Custody Agreement between the Selling Stockholder and Xxxxxxxx and Xxxxxx P.A.
as custodian.
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Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Shares and Option Shares by the Company to the
respective Underwriters shall be borne by the Company. The Company will pay and
save each Underwriter and any subsequent holder of the Shares harmless from any
and all liabilities with respect to or resulting from any failure or delay in
paying Federal and state stamp and other transfer taxes, if any, which may be
payable or determined to be payable in connection with the original issuance or
sale to such Underwriter of the Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) A registration statement (Registration No. 333-___) on Form S-1
relating to the Shares, including a preliminary prospectus and such amendments
to such registration statement as may have been required to the date of this
Agreement, has been prepared by the Company under the provisions of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(collectively referred to as the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a preliminary
prospectus as contemplated by Rule 430 or Rule 430A of the Rules and Regulations
included at any time as part of the registration statement. Copies of such
registration statement and amendments and of each related preliminary prospectus
have been delivered to the Representatives. If such registration statement has
not become effective, a further amendment to such registration statement,
including a form of final prospectus, necessary to permit such registration
statement to become effective will be filed promptly by the Company with the
Commission. If such registration statement has become effective, a final
prospectus containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the Rules and Regulations will be filed promptly
by the Company with the Commission in accordance with Rule 424(b) of the Rules
and Regulations. The term "Registration Statement" means the registration
statement as amended at the time it becomes or became effective (the "Effective
Date"), including financial statements and all exhibits and any information
deemed to be included by Rule 430A and includes any registration statement
relating to the offering contemplated by this Agreement and filed pursuant to
Rule 462(b) of the Rules and Regulations. The term "Prospectus" means the
prospectus as first filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations or, if no such filing is required, the form of final
prospectus included in the Registration Statement at the Effective Date. Any
reference herein to the terms "amend," "amendment" or "supplement" with respect
to the Registration Statement, any preliminary prospectus or the Prospectus
shall be deemed to refer to and include the filing of any document under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") after the
Effective Date, the date of any preliminary prospectus or the date of the
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
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(b) No order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission. On the Effective Date, the date
the Prospectus is first filed with the Commission pursuant to Rule 424(b) (if
required), at all times subsequent to and including the Closing Date and, if
later, the Option Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement thereto), including the financial
statements included in the Prospectus, did and will comply with all applicable
provisions of the Act and the Rules and Regulations and will contain all
statements required to be stated therein in accordance with the Act and the
Rules and Regulations. On the Effective Date and when any post-effective
amendment to the Registration Statement becomes effective, no part of the
Registration Statement, the Prospectus or any such amendment or supplement did
or will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. At the Effective Date, the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date and, if later, the Option Closing Date, the
Prospectus did not and will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
foregoing representations and warranties in this Section 3(b) do not apply to
any statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto.
(c) The Company does not own, and at the Closing Date and, if later,
the Option Closing Date, will not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any corporation, firm, partnership, joint venture,
association or other entity. The Company is, and at the Closing Date and, if
later, the Option Closing Date, will be, a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. The Company has, and at the Closing Date and, if later, the
Option Closing Date, will have, full power and authority to conduct all the
activities conducted by it, to own or lease all the assets owned or leased by it
and to conduct its business as described in the Registration Statement and the
Prospectus. The Company is, and at the Closing Date and, if later, the Option
Closing Date, will be, duly licensed or qualified to do business and in good
standing as a foreign corporation in all jurisdictions in which the nature of
the activities conducted by it or the character of the assets owned or leased by
it makes such license or qualification necessary, except to the extent that the
failure to be so qualified or be in good standing would not materially and
adversely affect the Company or its business, properties, business prospects,
condition (financial or other) or results of operations. The Company is not, and
at the Closing Date and, if later, the Option Closing Date, will not be, engaged
in any discussions or a party to any agreement or understanding, written or
oral, regarding the acquisition of an interest in any corporation, firm,
partnership, joint venture, association or other entity where such discussions,
agreements or understandings would require amendment to the Registration
Statement pursuant to applicable securities laws other than as described in the
Prospectus. Complete and correct copies of the articles of incorporation and of
the by-laws of the Company and all amendments thereto have
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been delivered to the Representatives, and no changes therein will be made
subsequent to the date hereof and prior to the Closing Date or, if later, the
Option Closing Date. The Company's Articles of Incorporation, as amended and
restated on June 1, 1998, were duly adopted by the Company's shareholders on
June 1, 1998.
(d) All of the outstanding shares of capital stock of the Company
(including the Selling Stockholder Option Shares to be sold by the Selling
Stockholder under this Agreement) have been duly authorized, validly issued and
are fully paid and nonassessable and were issued in compliance with all
applicable state and federal securities laws; the Company Firm Shares and the
Option Shares issued by the Company (if any) have been duly authorized and when
issued and paid for as contemplated herein will be validly issued, fully paid
and nonassessable; no preemptive or similar rights exist with respect to any of
the Shares or the issue and sale thereof. The description of the capital stock
of the Company in the Registration Statement and the Prospectus is, and at the
Closing Date and, if later, the Option Closing Date, will be, complete and
accurate in all respects. Except as set forth in the Prospectus, the Company
does not have outstanding, and at the Closing Date and, if later, the Option
Closing Date, will not have outstanding, any options to purchase, or any rights
or warrants to subscribe for, or any securities or obligations convertible into,
or any contracts or commitments to issue or sell, any shares of capital stock,
or any such warrants, convertible securities or obligations. No further approval
or authority of stockholders or the Board of Directors of the Company will be
required for the transfer and sale of the Company Firm Shares and the Option
Shares as contemplated herein.
(e) The financial statements and schedules included in the Registration
Statement or the Prospectus present fairly the financial condition of the
Company as of the respective dates thereof and the results of operations and
cash flows of the Company for the respective periods covered thereby, all in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the entire period involved, except as otherwise disclosed in
the Prospectus. No other financial statements or schedules of the Company are
required by the Act or the Rules and Regulations to be included in the
Registration Statement or the Prospectus. Coopers & Xxxxxxx, L.L.P. (the
"Accountants"), who have reported on such financial statements and schedules,
are independent accountants with respect to the Company as required by the Act
and the Rules and Regulations. The summary financial and statistical data
included in the Registration Statement present fairly the information shown
therein and have been compiled on a basis consistent with the financial
statements presented therein.
(f) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing Date
and, if later, the Option Closing Date, except as set forth in or contemplated
by the Registration Statement and the Prospectus, (i) there has not been and
will not have been any change in the capitalization of the Company (other than
in connection with the exercise of options to purchase the Company's Common
Stock granted pursuant to the Company's stock option plans from the shares
reserved therefor as described in the Registration Statement), or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company, arising for
any reason whatsoever, (ii) the Company has not incurred nor will it incur,
except in the ordinary course of business as described in the Prospectus, any
material liabilities or
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obligations, direct or contingent, nor has the Company entered into nor will it
enter into, except in the ordinary course of business as described in the
Prospectus, any material transactions other than pursuant to this Agreement and
the transactions referred to herein, (iii) the Company has not sustained any
material loss or interference with the business or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance, (iv)
the Company has not and will not have paid or declared any dividends or other
distributions of any kind on any class of its capital stock and (v) there has
not been any issuance of warrants, options, convertible securities or other
rights to purchase or acquire capital stock of the Company.
(g) The Company is not, will not become as a result of the transactions
contemplated hereby, and does not intend to conduct its business in a manner
that would cause it to become, an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
(h) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened or contemplated against or affecting the
Company or any of its officers in their capacity as such, nor any basis
therefor, before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding might, individually or in the
aggregate, materially and adversely affect the Company or the business,
properties, business prospects, condition (financial or otherwise) or results of
operations of the Company.
(i) The Company has, and at the Closing Date and, if later, the Option
Closing Date, will have, performed all the obligations required to be performed
by it, and is not, and at the Closing Date, and, if later, the Option Closing
Date, will not be, in default, under any contract or other instrument to which
it is a party or by which its property is bound or affected, which default might
materially and adversely affect the Company or the business, properties,
business prospects, condition (financial or other) or results of operations of
the Company. To the best knowledge of the Company, no other party under any
contract or other instrument to which it is a party is in default in any respect
thereunder, which default might materially and adversely affect the Company or
the business, properties, business prospects, condition (financial or other) or
results of operations of the Company. The Company is not and at the Closing Date
and, if later, the Option Closing Date, will not be, in violation of any
provision of its articles of incorporation or by-laws or other organizational
documents.
(j) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for the
execution and delivery by the Company of this Agreement and consummation by the
Company of the transactions on its part contemplated herein, except such as have
been obtained under the Act or the Rules and Regulations and such as may be
required under state securities or Blue Sky laws or the by-laws and rules of the
National Association of Securities Dealers, Inc. (the "NASD") in connection with
the purchase and distribution by the Underwriters of the Shares.
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(k) The Company has full corporate power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid, legal and binding agreement of the
Company, enforceable against the Company in accordance with the terms hereof.
The performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company pursuant to the
terms or provisions of, or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or give any party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, the articles of incorporation or by-laws of the Company, any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which the Company is a party or by
which the Company or any of its properties is bound or affected, or violate or
conflict with any judgment, ruling, decree, order, statute, rule or regulation
of any court or other governmental agency or body applicable to the business or
properties of the Company.
(l) The Company has good and marketable title to all properties and
assets described in the Prospectus as owned by it, free and clear of all liens,
charges, encumbrances or restrictions, except such as are described in the
Prospectus or are not material to the business of the Company. The Company has
valid, subsisting and enforceable leases for the properties described in the
Prospectus as leased by it. The Company owns or leases all such properties as
are necessary to its operations as now conducted or as proposed to be conducted,
except where the failure to so own or lease would not materially and adversely
affect the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company.
(m) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. All such contracts to which the Company is a party have been duly
authorized, executed and delivered by the Company, constitute valid and binding
agreements of the Company and are enforceable against and by the Company in
accordance with the terms thereof.
(n) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
Section 6 of this Agreement to be delivered to the Representatives was or will
be, when made, inaccurate, untrue or incorrect in any material respect.
(o) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action designed, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
(p) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement, which rights have not been waived by the holder thereof
as of the date hereof.
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(q) The Company has filed a registration statement pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
to register the Common Stock, and has filed an application to list the Shares to
be sold by the Company hereunder on the Nasdaq National Market ("NNM"), and has
received notification that the listing has been approved, subject to notice of
issuance of such Shares. The Shares to be sold by the Selling Stockholder
hereunder are listed on the NNM.
(r) Except as disclosed in or specifically contemplated by the
Prospectus (i) the Company has sufficient trademarks, trade names, patent
rights, mask works, copyrights, licenses, approvals and governmental
authorizations to conduct its business as now conducted, (ii) the Company has no
knowledge of any infringement by it of trademarks, trade name rights, patent
rights, mask work rights, copyrights, licenses, inventions, trade secrets or
other similar rights of others, where such infringement could have a material
and adverse effect on the Company or the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company, and (iii) there is no claim being made against the Company, or to the
best of the Company's knowledge, any employee of the Company, regarding
trademark, trade name, patent, mask work, copyright, license, inventions, trade
secret or other infringement which could have a material and adverse effect on
the Company or the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company.
(s) The Company has filed all federal, state, local and foreign income
tax returns which have been required to be filed and has paid all taxes and
assessments received by it to the extent that such taxes or assessments have
become due. The Company has no tax deficiency which has been or, to the best
knowledge of the Company, might be asserted or threatened against it which could
have a material and adverse effect on the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company.
(t) The pro forma financial information set forth in the Registration
Statement reflects, subject to the limitations set forth in the Registration
Statement as to such pro forma financial information, the results of operations
of the Company purported to be shown thereby for the periods indicated and
conforms to the requirements of Regulation S-X of the Rules and Regulations and
management of the Company believes (i) the assumptions underlying the pro forma
adjustments are reasonable, (ii) that such adjustments have been properly
applied to the historical amounts in the compilation of such statements, and
(iii) that such statements present fairly, with respect to the Company, the pro
forma financial position and results of operations and the other information
purported to be shown therein at the respective dates or for the respective
periods therein specified.
(u) The Company owns or possesses all authorizations, approvals,
orders, licenses, registrations, other certificates and permits of and from all
governmental regulatory officials and bodies, foreign and domestic necessary to
conduct its business as contemplated in the Prospectus, except where the failure
to own or possess all such authorizations, approvals, orders, licenses,
registrations, other certificates and permits would not materially and adversely
affect the Company or the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company. There is no
proceeding pending or threatened (or any basis therefor known to the Company)
which may cause any such authorization, approval, order, license,
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registration, certificate or permit to be revoked, withdrawn, cancelled,
suspended or not renewed; and the Company is conducting its business in
compliance with all laws, rules and regulations applicable thereto (including,
without limitation, all applicable federal, state and local environmental laws
and regulations) except where such noncompliance would not materially and
adversely affect the Company or the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company.
(v) The Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, and consistent with insurance
coverage maintained by similar companies and businesses, and as required by the
rules and regulations of all governmental agencies having jurisdiction over the
Company, including, but not limited to, insurance covering real and personal
property owned or leased by the Company against theft, damage, destruction, acts
of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(w) Neither the Company has nor, to the best of the Company's
knowledge, any of its employees or agents at any time during the last five years
(i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
(x) The Company has obtained and delivered to the Representatives
written agreements, in form and substance satisfactory to the Representatives,
of each of its directors, executive officers and stockholders that no offer,
sale, assignment, transfer, encumbrance, contract to sell, grant of an option to
purchase or other disposition of any Common Stock or other capital stock of the
Company will be made for a period of 180 days after the date of the Prospectus,
directly or indirectly, by such holder otherwise than hereunder or with the
prior written consent of Xxxxxxx & Company, Inc.
(y) The Company has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Shares other than any preliminary prospectus or the Prospectus or other
materials permitted by the Act to be distributed by the Company.
(z) The Company is in compliance with all provisions of Florida
Statutes Section 517.075 (Chapter 92-198, laws of Florida). The Company does not
do any business, directly or indirectly, with the government of Cuba or with any
person or entity located in Cuba.
(aa) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are executed
in accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to records is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(bb) Other than as contemplated by this Agreement, the Company has not
incurred any liability for any finder's or broker's fee or agent's commission in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.
(cc) There has been no unlawful storage, treatment or disposal of waste
by the Company (or any of its predecessors-in-interest) at any of the facilities
owned or leased thereby, except for such violations which would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings, affairs or business prospects of the Company; there has been no
material spill, discharge, leak, emission, ejection, escape, dumping or release
of any kind onto the properties owned or leased by the Company, or into the
environment surrounding those properties, of any toxic or hazardous substances,
as defined under any federal, state or local regulations, laws or statutes,
except for those releases permissible under such regulations, laws or statutes
or otherwise allowable under applicable permits and except for such releases
which would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, affairs or business prospects of the Company.
(dd) No material labor dispute with the employees of the Company exists
or is imminent.
(ee) Each employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
("Employee Benefit Plan"), and each bonus, retirement, pension, profit sharing,
stock bonus, thrift, stock option, stock purchase, incentive, severance,
deferred or other compensation or welfare benefit plan, program, agreement or
arrangement of, or applicable to employees or former employees of, the Company
or with respect to which the Company could have any liability ("Benefit Plans"),
was or has been established, maintained and operated in all material respects in
compliance with all applicable federal, state, and local statutes, orders,
governmental rules and regulations, including, but not limited to, ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"). No Benefit Plan is or
was subject to Title IV of ERISA or Section 302 of ERISA or Section 412 of the
Code. The Company does not, either directly or indirectly as a member of a
controlled group within the meaning of Sections 414(b), (c), (m) and (o) of the
Code ("Controlled Group"), have any material liability that remains unsatisfied
or arising under Section 502 of ERISA, Subchapter D of Chapter 1 of Subtitle A
of the Code or under Chapter 43 of Subtitle D of the Code. No action, suit,
grievance, arbitration or other matter of litigation or claim with respect to
any Benefit Plan (other than routine claims for benefits made in the ordinary
course of plan administration for which plan administrative procedures have not
been exhausted) is pending or, to the Company's knowledge, threatened or
imminent against or with respect to any Benefit Plan, any member of a Controlled
Group that includes the Company, or any fiduciary within the meaning of Section
3(21) of ERISA with respect to a Benefit Plan which, if determined adversely to
the Company, would have a material adverse effect on the Company. Neither the
Company nor any member of a Controlled Group that includes the Company, has any
knowledge of any facts that could give rise to any action, suit, grievance,
arbitration or any other manner of litigation or claim with respect to any
Benefit Plan.
4. Representations, Warranties and Covenants of the Selling
Stockholder. The Selling Stockholder represents, warrants and covenants to each
Underwriter that:
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(a) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Stockholder of this Agreement and the
Power-of-Attorney and Custody Agreement (hereinafter referred to as a
"Stockholder's Agreement") hereinafter referred to, and for the sale and
delivery of the Selling Stockholder Option Shares to be sold by such Selling
Stockholder hereunder, have been obtained; and such Selling Stockholder has full
right, power and authority to enter into this Agreement and the Stockholder's
Agreement, to make the representations, warranties and agreements hereunder and
thereunder, and to sell, assign, transfer and deliver the Shares to be sold by
such Selling Stockholder hereunder.
(b) Certificates in negotiable form representing all of the Selling
Stockholder Option Shares to be sold by such Selling Stockholder have been
placed in custody under the Stockholder's Agreement, in the form heretofore
furnished to you, duly executed and delivered by such Selling Stockholder to the
Custodian, and such Selling Stockholder has duly executed and delivered a
power-of-attorney, in the form heretofore furnished to you and included in the
Stockholder's Agreement (the Power-of-Attorney"), appointing Xxxx X. Xxxxxx and
Xxxxxx X. XxXxxx and each of them, as such Selling Stockholder's
attorney-in-fact (the "Attorneys-in-Fact") with authority to execute and deliver
this Agreement on behalf of such Selling Stockholder, to determine (subject to
the provisions of the Stockholder's Agreement) the purchase price to be paid by
the Underwriters to the Selling Stockholder as provided in Section 2 hereof, to
authorize the delivery of the Selling Stockholder Option Shares, if any, to be
sold by such Selling Stockholder hereunder and otherwise to act on behalf of
such Selling Stockholder in connection with the transactions contemplated by
this Agreement and the Stockholder's Agreement.
(c) Such Selling Stockholder specifically agrees that the Selling
Stockholder Option Shares represented by the certificates held in custody for
such Selling Stockholder under the Stockholder's Agreement are for the benefit
of and coupled with and subject to the interests of the Underwriters, the
Custodian, the Attorneys-in-Fact, and the Company, that the arrangements made by
such Selling Stockholder for such custody, and the appointment by such Selling
Stockholder of the Attorneys-in-Fact by the Power-of-Attorney, are to that
extent irrevocable, and that the obligations of such Selling Stockholder
hereunder shall not be terminated by operation of law, whether by the death,
disability, incapacity, liquidation or dissolution of the Selling Stockholder or
by the occurrence of any other event. If the individual Selling Stockholder or
any executor or trustee for a Selling Stockholder should die or become
incapacitated, or if any other such event should occur, before the delivery of
the Selling Stockholder Option Shares hereunder, certificates representing the
Selling Stockholder Option Shares shall be delivered by or on behalf of the
Selling Stockholder in accordance with the terms and conditions of this
Agreement and of the Stockholder's Agreement, and actions taken by the
Attorneys-in-Fact pursuant to the Powers-of-Attorney shall be as valid as if
such death, incapacity, termination, dissolution or other event had not
occurred, regardless of whether or not the Custodian, the Attorneys-in-Fact, or
any of them, shall have received notice of such death, incapacity, termination,
dissolution or other event.
(d) This Agreement and the Stockholder's Agreement have each been duly
authorized, executed and delivered by such Selling Stockholder and each such
document constitutes a valid and binding obligation of such Selling Stockholder,
enforceable in accordance with its terms.
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(e) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the sale of the Selling Stockholder Option Shares by such
Selling Stockholder or the consummation by such Selling Stockholder of the
transactions on its part contemplated by this Agreement and the Stockholder's
Agreement, except such as have been obtained under the Act or the Rules and
Regulations and such as may be required under state securities or Blue Sky laws
or the by-laws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Shares to be sold by such Selling
Stockholder.
(f) The sale of the Selling Stockholder Option Shares to be sold by
such Selling Stockholder hereunder and the performance by such Selling
Stockholder of this Agreement and the Stockholder's Agreement and the
consummation of the transactions contemplated hereby and thereby will not result
in the creation or imposition of any lien, charge or encumbrance upon any of the
assets of such Selling Stockholder pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or give any party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under, any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder or any of its properties is bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to such Selling Stockholder.
(g) Such Selling Stockholder has, and at the Closing Date and, if
later, the Option Closing Date, will have, good and marketable title to the
Selling Stockholder Option Shares to be sold by such Selling Stockholder
hereunder, free and clear of all liens, encumbrances, equities or claims
whatsoever; and, upon delivery of such Selling Stockholder Option Shares and
payment therefor pursuant hereto, good and marketable title to such Selling
Stockholder Option Shares, free and clear of all liens, encumbrances, equities
or claims whatsoever, will be delivered to the Underwriters.
(h) On the Option Closing Date, all stock transfer or other taxes
(other than income taxes) that are required to be paid in connection with the
sale and transfer of the Shares to be sold by such Selling Stockholder to the
several Underwriters hereunder will be have been fully paid or provided for by
such Selling Stockholder and all laws imposing such taxes will have been fully
complied with.
(i) Other than as permitted by the Act and the Rules and Regulations,
such Selling Stockholder has not distributed and will not distribute any
preliminary prospectus, the Prospectus or any other offering material in
connection with the offering and sale of the Shares. Such Selling Stockholder
has not taken and will not at any time take, directly or indirectly, any action
designed, or which might reasonably be expected, to cause or result in, or which
will constitute, stabilization of the price of shares of Common Stock to
facilitate the sale or resale of any of the Shares.
(j) All information with respect to such Selling Stockholder contained
in the Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or
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supplement thereto complied or will comply in all material respects with all
applicable requirements of the Act and the Rules and Regulations and does not
and will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(k) Such Selling Stockholder has no knowledge of any material fact or
condition not set forth in the Registration Statement or the Prospectus that has
adversely affected, or may adversely affect, the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company, and the sale of the Shares proposed to be sold by such Selling
Stockholder is not prompted by any such knowledge.
(l) Such Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in Section 3 hereof are
not true and correct.
(m) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Stockholder agrees to deliver to you prior to or at the Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
5. Agreements of the Company and the Selling Stockholder. Each of the
Company and the Selling Stockholder respectively covenants and agrees with the
several Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the Registration
Statement to become effective, and will notify the Representatives promptly, and
will confirm such advice in writing, (i) when the Registration Statement has
become effective and when any post-effective amendment thereto becomes
effective, (ii) of any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose or the threat thereof, (iv) of the happening of any event
during the period mentioned in the second sentence of Section 5(e) that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in the light of the circumstances in which they are made, not
misleading and (v) of receipt by the Company or any representative or attorney
of the Company of any other communication from the Commission relating to the
Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue
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any order suspending the effectiveness of the Registration Statement, the
Company will make every reasonable effort to obtain the withdrawal of such order
at the earliest possible moment. If the Company has omitted any information from
the Registration Statement pursuant to Rule 430A of the Rules and Regulations,
the Company will comply with the provisions of and make all requisite filings
with the Commission pursuant to said Rule 430A and notify the Representatives
promptly of all such filings.
(c) The Company will furnish to each Representative, without charge,
one signed copy of each of the Registration Statement and of any post-effective
amendment thereto, including financial statements and schedules, and all
exhibits thereto and will furnish to the Representatives, without charge, for
transmittal to each of the other Underwriters, a copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any undertakings
contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to each of the Underwriters, without charge, as many copies
of any preliminary prospectus and the Prospectus or any amendment or supplement
thereto as the Representatives may reasonably request. The Company consents to
the use of the Prospectus or any amendment or supplement thereto by the several
Underwriters and by all dealers to whom the Shares may be sold, both in
connection with the offering or sale of the Shares and for any period of time
thereafter during which the Prospectus is required by law to be delivered in
connection therewith. During the period in which a prospectus is required by law
to be delivered by an Underwriter or dealer, the Company will comply with all
requirements imposed upon it by the Act and the Rules and Regulations, as from
time to time in force, so far as necessary to permit the continuance of sales of
or dealings in the Shares as contemplated by the provisions hereof or the
Prospectus. If during such period of time any event shall occur which in the
judgment of the Company or counsel to the Underwriters should be set forth in
the Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement or
amendment thereto, and will deliver to each of the Underwriters, without charge,
such number of copies of such supplement or amendment to the Prospectus as the
Representatives may reasonably request. The Company will not file any document
under the Exchange Act or the Exchange Act Rules and Regulations before the
termination of the offering of the Shares by the Underwriters, if such document
would be deemed to be incorporated by reference into the Prospectus, that is not
approved by the Representatives after reasonable notice thereof. In case any
Underwriter is required to deliver a prospectus in connection with sales of any
Shares at any time nine months or more after the effective date of the
Registration Statement, upon the request of the Representatives but at the
expense of such Underwriter, the Company will prepare and deliver to such
Underwriter as many copies as the Representatives may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act.
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(f) Prior to any public offering of the Shares, the Company will
cooperate with the Representatives and counsel to the Underwriters in connection
with the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Representatives may
request; provided, that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any jurisdiction
where it is not now so subject.
(g) The Company will, so long as required under the Rules and
Regulations, 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 flow of the Company and its consolidated
Subsidiaries, if any, 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), consolidated summary financial information of the
Company and its Subsidiaries, if any, for such quarter in reasonable detail.
(h) During the period of five years commencing on the Effective Date,
the Company will furnish to the Representatives and each other Underwriter who
may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to the
Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the National
Association of Securities Dealers ("NASD") or any securities exchange pursuant
to the requirements of the NASD or with the Commission pursuant to the Act or
the Exchange Act.
(i) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail) for a period of 12 months ended commencing after the
Effective Date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(j) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay or reimburse
if paid by the Representatives, in such proportions as they may agree upon
themselves, all costs and expenses incident to the performance of the
obligations of the Company and the Selling Stockholder under this Agreement and
in connection with the transactions contemplated hereby, including but not
limited to costs and expenses of or relating to (i) the preparation, printing
and filing of the Registration Statement and exhibits to it, each preliminary
prospectus, Prospectus and any amendment or supplement to the Registration
Statement or Prospectus, (ii) the preparation and delivery of certificates
representing the Shares, (iii) the printing of this Agreement, the Agreement
Among Underwriters, any Selected Dealer Agreements, any Underwriters'
Questionnaires, the Stockholder's Agreements, any Underwriters' Powers of
Attorney, and any invitation letters to prospective Underwriters, (iv)
furnishing (including costs of shipping and mailing) such copies of the
Registration Statement, the Prospectus and any preliminary prospectus, and all
amendments and supplements thereto, as may be requested for use in connection
with the offering and sale of the Shares by the Underwriters or
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by dealers to whom Shares may be sold, (v) the listing of the Shares on the NNM,
(vi) any filings required to be made by the Underwriters with the NASD, and the
fees, disbursements and other charges of counsel for the Underwriters in
connection therewith, (vii) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 5(f), including the fees, disbursements and other
charges of counsel to the Underwriters in connection therewith, and the
preparation and printing of preliminary, supplemental and final Blue Sky
memoranda, (viii) fees, disbursements and other charges of counsel to the
Company (but not those of counsel for the Underwriters, except as otherwise
provided herein), (ix) accounting fees of the Company and (x) the transfer agent
for the Shares. In addition, the Company will pay all travel and lodging
expenses incurred by management of the Company in connection with any
informational "road show" meetings held in connection with the offering and will
also pay for the preparation of all materials used in connection with such
meetings. The Company shall not, however, be required to pay for any of the
Underwriters' expenses (other than those related to qualification of the Shares
under state securities or Blue Sky laws and those incident to securing any
required review by the NASD of the terms of the sale of the shares) except that,
if this Agreement shall not be consummated because the conditions in Section 6
hereof are not satisfied, or because this Agreement is terminated by the
Representatives pursuant to Section 9 hereof, or by reason of any failure,
refusal or inability on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on its part to be performed, unless such failure to satisfy said
condition or to comply with said terms shall be due to the default or omission
of any Underwriter, then the Company shall promptly upon request by the
Representatives reimburse the several Underwriters for all out-of-pocket
accountable expenses, including fees and disbursements of counsel, incurred in
connection with investigating, marketing and proposing to market the Shares or
in contemplation of performing their obligations hereunder; but the Company
shall not in any event be liable to any of the several Underwriters for damages
on account of loss of anticipated profits from the sale by them of the Shares.
The Selling Stockholder will pay (directly or by reimbursement) all fees and
expenses incident to the performance of his obligations under this Agreement
that are not otherwise specifically provided for herein, including but not
limited to any fees and expenses of counsel for such Selling Stockholder, any
fees and expenses of the Attorneys-in-Fact and the Custodian, and all expenses
and taxes incident to the sale and delivery of the Shares to be sold by such
Selling Stockholder to the Underwriters hereunder.
(k) The Company will not at any time, directly or indirectly, take any
action designed or which might reasonably be expected to cause or result in, or
which will constitute, stabilization of the price of the shares of Common Stock
to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering and sale
of the Shares to be sold by the Company substantially in the manner set forth in
the Prospectus under "Use of Proceeds" and shall file such reports with the
Commission with respect to the sale of the Shares and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(m) During the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, without the
prior written consent of Xxxxxxx & Company, Inc., the Company will not offer,
sell, contract to sell, grant options to purchase or
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otherwise dispose of any of the Company's equity securities of the Company or
any other securities convertible into or exchangeable with its Common Stock or
other equity security (other than pursuant to employee stock option plans or the
conversion of convertible securities or the exercise of warrants outstanding on
the date of this Agreement).
(n) During the period of 180 days after the date of the Prospectus, the
Company will not, without the prior written consent of Xxxxxxx & Company, Inc.,
grant options to purchase shares of Common Stock that will vest in such period
at a price less than the initial public offering price. During the period of 180
days after the date of the Prospectus, the Company will not file with the
Commission or cause to become effective any registration statement relating to
any securities of the Company without the prior written consent of Xxxxxxx &
Company, Inc.
(o) The Selling Stockholder will, and the Company will cause each of
its officers, directors and certain stockholders designated by the
Representatives to, enter into lock-up agreements with the Representatives to
the effect that they will not, without the prior written consent of Xxxxxxx &
Company, Inc., sell, contract to sell or otherwise dispose of any shares of
Common Stock or rights to acquire such shares according to the terms set forth
in Schedule III hereto.
(p) The Company will not file with the Commission any registration
statement on Form S-8 relating to shares of its Common Stock prior to 90 days
after the effective date of the Registration Statement, other than a
registration statement on Form S-8 with respect to the Company's employee stock
purchase plan which registration statement may not be relied upon for resales
during such 90 day period.
6. Conditions of the Obligations of the Underwriters. The obligations
of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become effective
shall be received by the Representatives not later than 5:00 p.m., New York City
time, on the date of this Agreement or at such later date and time as shall be
consented to in writing by the Representatives and all filings required by Rule
424 and Rule 430A of the Rules and Regulations shall have been made.
(b) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall be
pending or threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or registration
of the Shares under the securities or Blue Sky laws of any jurisdiction shall be
in effect and no proceeding for such purpose shall be pending before or
threatened or contemplated by the Commission or the authorities of any such
jurisdiction, (iii) any request for additional information on the part of the
staff of the Commission or any such authorities shall have been complied with to
the satisfaction of the staff of the Commission or such authorities and (iv)
after the date hereof no amendment or supplement to the Registration Statement
or the Prospectus shall have been filed unless a copy thereof was first
submitted to the Representatives and the Representatives do not object thereto
in good faith, and the Representatives shall have received certificates, dated
the Closing Date and, if later, the Option Closing Date and signed by the Chief
Executive Officer and the Chief Financial Officer of the Company (who may, as to
proceedings
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threatened, rely upon the best of their information and belief), to the effect
of clauses (i), (ii) and (iii) of this paragraph.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business, in each case other than as described in or
contemplated by the Registration Statement and the Prospectus, and (ii) the
Company shall not have sustained any material loss or interference with its
business or properties from fire, explosion, flood or other casualty, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree, which is not described in the
Registration Statement and the Prospectus, if in the judgment of the
Representatives any such development makes it impracticable or inadvisable to
consummate the sale and delivery of the Shares by the Underwriters at the
initial public offering price.
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company or any of its officers or
directors in their capacities as such, before or by any Federal, state or local
court, commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, in which litigation or proceeding an unfavorable
ruling, decision or finding would, in the judgment of the Representatives,
materially and adversely affect the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company.
(e) Each of the representations and warranties of the Company and the
Selling Stockholder contained herein shall be true and correct in all material
respects at the Closing Date and, with respect to the Option Shares, at the
Option Closing Date, and all covenants and agreements contained herein to be
performed on the part of the Company or the Selling Stockholder and all
conditions contained herein to be fulfilled or complied with by the Company or
the Selling Stockholder at or prior to the Closing Date and, with respect to the
Option Shares, at or prior to the Option Closing Date, shall have been duly
performed, fulfilled or complied with.
(f) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to the Representatives and counsel for the
Underwriters from Xxxxxxxx & Xxxxxx P.A., counsel to the Company and the Selling
Stockholder, with respect to the following matters (except that the matters set
forth in subparagraphs (xix)-(xxi) need not be addressed in the opinion
delivered at the Option Closing Date, if later than the Closing Date):
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; has full corporate power and authority to conduct all
the activities conducted by it, to own or lease all the assets owed or
leased by it and to conduct its business as described in the
Registration Statement and Prospectus; and is duly licensed or
qualified to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of the activities
conducted by it
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or the character of the assets owned or leased by it makes such license
or qualification necessary and where the failure to be licensed or
qualified would have a material and adverse effect on the business or
financial condition of the Company.
(ii) All of the outstanding shares of capital stock of the
Company (including the Selling Stockholder Shares) have been duly
authorized, validly issued and are fully paid and nonassessable, to
such counsel's knowledge, were issued pursuant to exemptions from the
registration and qualification requirements of federal and applicable
state securities laws, and were not issued in violation of or subject
to any preemptive or, to such counsel's knowledge, similar rights;
(iii) The specimen certificate evidencing the Common Stock
filed as an exhibit to the Registration Statement is in due and proper
form under Minnesota law, the Shares to be sold by the Company
hereunder have been duly authorized and, when issued and paid for as
contemplated by this Agreement, will be validly issued, fully paid and
nonassessable; and no preemptive or similar rights exist with respect
to any of the Shares or the issue and sale thereof.
(iv) To such counsel's knowledge, the Company does not own or
control, directly or indirectly, any shares of stock or any other
equity or long-term debt securities of any corporation or have any
equity interest in any corporation, firm, partnership, joint venture,
association or other entity.
(v) The number of shares of authorized and outstanding
capital stock of the Company is as set forth in the Registration
Statement and the Prospectus in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any,
pursuant to this Agreement or pursuant to reservations, agreements,
employee benefit plans or the exercise of convertible securities,
options or warrants referred to in the Prospectus). To such counsel's
knowledge, except as disclosed in or specifically contemplated by the
Prospectus, there are no outstanding options, warrants of other rights
calling for the issuance of, and no commitments, plans or arrangements
to issue, any shares of capital stock of the Company or any security
convertible into or exchangeable or exercisable for capital stock of
the Company. The description of the capital stock of the Company in
the Registration Statement and the Prospectus conforms in all material
respects to the terms thereof.
(vi) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which the Company is
a party or to which any of its properties is subject that are required
to be described in the Registration Statement or the Prospectus but are
not so described.
(vii) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is
required for the consummation by the Company of the transactions on its
part contemplated under this Agreement, except such as have been
obtained or made under the Act or the Rules and Regulations and such as
may be
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required under state securities or Blue Sky laws or the by-laws and
rules of the NASD in connection with the purchase and distribution by
the Underwriters of the Shares.
(viii) The Company has full corporate power and authority to
enter into this Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
(ix) The execution and delivery of this Agreement, the
compliance by the Company with all of the terms hereof and the
consummation of the transactions contemplated hereby does not
contravene any provision of applicable law or the Articles of
Incorporation or By-Laws of the Company, and to the best of such
counsel's knowledge will not result in the creation or imposition of
any lien, charge or encumbrance upon any of the assets of the Company
pursuant to the terms and provisions of, result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or give any party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, any
indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument known to
such counsel to which the Company is a party or by which the Company or
any of its properties is bound or affected, or violate or conflict with
(i) any judgment, ruling, decree or order known to such counsel or (ii)
any statute, rule or regulation of any court or other governmental
agency or body, applicable to the business or properties of the Company
except for such liens, charges, encumbrances, breaches, violations or
terminations as would not reasonably be expected to have a material and
adverse effect on business, properties or results of operations of the
Company.
(x) To such counsel's knowledge, there is no document or
contract of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed or incorporated
by reference as required, and each description of such contracts and
documents that is contained in the Registration Statement and
Prospectus fairly presents in all material respects the information
required under the Act and the Rules and Regulations.
(xi) The statements under the captions "Risk Factors -- Shares
Eligible for Future Sale," "Risk Factors -- Undesignated Shares,
Certain Anti-Takeover Provisions, "Management -- Stock Incentive
Plans," "Management -- Indemnification Agreements," "Certain
Transactions," "Description of Capital Stock," and "Shares Eligible for
Future Sale" in the Prospectus, insofar as the statements constitute a
summary of documents referred to therein or matters of law, are
accurate summaries and fairly and correctly present, in all material
respects, the information called for with respect to such documents and
matters (provided, however, that such counsel may rely on
representations of the Company with respect to the factual matters
contained in such statements, and provided further that such counsel
shall state that nothing has come to the attention of such counsel
which leads them to believe that such representations are not true and
correct in all material respects).
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(xii) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for,
and immediately upon completion of the sale of Shares contemplated
hereby will not be, an "investment company," as such terms are defined
in the Investment Company Act of 1940, as amended.
(xiii) The Selling Stockholder Shares are duly listed on the
NNM and the Company Shares have been duly authorized for listing on the
NNM, subject to notice of issuance.
(xiv) To such counsel's knowledge, no holder of securities of
the Company has rights, which have not been waived, to require the
Company to register with the Commission shares of Common Stock or other
securities, as part of the offering contemplated hereby.
(xv) The Registration Statement has become effective under the
Act, and to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted or is
pending, threatened or contemplated.
(xvi) The Registration Statement and the Prospectus comply as
to form in all material respects with the requirement of the Act and
the Rules and Regulations (other than the financial statements,
schedules and other financial and statistical data contained in the
Registration Statement or the Prospectus, as to which such counsel need
express no opinion).
(xvii) Such counsel has participated in the preparation of the
Registration Statement and Prospectus and has no reason to believe
that, as of the Effective Date the Registration Statement, or any
amendment or supplement thereto, (other than the financial statements,
schedules and other financial and statistical data contained therein,
as to which such counsel need express no opinion) contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or that the Prospectus, or any amendment or supplement
thereto, as of its date and the Closing Date and, if later, the Option
Closing Date, contained or contains any untrue statement of a material
fact or omitted 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 (other than the financial statements,
schedules and other financial and statistical data contained therein,
as to which such counsel need express no opinion). Such counsel may
express the statements set forth in this clause (xvii) in a letter
separate from its opinion.
(xviii) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by the
Company prior to the Closing Date or the Option Closing Date, as the
case may be, (other than the financial statements, schedules and other
financial and statistical data contained therein, as to which such
counsel need express no opinion), when they became effective or were
filed with the Commission, as the case
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may be, complied as to form in all material respects with the
requirements of the Exchange Act and the Exchange Act Rules and
Regulations.
(xix) This Agreement and the Stockholder's Agreement have each
been duly executed and delivered by or on behalf of the Selling
Stockholder; the Stockholder's Agreement constitutes a valid and
binding agreement of such Selling Stockholder in accordance with its
terms, except as enforceability may be limited by the application of
bankruptcy, insolvency or other laws affecting creditors' rights
generally or by general principles of equity; the Attorneys-in-Fact and
the Custodian have been duly authorized by such Selling Stockholder to
deliver the Shares on behalf of such Selling Stockholder in accordance
with the terms of this Agreement; and the sale of the Shares to be sold
by such Selling Stockholder hereunder, the performance by such Selling
Stockholder of this Agreement and the Stockholder's Agreement and the
consummation of the transactions contemplated hereby and thereby will
not result in a breach or violation of any of the terms or provisions
of, or constitute a default under, or give any party a right to
terminate any of its obligations under, or result in the acceleration
of any obligation under any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, lease, contract or other agreement or
instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder or any of its properties is bound or affected
known to counsel, or violate or conflict with any judgment, ruling,
decree, order, statute, rule or regulation of any court or other
governmental agency or body applicable to such Selling Stockholder
known to such counsel.
(xx) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is
required for the consummation by the Selling Stockholder of the
transactions on his part contemplated by this Agreement, except such as
have been obtained or made under the Act or the Rules and Regulations
and such as may be required under state securities or Blue Sky laws or
the by-laws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Shares.
(xxi) The Selling Stockholder has full legal right, power and
authority to enter into this Agreement and the Stockholder's Agreement
and to sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder hereunder and, upon payment for such Shares and
assuming that the Underwriters are purchasing such Shares in good faith
and without notice of any other adverse claim within the meaning of the
Uniform Commercial Code, the Underwriters will have acquired all rights
of such Selling Stockholder in such Shares free of any adverse claim,
any lien in favor of the Company and any restrictions on transfer
imposed by the Company.
(xxii) To the knowledge of such counsel, the Company holds and
is operating in compliance with all licenses, approvals, certificates
and permits from governmental and regulatory authorities, foreign and
domestic, which are necessary to the conduct of its business as
currently being conducted and as described in the Prospectus. To the
knowledge of such counsel, the Company has not received notice of or
has knowledge of any basis for any proceeding or action relating
specifically to the Company for the
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revocation or suspension of any such consent, authorization, approval,
order, license, certificate, permit or any other action or proposed
action by any regulatory authority having jurisdiction over the Company
that would have a material adverse effect on the Company.
(xxiii) To the knowledge of such counsel, the Company owns or
licenses all patents, patent applications, trademarks, service marks,
tradenames, trademark registrations, service xxxx registrations,
copyrights, licenses, inventions, trade secrets and other similar
rights necessary for the conduct of its business as currently being
conducted and as described in the Prospectus. To the knowledge of such
counsel, no aspect of the business of the Company involves or gives
rise to any infringement of or license or similar fees for any patents,
patent applications, trademarks, service marks, tradenames, trademark
registrations, service xxxx registrations, copyrights, licenses,
inventions, trade secrets or other similar rights of others, and the
Company has not received any notice or claim of conflict with the
asserted rights of others with respect to any of the foregoing.
In rendering the opinions in subparagraphs (xix) - (xxi), such counsel
may rely upon opinions of other counsel retained by the Selling Stockholder
reasonably acceptable to the Representatives and as to matters of fact on
certificates of the Selling Stockholder, officers of the Company and
governmental officials and the representations and warranties of the Company and
the Selling Stockholder contained in this Agreement and the Stockholder's
Agreement, provided that the opinion of counsel to the Company and Selling
Stockholder shall state that they are doing so, that they have no reason to
believe that they and the Underwriters are not entitled to rely on such opinions
or certificates and that copies of such opinions or certificates are attached to
the opinion.
In rendering such opinion, such counsel may rely upon as to matters of
local law on opinions of counsel satisfactory in form and substance to the
Representatives and counsel for the Underwriters, provided that the opinion of
counsel to the Company and the Selling Stockholder shall state that they are
doing so, that they have no reason to believe that they and the Underwriters are
not entitled to rely on such opinions and that copies of such opinions are
attached to the opinion.
(g) The representatives shall have received an opinion, dated the
Closing Date and the Option Closing Date, from Xxxxxx, Xxxxxxxx and Xxxxxx,
P.A., counsel to the Underwriters, with respect to the Registration Statement,
the Prospectus and this Agreement, which opinion shall be satisfactory in all
respects to the Representatives.
(h) Concurrently with the execution and delivery of this Agreement, the
Accountants shall have furnished to the Representatives a letter, dated the date
of its delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants with respect to the Company as required by the Act and the Rules and
Regulations and with respect to certain financial and statistical information
contained in the Registration Statement. At the Closing Date and, as to the
Option Shares, the Option Closing Date, the Accountants shall have furnished to
the Representatives a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set forth in
the letter from the Accountants, that nothing has come to their attention during
the period from the date
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of the letter referred to in the prior sentence to a date (specified in the
letter) not more than five days prior to the Closing Date and the Option Closing
Date, as the case may be, which would require any change in their letter dated
the date hereof if it were required to be dated and delivered at the Closing
Date and the Option Closing Date.
(i) Concurrently with the execution and delivery of this Agreement and
at the Closing Date and, as to the Option Shares, the Option Closing Date, there
shall be furnished to the Representatives a certificate, dated the date of its
delivery, signed by each of the Chief Executive Officer and the Chief Financial
Officer of the Company, in form and substance satisfactory to the
Representatives, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) as of the date of
such certificate, such documents are true and correct in all material
respects and do not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not untrue or
misleading, (B) in the case of the certificate delivered at the Closing
Date and the Option Closing Date, since the Effective Date no event has
occurred as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not untrue or misleading, (C)
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company has not
incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions, not in the ordinary course
of business, or declared or paid any dividends or made any distribution
of any kind with respect to its capital stock, and except as disclosed
in the Prospectus, there has not been any change in the capital stock
(other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding
options or warrants), or any material change in the short-term or
long-term debt, or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock, of the
Company, or any material adverse change or any development involving a
prospective material adverse change (whether or not arising in the
ordinary course of business), in the general affairs, condition
(financial or otherwise), business, key personnel, property, prospects,
net worth or results of operations of the Company, and (D) except as
stated in the Registration Statement and the Prospectus, there is not
pending, or, to the knowledge of the Company, threatened or
contemplated, any action, suit or proceeding to which the Company is a
party before or by any court or governmental agency, authority or body,
or any arbitrator, which might result in any material adverse change in
the condition (financial or otherwise), business, prospects or results
of operations of the Company.
(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct.
(iii) Each of the covenants required to be performed by the
Company herein on or prior to the date of such certificate has been
duly, timely and fully performed and each
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condition herein required to be satisfied or fulfilled on or prior to
the date of such certificate has been duly, timely and fully satisfied
or fulfilled.
(j) Concurrently with the execution and delivery of this Agreement and
at the Closing Date and, as to the Option Shares, the Option Closing Date, there
shall be furnished to the Representatives a certificate, dated the date of its
delivery, signed by the Selling Stockholder (or the Attorneys-in-Fact on his
behalf), in form and substance satisfactory to the Representatives, to the
effect that the representations and warranties of the Selling Stockholder
contained herein are true and correct in all material respects on and as of the
date of such certificate as if made on and as of the date of such certificate,
and each of the covenants and conditions required herein to be performed or
complied with by the Selling Stockholder on or prior to the date of such
certificate has been duly, timely and fully performed or complied with.
(k) On or prior to the Closing Date, the Representatives shall have
received the executed agreements referred to in Section 5(o).
(l) The Shares shall be qualified for sale in such jurisdictions as the
Representatives may reasonably request and each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
or the Option Closing Date.
(m) Prior to the Closing Date, the Shares shall have been duly
authorized for listing on the NNM upon official notice of issuance.
(n) The Company and the Selling Stockholder shall have furnished to the
Representatives such certificates, in addition to those specifically mentioned
herein, as the Representatives may have reasonably requested as to the accuracy
and completeness at the Closing Date and the Option Closing Date of any
statement in the Registration Statement or the Prospectus, as to the accuracy at
the Closing Date and the Option Closing Date of the representations and
warranties of the Company and the Selling Stockholder herein, as to the
performance by the Company and the Selling Stockholder of its and his respective
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Representatives.
(o) Prior to the Closing Date, the Company shall have furnished the
Representatives with signed copies of the S Corporation Indemnification
Agreements entered into between the Company and each stockholder of the Company
under which the stockholders of the Company indemnify the Company for certain
potential income tax liabilities incurred by the Company as a result of any
failure of the Company to qualify as an S corporation under the Internal Revenue
Code of 1986, as amended (the "Code") for any taxable period ending on or prior
to the Closing Date.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case
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may be. In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5(j) and 7
hereof).
7. Indemnification.
(a) The Company and the Selling Stockholder, jointly and severally, will
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person, if any, who controls each
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, liabilities, expenses
and damages (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they, 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, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
(i) any 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 to the Registration Statement or the
Prospectus, or the omission or alleged omission to state in such document a
material fact required to be stated in it or necessary to make the statements in
it not misleading in the light of the circumstances in which they were made,
(ii) any act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Common Stock
or the offering contemplated hereby, and which is included as part of or
referred to in any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arising out of or based upon matters covered by
clause (i) above, and will reimburse each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating or defending any
such action or claim as such expenses are incurred; or arise out of or are based
in whole or in part on any inaccuracy in the representations and warranties of
the Company or the Selling Stockholder contained herein or any failure of the
Company or the Selling Stockholder to perform its or his obligations hereunder
or under law in connection with the transactions contemplated hereby, or (iii)
any failure of the Company's qualification as an S corporation under the Code
for any taxable period ending on or prior to the Closing Date; provided,
however, that (i) the Company and the Selling Stockholder will not be liable to
the extent that such loss, claim, liability, expense or damage arises from the
sale of the Shares in the public offering to any person by an Underwriter and is
based on an untrue statement or omission or alleged untrue statement or omission
made in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by the Representatives, on
behalf of any Underwriter, expressly for inclusion in the Registration
Statement, the preliminary prospectus or the Prospectus; (ii) the Company and
the Selling Stockholder will not be liable to any Underwriter, the directors,
officers, employees or agents of such Underwriter or any person controlling such
Underwriter with respect to any loss, claim, liability, expense, or damage
arising out of or based on any untrue statement or omission or alleged untrue
statement or omission or alleged omission to state a material fact in the
preliminary prospectus which is corrected in the Prospectus if the person
asserting any such loss, claim, liability, charge or damage purchased Shares
from such Underwriter but was not sent or given a copy of the Prospectus at or
prior to the written confirmation of the sale of such Shares to such person; and
(iii) the liability of the Selling Stockholder under this Section 7(a) shall not
exceed the product of the purchase price for each Share set forth in Section
1(a) hereof multiplied by the
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number of Shares sold by such Selling Stockholder hereunder. This indemnity
agreement will be in addition to any liability that the Company and the Selling
Stockholder might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who signs 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 Selling
Stockholder to the same extent as the foregoing indemnity from the Company and
each Selling Stockholder to each Underwriter, as set forth in Section 7(a), but
only insofar as losses, claims, liabilities, expenses or damages arise out of or
are based on any untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by the Representatives, on
behalf of such Underwriter, expressly for use in the Registration Statement, the
preliminary prospectus or the Prospectus. The Company and the Selling
Stockholder acknowledge that the statements set forth under the heading
"Underwriting" in the preliminary prospectus and the Prospectus constitute the
only information relating to any Underwriter furnished in writing to the Company
by the Representatives on behalf of the Underwriters expressly for inclusion in
the Registration Statement, the preliminary prospectus or the Prospectus. This
indemnity will be in addition to any liability that each Underwriter might
otherwise have.
(c) Any party that proposes to assert the right to be indemnified under
this Section 7 shall, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 7, notify each such
indemnifying party in writing of the commencement of such action, enclosing with
such notice a copy of all papers served, but the omission so to notify such
indemnifying party will not relieve it from any liability that it may have to
any indemnified party under the foregoing provisions of this Section 7 unless,
and only to the extent that, such omission results in the loss of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense, the indemnifying party will not be
liable to the indemnified party for any legal or other expenses except as
provided below and except for the reasonable costs of investigation subsequently
incurred by the indemnified party in connection with the defense. The
indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (i) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (ii)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(iii) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (iv) the indemnifying
party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
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action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm admitted to practice in such jurisdiction at any one time for all
such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. Any indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent (which consent will not be
unreasonably withheld).
(d) If the indemnification provided for in this Section 7 is applicable
in accordance with its terms but for any reason is held to be unavailable to or
insufficient to hold harmless an indemnified party under paragraphs (a), (b) and
(c) of this Section 7 in respect of any losses, claims, liabilities, expenses
and damages referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company or the Selling Stockholder from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) by such indemnified
party as a result of such losses, claims, liabilities, expenses and damages in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Stockholder, on the one hand, and the
Underwriters, on the other hand. The relative benefits received by the Company
and the Selling Stockholder, on the one hand, and the Underwriters, on the other
hand, shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and the
Selling Stockholder 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. If, but only if, the allocation provided by the
foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company and the Selling Stockholder, on the one hand, and
the Underwriters, on the other hand, with respect to the statements or omissions
which resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company, the Selling Stockholder or the Representatives on behalf of the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholder and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 7(d) were to
be 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 into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof, referred to above in
this Section 7(d) shall be deemed to include, for purposes of this Section 7(d),
any legal or other expenses reasonably incurred by such
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indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7(d), no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts received by it and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(d), any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against any such party in respect of which a claim for contribution may be made
under this Section 7(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 7(d). No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this Section
7 and the representations and warranties of the Company and the Selling
Stockholder contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of any of the Shares and payment therefor or (iii)
any termination of this Agreement.
8. Reimbursement of Certain Expenses. In addition to its other
obligations under Section 7(a) of this Agreement, the Company hereby agrees to
reimburse on a 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,
in whole or in part, any statement or omission or alleged statement or omission,
or any inaccuracy in the representations and warranties of the Company or the
Selling Stockholder contained herein or failure of the Company or the Selling
Stockholder to perform its or his respective obligations hereunder or under law,
all as described in Section 7(a), notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 8 and the possibility that such payment might later be held to be
improper; provided, however, that, to the extent any such payment is ultimately
held to be improper, the persons receiving such payments shall promptly refund
them.
9. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time on or prior to the Closing Date (or,
with respect to the Option Shares, on or prior to the Option Closing Date), by
notice to the Company and the Selling Stockholder from the Representatives,
without liability on the part of any Underwriter to the Company if, prior to
delivery and payment for the Firm Shares or Option Shares, as the case may be,
in the sole judgment of the Representatives, (i) trading in any of the equity
securities of the Company shall have been suspended by the Commission or by The
Nasdaq Stock Market, (ii) trading in securities generally on The Nasdaq Stock
Market shall have been suspended or limited or minimum or maximum prices shall
have been generally established on such exchange, or additional material
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governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by such exchange, by
order of the Commission or any court or other governmental authority, or by the
New York Stock Exchange, (iii) a general banking moratorium shall have been
declared by either Federal or Minnesota state authorities or (iv) any material
adverse change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States or any outbreak
or material escalation of hostilities or other calamity or crisis shall have
occurred, the effect of which is such as to make it, in the sole judgment of the
Representatives, impracticable or inadvisable to proceed with completion of the
public offering or the delivery of and payment for the Shares.
If this Agreement is terminated pursuant to Section 10 hereof, neither
the Company nor the Selling Stockholder shall be under any liability to any
Underwriter except as provided in Sections 5(j), 7 and 8 hereof.
10. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse to purchase any of the Firm Shares which it or
they have agreed to purchase hereunder, and the aggregate number of Firm Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of Firm Shares,
the other Underwriters shall be obligated, severally, to purchase the Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the number of Firm Shares which
they have respectively agreed to purchase pursuant to Section 1 bears to the
aggregate number of Firm Shares which all such non-defaulting Underwriters have
so agreed to purchase, or in such other proportions as the Representatives may
specify; provided that in no event shall the maximum number of Firm Shares which
any Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 10 by more than one-ninth of such number of
Firm Shares without the prior written consent of such Underwriter. If any
Underwriter or Underwriters shall fail or refuse to purchase any Firm Shares and
the aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase exceeds one-tenth of the
aggregate number of the Firm Shares and arrangements satisfactory to the
Representatives and the Company for the purchase of such Firm Shares are not
made within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Stockholder for the purchase or sale of any Shares under this Agreement.
In any such case either the Representatives or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and the
Prospectus or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken pursuant to this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
11. Written Information. For all purposes under this Agreement each of
the Company and the Selling Stockholder understands and agrees with each of the
Underwriters that the following constitutes the only written information
furnished to the Company by or through the Representatives specifically for use
in preparation of the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto: (i) the per share "Price to
Public" and per share "Underwriting Discounts and Commissions" set forth on the
cover page of
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the Prospectus, (ii) the information relating to stabilization set forth in the
last paragraph on page two of the preliminary prospectus and the Prospectus, and
(iii) the information set forth under the caption "Underwriting" in the
preliminary prospectus and the Prospectus.
12. Miscellaneous. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company or the Selling Stockholder, at the
office of the Company, 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000, Attention: Xxxx X. Xxxxxx, with a copy to Xxxxxxxx & Xxxxxx P.A., 000
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxxxx
X. Xxxxxxx, Esq., or (b) if to the Underwriters, to the Representatives at the
offices of Xxxxxxx & Company, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Corporate Finance Department, with a copy to Xxxxxx, Xxxxxxxx and
Xxxxxx, P.A., 5500 Norwest Center, 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxxx, Esq. Any such notice shall be
effective only upon receipt. Any notice under such Section 9 or 10 may be made
by telex or telephone, but if so made shall be subsequently confirmed in
writing.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, the Selling Stockholder and the controlling
persons, directors and officers referred to in Section 7, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" as used
in this Agreement shall not include a purchaser, as such purchaser, of Shares
from any of the several Underwriters.
Any action required or permitted to be made by the Representatives
under this Agreement may be taken by them jointly or by Xxxxxxx & Company, Inc.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Minnesota applicable to contracts made and to be
performed entirely within such State.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company and the Underwriters each hereby waive any right they may
have to a trial by jury in respect of any claim based upon or arising out of
this Agreement or the transactions contemplated hereby.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors and officers and (c) delivery of and payment for the Shares under
this Agreement.
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Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
DATALINK CORPORATION
By:
----------------------------------------
Xxxx X. Xxxxxx, Chief Executive Officer
SELLING STOCKHOLDER
(named in Schedule II hereto)
By:
----------------------------------------
Attorney-in-Fact
Confirmed as of the date first above mentioned:
XXXXXXX & COMPANY, INC.
CRUTTENDEN XXXX INCORPORATED
XXXX X. XXXXXXX AND COMPANY, INCORPORATED
Acting on behalf of themselves
and as the Representatives of
the other several Underwriters
named in Schedule I hereto.
By: XXXXXXX & COMPANY, INC.
By:
-----------------------------------
Title:
-----------------------------
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SCHEDULE I
UNDERWRITERS
Number of
Firm Shares
Underwriters to be Purchased
------------ ---------------
Xxxxxxx & Company, Inc..........................................
Cruttenden Xxxx Incorporated....................................
Xxxx X. Xxxxxxx and Company, Incorporated.......................
---------
Total................................................
==========
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SCHEDULE II
Total Number Total Number of
of Firm Shares Option Shares
to be Sold to be Sold
-------------- ---------------
Datalink Corporation.............................2,600,000 320,000
Xxxxxxx X. Xxxxxxxx.............................. --- 70,000
--------- ------
TOTALS..................................2,600,000 390,000
========= =======
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SCHEDULE III
FORM OF LOCK-UP AGREEMENT
[AND DIRECTORS, OFFICERS AND STOCKHOLDERS
OF THE COMPANY WHO SHALL SIGN SUCH AGREEMENT]
The undersigned is a holder of securities of Datalink Corporation, a
Minnesota corporation (the "Company"), and wishes to facilitate the public
offering of shares of the Common Stock (the "Common Stock") of the Company (the
"Offering"). The undersigned recognizes that such Offering will be of benefit to
the undersigned.
In consideration of the foregoing and in order to induce you to act as
underwriters in connection with the Offering, the undersigned hereby agrees that
he, she or it will not, without the prior written approval of Xxxxxxx & Company,
Inc., acting on its own behalf and/or on behalf of other representatives of the
underwriters, directly or indirectly, sell, contract to sell, make any short
sale, pledge, or otherwise dispose of, or enter into any hedging transaction
that is likely to result in a transfer of, any shares of Common Stock, options
to acquire shares of Common Stock or securities exchangeable for or convertible
into shares of Common Stock of the Company which he, she or it may own,
exclusive of any shares of Common Stock purchased in connection with the
Company's public offering for a period commencing as of the date hereof and
ending on the date which is one hundred eighty (180) days after the date of the
final Prospectus relating to the Offering. The undersigned confirms that he, she
or it understands that the underwriters and the Company will rely upon the
representations set forth in this Agreement in proceeding with the Offering. The
undersigned further confirms that the agreements of the undersigned are
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns. The undersigned agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent
against the transfer of securities held by the undersigned except in compliance
with this Agreement.
This Agreement shall be binding on the undersigned and his, her or its
respective successors, heirs, personal representatives and assigns.
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